Project Management with Dynamic Scheduling Baseline Scheduling, Risk
The topic of this book is known as dynamic scheduling, and is used to refer to three dimensions of project management and scheduling: the construction of a baseline schedule and the analysis of a project schedule’s risk as preparation of the project contr
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Earned Value Management
Abstract In the previous parts of this book, it was assumed that the project has not started yet, and hence, the project was still in the definition and scheduling phase of the project life cycle. From this chapter on, it is assumed that the project has started (execution phase) and that the project is in progress. Consequently, it is the task of the project manager to carefully control the performance of the project, using his/her knowledge of the schedule risk analyses and baseline scheduling steps discussed in the two previous parts. The project control dimension of dynamic scheduling can be done relying on a well-established technique known as Earned Value Management. Earned Value Management (EVM) is a methodology used since the 1960s, when the USA department of defense proposed a standard method to measure a project’s performance. The system relies on a set of often straightforward metrics to measure and evaluate the general health of a project. These metrics serve as early warning signals to timely detect project problems or to exploit project opportunities. The purpose of an EVM system is to provide answers to project managers on questions such as: • What is the difference between budgeted and actual costs? • What is the current project status? Ahead of schedule or schedule delay? • Given the current project performance, what is the expected remaining time and cost of the project? This chapter gives an overview of all EVM metrics and performance measures to monitor the time and cost dimension of a project’s current progress to date, and shows how this information can be used to predict the expected remaining time and cost to finalize the project. This information serves as a trigger to take corrective actions to bring the project back on track when needed.
M. Vanhoucke, Project Management with Dynamic Scheduling, DOI 10.1007/978-3-642-25175-7 12, © Springer-Verlag Berlin Heidelberg 2012
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12 Earned Value Management
12.1 Introduction Earned Value Management is a methodology used to measure and communicate the real physical progress of a project and to integrate the three critical elements of project management (scope, time and cost management). It takes into account the work completed, the time taken and the costs incurred to complete the project and it helps to evaluate and control project risks by measuring project progress in monetary terms. The basic principles and the use in practice have been comprehensively described in many sources (for an overview, see e.g. Anbari 2003 or Fleming and Koppelman 2005). Although EVM has been set up to follow up both time and cost, the majority of the research has been focused on the cost aspect (see e.g. the paper written by Fleming and Koppelman (2003) who discuss EVM from a price tag point of view). This chapter reviews the basic key metrics in earned value, elaborates on the recent research focused on the time aspect of EVM and compares a newly developed method, called earned schedule (Lipke 2003), with the more traditional approa
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