Good Earned Value Management Critical Thinking Example
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Earned Value Management (EVM) is defined in two slightly different ways by author Margo S. Visitacion. In the article in the September issue of Contract Management magazine, she explains it as a “methodology that integrates cost, schedule, and technical performance to improve project success (Visitacion, 2007a).” In the October issue of the same magazine, the same author does not contradict that definition of EVM, but adds that three components are tracked to determine the health of a given project: the first is the planned value of the project, which would include work schedules and budgets; the second is the earned value which includes the amount of work devoted to the work completed; and the third is the actual cost of what is spent on the completed work (Visitacion, 2007b).
In the September article, Visitacion discussed how the federal government was mandated to implement and follow EVM guidelines. By that time, however, only about one-third of the agencies surveyed were working towards that goal. The Department of Defense was on the forefront in it’s following the procedures and has embraced the standards used in the EVM model. EVM can be a successful tool in projecting procedural successes and failures, and help get projects back on track, even financially, if overages are caught before the project is at the 15% point.
This article also uses a system of Myth versus Fact column structure in its presentation of information. There are five specific myths addressed in the articles that have the corresponding facts then associated with them. The myth first is that using the EVM system will always result in projects being on-track. In reality, the EVM structure helps to ensure project success, and that is determined by the participation and correct use of guidelines that are set in place. The second myth discussed is that EVM projects require no project management knowledge. This misconception is redirected in that EVM project success and project knowledge and success are usually a mutual success. The third myth is that by using EVM, project cost overruns can always be recuperated. This, in fact, can only be successful early in the project. The earlier addressed, the more likely it is to get the budget back on-track. The fourth myth is that EVM style management is only for large scale projects. In reality, projects of any size and scope can benefit from the EVM approach if done in an effective manner. The fifth and last myth addressed is that EVM reports are accurate and reliable without fault. This cannot be justified because reports are only as accurate as the information that is provided to create them. The data creates the end result (Visitation, 2007a).
The second article by Visitation looks at a specific and successful implementation of the EVM model, the one used by the Lawrence Livermore National Laboratory (LLNL). This agency falls under the auspice of the Department of Energy (DOE) which works to assist the National Nuclear Security Administration. The staggering $1.6 billion dollar budget encompasses services such as basic and applied research, homeland security, nonproliferation, intelligence, and stockpile stewardship. With such sensitive materials and functions at stake, a system that is proven in being effective to report the necessary information to key personnel is essential. EVM has proven itself as being able to fulfill this role.
The article continues with the story of Anita Zenger, project controls manager for LLNL plant engineering. Zenger headed the task of completing the LLNL Terascale Simulation Facility. Creating this $100 million dollar laboratory on budget and eight months ahead of schedule was credited to Zenger’s use of EVM management techniques. Zenger used EVM software to watch costs, manage the functionality of the project, graph analysis capabilities, estimate completion times of sub-projects, and other earned-value calculations. The EVM software also was able to distinguish direct and indirect costs and have adjustments made for specific built-in controls when and where they were deemed necessary (Visitacion, 2007b).
When establishing new retail site locations, the EVM system could have been helpful to me and my team in past endeavors in a number of ways.
Even when faced with the smaller task of setting up one retail outlet at a time, EVM can still be useful as one needed to look at the longer term forecast. The component that I might have been involved in was launching the store, but that sets up the success of the store. Getting the store ready to open is a large enough project for the EVM system to be implemented.
It is almost always impertinent to have knowledge of the retail market and the product which will be sold in order for the successful launch of a store. EVM allows for this prior knowledge and the knowledge of EVM practices to be used simultaneously for the best success. This includes not only finding the right retail locations, but how to visually set up the store to attract customers initially and then to keep them coming back and have them as repeat customers.
Once the retail site is found, it needs to be modified for the specific market being served. This can be an expensive task. I have found in the past that first-hand knowledge of many areas is needed to control these costs. In this situation, the EVM model would be beneficial to help ensure that budgets are followed and maintained. Even with EVM systems, no budget or timetable is always perfect, so allowances need to be made upfront.
In my past it has been my experience that reports are only beneficial if the data gathered has been accurate. Teaching managers how to gather the best data is essential. Expecting it as a manager is equally important. As a company grows, it is important for the corporate headquarters to be getting the information needed as quickly and reliably as possible so that needed changes can be made and changes can be implemented as needed, training adjustments made, and staff educated, so that the best customer experience is had and repeat customers are made.
Visitacion, M. (2007a). September. Debunking commonly held EVM myths. Contract
Management. 47(9), 51-52.
Visitacion, M. (2007b). October. Exemplary EVM at Lawrence Livermore Labs. Contract
Management. 47(10), 75-77.
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