Earned Value , Variance Analysis and Project Monitoring

Monitoring the progress of the project as it progresses throughout the various tasks which are to be completed in order to attempt project objectives and aims which for the basis of the project. All throughout the project, there is data which is collected and is used to control the project and ensure the project stays on track with time, resources and costs.

The control process of a project is a process which consists of the following steps: 

· setting a baseline plan which is the elements used to measure the project performance, found within the work breakdown structure formed at the beginning of the project management process

· measuring progress & performance of time and budget within the planning process. The management of time is based on the project network schedule and the critical path and taking into account the earned value which is the budgeted cost of the work performed for the project

· comparing the plan against the actual resources, time and performance given for the project

· take action on any diversions from the project or creep of project performance, keep the project on track as much as possible. If change is required, which can occur, the baseline plan needs to be altered to reflect that change

There are a number of visual elements which can be used to monitor the progress of the project which are: Gantt Chart & Controll Charts

The earned value system begins with the time-phased costs that provide the project with a baseline budget, or the planned budget value of the work schedule of the project and its activities it involves. These can be compared against the planned schedules of time and capital which were estimated at the beginning of the project based on bottom/up and top/down estimates. The earned value of an activity within a project is the percentage of the orginal budget that has been earned by the work completed for the project. 

The cost/schedule system must be integrated within a five stage process, the first three stages are completed within the planning stage of project management while the final two stages are completed during the execution stage of the project. 

1.    Define the work of the project with a work breakdown structure. 

2.    Develop a work and resource schedule

3.    Develop a time-phased budget

4.    Collect actual costs which calculates the scedule variances which is based on the earned value minus the planned budget baseline 

The NCH is a project which has failed to be monitored effectively as the cost/schedule systems were not put in place in an appropriate manner which has resulted in severe changes in its capital budget and time schedules. Due to its initial lack of planning & responsibility the progress, the project its progress and schedules in relation to time and cost could not be monitored and the project has gone exceeded its baseline budget and now has a cost of €1.7 billion. 

Variance analysis has two elements which consists of: 1. Comparing earned value with the expected schedule value. 2. Comparing earned value with the actual costs. The project status can be obtained by using the earned value cost and the schedule has a number of elements which need to be understood. planned cost of the work scheduled (PV), budgeted cost of the work completed (EV), and actual cost of the work completed (AC). From these data the schedule variance (SV) and cost variance (CV) are computed each reporting period. If a project has a positive variance it shows a desirable condition, while a negative project variance suggests problems or changes that have taken place and not been taken into account appropriately. Cost variance allows the project manager to understand if the work within the project has cost more or less than the expected & budgeted amount. 

Schedule variance allows an assessment of each single work packages involved within the project to achieve the goal & main objectives. Schedule variance measures progress in monetary terms rather than time, as it takes into account the planned budget and actual costs of work. 

The project manager can monitor project process and its development throughout each of its work packages by utilizing information. The information required is the critical path and network schedule along with the initial planned budget and invoices for work which has been completed and which is in progress. If issues arise, they can be dealt with easily if the manager has incorporated a buffer of time and money into the project. However, if no buffer has been accounted for, there will be issues. The PM must consistently keep an eye on the project and its progress while monitoring the budgeted time and costs.