Earned value

Recommendation 9. The Army should develop an earned value system to maintain a comprehensive multiyear cost and schedule for the construction, operation, and closure of each chemical agent disposal facility. The system should be used to control and report the effect on cost and schedule from changes such as permit modifications, proposals for engineering changes, and the phaseout of security for surety material. 

Once all activities have been identified and assigned value and a milestone system established, the computation of earned values and overall progress (percent completion) is a very simple operation. 

The sum of the earned values divided by the total assigned value is the percent completion. 

Note Table 19.1 must be used to estimate erection hours for Earned Value System used for monitoring construction progress. See Appendix E. 

For example, many of the elements of project management applied in the construction and telecommunications industries do not work in pharmaceutical development. This includes earned value, configuration management, and detailed representations of the work breakdown structures. These concepts actually provide too much structure when applied to pharmaceutical or any product development and could potentially have a... 

I---Planned Progress -----Actual Costs ---Earned Value ... 

The third process, financial control of the project, is again based on the cost accounts. The basic control method is an ongoing comparison between actual and planned cost accumulation. Methods such as the earned value technique develop ratio measures that help the controller to analyze the schedule and cost deviations over time and employ control limits as triggers for corrective action. The control is usually performed at the WP cost account level. 

An earned value stream map showing the individual processing steps from mining to the lithium-ion battery production, with time frames for the individual steps and percentage of value added (0% at mining, 100% at battery manufactured). 

Finally, there are multiple financial measures for improvement projects. Indeed, most proposed projects will encounter a capital budgeting process at some point on the path to approval. There, they will be subjected to Internal Rates of Return, Net Present Value, or Earned Value criteria for examination. We discuss these in more depth in later chapters on cost reduction in the supply chain. 

Project control for cost, performance and schedule Appropriate transition points and reviews Configuration management and documentation Performance compared to baseline Earned value recognition The estimation and allocation of resources Risks and alternatives... 

The technical execution of the project is straightforward once the baseline activities are properly identified, scheduled, resource loaded, and leveled. If planning the work is completed in detail, the only thing left is to work the plan and report on the progress in a consistent manner. Normal reporting utilizes an earned value management system identified under the project management section. 

Compares tasks completed and milestones achieved to the project schedule, perhaps using periodic updates of a critical path method (CPM) analysis as described in the next chapter. If critical tasks are or soon will be behind schedule, takes corrective actions discussed in that chapter. As noted earlier in this chapter, the project manager may also use the earned value method (EVM) to monitor planned costs, actual costs, and the value of results produced. 

Anbari, F. T. 2003. Earned Value Project Method and Extensions. Project Management Journal, December, pp. 12-23. 

Bettis, N. T. 2006. Earned Value Management Manage The Future, Not Just The Past, and Prevent Projects From Trending In A Negative Direction. CE News, December, pp. 18-19. Cannon, H. M. 2008. Top 10 Items to Include in Your Contracts. NSPE PEPP Talk-... 

Covey, S. R. 1990. The 7 Habits of Highly Effective People. New York Simon Schuster. Fleming, Q. W. and J. M. Koppelman. 2010. Earned Value Project Management - Fourth Edition. Project Management Institute Newton Square, PA. 

Project Management Institute. 2005. Practice Standard for Earned Value Management. PMI Newton Square, PA. 

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