Earned Value Management

Earned value management is a project management technique for measuring project performance and progress. It has the ability to combine measurements of the project management triangle:

• Scope
• Time
• Costs

In a single integrated system, Earned Value Management is able to provide accurate forecasts of project performance problems, which is an important contribution for project management.

Early EVM research showed that the areas of planning and control are significantly impacted by its use; and similarly, using the methodology improves both scope definition as well as the analysis of overall project performance. More recent research studies have shown that the principles of EVM are positive predictors of project success.^[1] Popularity of EVM has grown in recent years beyond government contracting, a sector in which its importance continues to rise^[2] (e.g., recent new DFARS rules^[3]), in part because EVM can also surface in and help substantiate contract disputes.^[4]

Essential features of any EVM implementation include

1. a project plan that identifies work to be accomplished,
2. a valuation of planned work, called Planned Value (PV) or Budgeted Cost of Work Scheduled (BCWS), and
3. pre-defined “earning rules” (also called metrics) to quantify the accomplishment of work, called Earned Value (EV) or Budgeted Cost of Work Performed (BCWP).

EVM implementations for large or complex projects include many more features, such as indicators and forecasts of cost performance (over budget or under budget) and schedule performance (behind schedule or ahead of schedule). However, the most basic requirement of an EVM system is that it quantifies progress using PV and EV.

Project Cost Management

Project Cost Management (PCM) is a method that uses technology to measure cost and productivity through the full life cycle of enterprise level projects.^{[citation needed]}

PCM encompasses several specific functions of project management including estimating, job controls, field data collection, scheduling, accounting and design. PCM main goal is to complete a project within an approved budget^[1]

Beginning with estimating, a vital tool in PCM, actual historical data is used to accurately plan all aspects of the project. As the project continues, job control uses data from the estimate with the information reported from the field to measure the cost and production in the project. From project initiation to completion, project cost management has an objective to simplify and cheapen the project experience. ^[2]

This technological approach has been a big challenger to the mainstream estimating software and project management industries.^[3] [4]

Project Cost Management is one of the ten Knowledge Areas outlined in the A Guide to the Project Management Body of Knowledge (aka the PMBOK Guide). It is used during the Planning and Monitoring & Controlling Process Groups.

There are 4 processes in this knowledge area including

1. Planning Cost Management
2. Estimating Costs
3. Determining Budget
4. Controlling Cost

A key technique for Project Cost Management is Earned Value Management (EVM).

Project Risk Management

Project risk management is an important aspect of project management. According to the Project Management Institute's PMBOK, Risk management is one of the ten knowledge areas in which a project manager must be competent. Project risk is defined by PMI as, "an uncertain event or condition that, if it occurs, has a positive or negative effect on a project’s objectives."

Project risk management remains a relatively undeveloped discipline, distinct from the risk management used by Operational, Financial and Underwriters' risk management. This gulf is due to several factors: Risk Aversion, especially public understanding and risk in social activities, confusion in the application of risk management to projects, and the additional sophistication of probability mechanics above those of accounting, finance and engineering.

With the above disciplines of Operational, Financial and Underwriting risk management, the concepts of risk, risk management and individual risks are nearly interchangeable; being either personnel or monetary impacts respectively. Impacts in project risk management are more diverse, overlapping monetary, schedule, capability, quality and engineering disciplines. For this reason, in project risk management, it is necessary to specify the differences (paraphrased from the "Department of Defense Risk, Issue, and Opportunity Management Guide for Defense Acquisition Programs"):

• Risk Management: Organizational policy for optimizing investments and (individual) risks to minimize the possibility of failure.
• Risk: The likelihood that a project will fail to meet its objectives.
• A risk: A single action, event or hardware component that contributes to an effort's "Risk."

An improvement on the PMBOK definition of risk management is to add a future date to the definition of a risk.^[2] Mathematically, this is expressed as a probability multiplied by an impact, with the inclusion of a future impact date and critical dates. This addition of future dates allows predictive approaches.^{[citation needed]}

Good Project Risk Management depends on supporting organizational factors, having clear roles and responsibilities, and technical analysis.

Chronologically, Project Risk Management may begin in recognizing a threat, or by examining an opportunity. For example, these may be competitor developments or novel products. Due to lack of definition, this is frequently performed qualitatively, or semi-quantitatively, using product or averaging models. This approach is used to prioritize possible solutions, where necessary.

In some instances it is possible to begin an analysis of alternatives, generating cost and development estimates for potential solutions.

Once an approach is selected, more familiar risk management tools and a general project risk management process may be used for the new projects:

• A Planning risk management
• Risk identification and monetary identification
• Performing qualitative risk analysis
• Communicating the risk to stakeholders and the funders of the project
• Refining or iterating the risk based on research and new information
• Monitoring and controlling risks

Finally, risks must be integrated to provide a complete picture, so projects should be integrated into enterprise wide risk management, to seize opportunities related to the achievement of their objectives.

Excerpt from wikipedia : https://en.wikipedia.org/wiki/Project_risk_management

Scope Management

In project management, the term scope has two distinct uses: Project Scope and Product Scope.

Scope involve getting information required to start a project, and the features the product would have that would meet its stakeholders requirements.

• Project Scope: "The work that needs to be accomplished to deliver a product, service, or result with the specified features and functions."^[1]

• Product Scope: "The features and functions that characterize a product, service, or result."^[1]

Notice that Project Scope is more work-oriented (the hows), while Product Scope is more oriented toward functional requirements (the whats).

If requirements aren't completely defined and described and if there is no effective change control in a project, scope or requirement creep may ensue.

When a construction site is being built, the constructor raises a fence on the site defining the boundaries of the construction. This process of building a fence is called scoping. Scope management is the process of defining what work is required and then making sure all of that work – and only that work – is done. Scope management plan should include the detailed process of scope determination, its management and its control. This needs to be planned in advance before the commencement of the project during mobilization phase. Project manager must seek formal approval on a well-defined and clearly articulated scope. To identify scope, requirements must be gathered from all stakeholders. Gathering requirements from only a few stakeholders or only the sponsor might lead to incorrect definition of scope. Large projects require more time, effort and resources to gather requirements and thus defining the scope is important. Scope definition helps us make sure that we are doing all the work but only the work included in the scope management plan. Gold plating a project (adding extras) is not allowed. Changes in scope must be taken into consideration all the knowledge areas of project management such as time, cost, risk, quality, resources and customer satisfaction. Integrated change management process is required to approve changes to scope of a project. Integrated Change Management includes updating of Change Request Form by Change Originator and also tracking the change on Change Control Register.

Excerpt from Wikipidea https://en.wikipedia.org/wiki/Scope_(project_management)

Project Management Body of Knowledge (PMBOK)

The PMBOK Guide is the standard for managing most projects most of the time across many types of industries. This standard describes the project management processes, tools, and techniques used to manage a project toward a successful outcome.

This standard is unique to the project management field and has interrelationships to other project management disciplines such as program management and portfolio management.

Project management standards do not address all details of every topic. This standard is limited to single projects and the project management processes that are generally recognized as good practice.

(Excerpt from PMBOK 4th Edition, PMI USA)

Project Management Processes

Project management process involves a number of activities that contribute to overall project completion; these number of activities can be categorized together to form five main processes of project management.

• Project Initiation
• Project Planning
• Project Execution
• Project Monitoring & Control
• Project Closing

Now we will discuss the five processes of project management in bit detail

Project Initiation

The initiating processes determine the nature and scope of the project, If this stage is not performed well, it is unlikely that the project will be successful in meeting the business’ needs. The key project controls needed here are an understanding of the business environment and making sure that all necessary controls are incorporated into the project. Any deficiencies should be reported and a recommendation should be made to fix them.

Project Planning

After the initiation stage, the project is planned to an appropriate level of detail. The main purpose is to plan time, cost and resources adequately to estimate the work needed and to effectively manage risk during project execution. As with the Initiation process group, a failure to adequately plan greatly reduces the project's chances of successfully accomplishing its goals.

Project planning generally consists of

• determining how to plan
• developing the scope statement
• selecting the planning team
• identifying deliverables and creating the work breakdown structure;
• identifying the activities needed to complete those deliverables and networking the activities in their logical sequence.
• estimating the resource requirements for the activities;
• estimating time and cost for activities;
• developing the schedule;
• developing the budget;
• risk planning;

Project Execution

Executing consists of the processes used to complete the work defined in the project plan to accomplish the project's requirements. Execution process involves coordinating people and resources, as well as integrating and performing the activities of the project in accordance with the project management plan. The deliverables are produced as outputs from the processes performed as defined in the project management plan and other frameworks that might be applicable to the type of project at hand.

Execution process group include:

• Direct and Manage Project execution
• Quality Assurance of deliverables
• Acquire, Develop and Manage Project team
• Distribute Information
• Manage stakeholder expectations
• Conduct Procurement

Project Monitoring & Control

Monitoring and controlling consists of those processes performed to observe project execution so that potential problems can be identified in a timely manner and corrective action can be taken, when necessary, to control the execution of the project. The key benefit is that project performance is observed and measured regularly to identify variances from the project management plan.

Monitoring and controlling includes:

• Measuring the ongoing project activities ('where we are');
• Monitoring the project variables (cost, effort, scope, etc.) against the project management plan and the project performance baseline (where we should be);
• Identify corrective actions to address issues and risks properly (How can we get on track again);
• Influencing the factors that could circumvent integrated change control so only approved changes are implemented.

Project Closing

Closing includes the formal acceptance of the project and the ending thereof. Administrative activities include the archiving of the files and documenting lessons learned.

This phase consists of:

• Project closure: Finalize all activities across all of the process groups to formally close the project or a project phase
• Contract closure: Complete and settle each contract (including the resolution of any open items) and close each contract applicable to the project or project phase

Project Management Triangle

The Project Management Triangle is a model of the constraints of project management.

Like any human, undertaking projects need to be performed and delivered under certain constraints. Traditionally, these constraints have been listed as "scope," "time," and "cost".These are also referred to as the "Project Management Triangle". Where each triangle side represents a constraint, its to be noted that one side of the triangle cannot be changed without affecting the others.

   Time   : The time constraint refers to the amount of time available to complete a project. 
   Cost    : The cost constraint refers to the budgeted amount available for the project.
   Scope : The scope constraint refers to what must be done to produce the project's end result.

These three constraints are often competing constraints: 
  - Increased scope typically means increased time and increased cost.
  - A tight time constraint could mean increased costs and reduced scope
  - and a tight budget could mean increased time and reduced scope.

The discipline of Project Management is about providing the tools and techniques that enable the project team (not just the project manager) to organize their work to meet these constraints.

Time

For analytic purposes, the time required to produce a deliverable is estimated using several techniques. One method is to identify tasks needed to produce the deliverables documented in a work breakdown structure or WBS. The work effort for each task is estimated and those estimates are rolled up into the final deliverable estimate.

The tasks are also prioritized, dependencies between tasks are identified, and this information is documented in a project schedule. The dependencies between the tasks can affect the length of the overall project (dependency constrained), as can the availability of resources (resource constrained). Time is different from all other resources and cost categories.

Cost

To develop an approximation of a project cost depends on several variables including: resources, work packages such as labor rates and mitigating or controlling influencing factors that create cost variances.

Tools used in cost are, risk management, cost contingency, cost escalation, and indirect costs .

Scope

Requirements specified to achieve the end result. The overall definition of what the project is supposed to accomplish, and a specific description of what the end result should be or accomplish. 

A major component of scope is the quality of the final product. The amount of time put into individual tasks determines the overall quality of the project. Some tasks may require a given amount of time to complete adequately, but given more time could be completed exceptionally. Over the course of a large project, quality can have a significant impact on time and cost (or vice versa).

Together, these three constraints have given rise to the phrase "On Time, On Spec, On Budget." In this case, the term "scope" is substituted with "spec(ification)."