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Earned Value Management

It provides an Insight about the possible problems and opportunities that may arise. This allows the project manager to do precautionary actions to fulfill project requirements. By using FEM. a project team or a company can quickly respond to problems and issues that can hinder a project in meeting its objectives. In the context of earned value there are key measurements that a project manager should keep their attention on. 80th schedule variance and cost variance gives a project manager an overview of the project’s status. Schedule variance is the deviation of time in relation to the planned progress and earned progress.

This helps the project manager to determine whether the project Is behind schedule or If It Is on schedule. On the other hand, cost variance is the deviation between earned value and actual cost of the progress. It determines If the current progress of the project is already over budget or not. There is a study done by Mir and Pennington that tries to link project management performance and project success, “Critical Success Factors is a tool for highlighting key strengths and factors” (Antler, 2008). It can distinguish internal (controllable) and external (uncontrollable) factors.

Mir and Pennington determined factors that

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will encourage project success which are called critical success factors. These factors are PM Leadership, PM Staff, PM Policy and Strategy, PM Partnerships, Project lifestyle management processes, and PM Key Performance Indicators. One of the significant factor that was determined by their study is PM Staff. It emphasizes the increase of PM capability by mangling the potential of project-related human resources (Mir and Pennington, 2013). There are multiple issues that are related to human resources.

Project leader often assume that certain members of the team have specific levels of technical knowledge (Linnet, 2011). Project managers must not forget that there will be gaps in a team’s knowledge. This occurs because people do not reveal what their true capabilities are. 1 OFFS “Quality is integrated into project planning by not only shaping scope and work around customer requirements but also by structuring work around quality’ (Barley, 2005, p. 59). In earned value, quality is the percentage complete of a work according to customer requirements.

According to Crosby (1987) it costs less to get it right the first time. A research done by Xx et al. (2010), explains how FEM. was improved by incorporating Quality Earned Value (Q.V.). In the said research which is entitled “Project integrated management based on quality earned value”, Xx et al. Made his own parameters to compute for the Q.V.. HUH De-yin (1994), introduced the theory and process of Earned Value Method. In HUH De-Win’s research, he amplified the basis work and steps in comprehensive control of cost and schedule.

However, the current Earned Value management theory only involves two factors the cost and the schedule and it does not considered the impact of quality on the schedule and cost (Xx et al, 2010). Ex.’s article established a project management model of Quality Earned Value or Q.V. which can achieve cohesive control of quality, cost and schedule. The Q.V. can then provide correct decisions of project control measures based on the result and its interpretation on based on the proposed index given by Xx et al. Xx et al presented the formula that they came up with to determine the actual quality of the project.

The actual quality formula is given as: Actual Quality – To get the quality index which will be basis for the interpretation was obtained by getting the ratio of the computed Actual Quality and the Budget Quality multiplied by its corresponding weights. Quality Index = AS/BC On the other hand, Resource management is the proper arrangement and deployment of the resources available to a project. A successful project manager must be able to efficiently manage the resources assigned to the project (kinder. Com). Managing resources is a very critical factor behind the success or failure of a project.

Resource management is closely related to time and budget management since creating and sticking to a budget is needed to properly assigned resources to specific activities of a project. One of the main objective of Earned Value Management is to ensure cost and schedule are controlled efficiently. FEM. outputs give adequate information to project managers to manage the project properly and efficiently. Relating resource capability to quality can be an integral aspect incorporated in FEM.. II. Review of Related Literature The Golden triangle can determine the success of a Project management group.

The Golden Triangle is composed of Schlep (time), budget, and scope and the end of it is quality. According to Durum-Groan (2014), The Golden Triangle evaluates a project’s end product. In the article written by Durum-Groan, the triangle was used to relate to Project management success. In addition to that, a project is considered success if the implementation complies with the constraints cost, time, and the perception of quality by the customer. Since quality is subjective and based on the perception of the project manager or customer, Xx et al created an index to quantify quality and incorporated in FEM..

Xx et al stated that current Earned Value Management theory only involves two factors namely cost and schedule and quality impact on cost and schedule is not considered. Not incorporating quality impact creates a quality control deficiency in the current FEM. practice (Xx et al. 2010) Quality According to the study done Joyous et. I (2010), there are some deficiencies in the traditional FEM. being practiced today. The origin of the said discrepancies are unknown however it could be due to an increase of usage of resource or because of an increased product quality.

According to the results of their study, the total progress lag $300,000 but deducting the increased cost due to the increased quality level the total progress only lag $192,200. The total cost also overspent $700,000 but when the increased cost due to increased quality level is deducted the cost is $20,780,000 thus The Q.V. model presented by Xx et al. , considered mutual restrictive and international relationship of quality, cost, and schedule which can reflect the deviations of cost and schedule realistically.

The Q.V. is certainly a helpful wait to improve the project management level and its benefit (Xx et al. , 2010). Resource Capability PM Staff is correlated to project success according to Mir and Pennington (2013). It is one of the most individual independent variable that contributes toward project success. PM Staff is related to training the the relevance of performance (Mir and Pennington, 2013). Resource capability deals with the capacity of the resource to complete the activity. The skill set of the resource may affect the quality of the work done, and the progress of the said activity.

Mir and Pennington (2014) suggested that resource has an impact on project efficiency. According to Kim et. Al. (2003) technical performance requirements can relate to FEM.. Sometimes, a team member’s work may be inadequate. This may be due to misunderstanding of requirements. It can lead to higher costs and longer completion time. According to Linnet (201 1), there is a variation in quality of work because team embers have different levels of skills, ambition, motivation, and energy. It is harder to measure quality of work when it is progress compared to a completed work.

There are times that a team member’s work is inadequate. Ill. Statement of the Problem Obtaining the earned value only takes into account the rate of performance and planned value. It fails to consider the actual capability of the resource and the quality of work. This research aims to incorporate those variables into an equation so that further analysis can be made. ‘V. Theoretical Framework Figure 1 . Theoretical Framework Based on the researched theories, these factors contribute to a better understanding of earned value management. According to Kim et. L. (2003) technical performance requirement can be related to earned value management. This also pertains to the should also be considered based on a study done by Xx & Ghana (2010). With these factored in, a new model will be formulated, CIRCE. V. Conceptual Framework Figure 2. Conceptual Framework Quality score is obtained from the quality criterion. The quality will be based on the project manager’s Judgment. It will be the current quality or actual quality of an activity. The weight of activity is the importance of the activity determined.

Expected/ allowable quality is the “passing mark” of a task/activity which is determined by the project manager. Work rate is based on the rate of work of the resource. It is a time based value. The skill level of the resource is also determined by the project manager. All of this will be used to gain a better insight on cost. VI. Proposed Model A. Resource-Based Earned Value Model The model that will be presented aims to include Resource capability and Quality in Earned Value Management. Resource capability may greatly affect the quality of the reject.

The researchers’ aim to combine the quality model in the study of Xx et al (2010) and the suggestion of Kim et. Al. That technical performance should be included in earned value management. The model is computed by: Where: Wi = importance of the task ICQ = Quality score of the actual work done Rock = Resource capability BSM = Allowable/Budgeted quality EVE = earned value Ri = work rate of the resource SO = Skill level of the resource B. Case Analysis The data are given as follow: Figure 3. Raw Data The results following traditional FEM. are computed using MS Project 2010. Figure 4.

Results of the Raw data using traditional FEM. The researchers created a set of made-up data to simulate the model suggested above. Weight of the task is based on the importance of the task. Actual percentage of quality is assessed by the project manager. Lastly, the capability of assigned resource is based on the ability of the resource or skill. Sample Computation 1. 2 CAR= 0. 5256 CRAVE=O. 5256 * $200 -$105. 13 Once the Car is obtained, it is then multiplied to each FEM.. The current EVE of the done after this step which can be based on the criteria shown in Table 3. Figure 5. Results using the proposed Model

From the formulation given above, it can now be evaluated using the quality index shown below: Table 3. Proposed Resource Capability Quality Index From the results shown in Figure 5, ISRC has a negative value of $272. 572 which means that the cost of the project increased due to decreased quality of the project from the capabilities of the resource. VI’. Recommendation for future studies The researchers recommend to future researchers is that they may want to find a better way to quantify the resource capability in that way, the occurrence of biases on the part of the project manager may be avoided.

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