How do you apply Earned Value Management Successfully?
When should Earned Value
Management be applied in a construction project?
The most accurate answer is:
every construction project
Every construction project
considers two key concepts in Earned Value Management viz.
·
Measurable work improvement
·
Build a performance measurement baseline or
PMB to track and evaluate the performance
Listed
below are some benefits of Earned Value Management
·
Easy to adapt and understand
·
Simplifies construction project management
·
Highly scalable
·
Can be applied at various levels viz.
program, project, and portfolio
·
Helps project managers make informed
decisions based on an accurate forecasting ability
·
Fast project execution based on systems
supported by Earned Value Management Systems (EVMS)
What
are the prime building blocks of Earned Value Management?
·
Earned Value Management works on certain work
principles or blocks viz.
·
Defining an accurate Work Breakdown Structure
or WBS
·
Identify the organization & its
stakeholders
·
Add various project subsystems
·
Evaluate overheads
·
Integrate WBS & OBS
What
is a Work Breakdown Structure?
Work Breakdown Structure can
be simply defined as breaking down a large project into manageable sections
viz. work packages
The WBS serves as a
principal focal point for
·
Scheduling
·
Budgeting
·
Controlling
·
Project Planning
·
Monitoring
·
Using
WBS, accurate estimates can be projected
Characteristics
of a well-planned WBS can be listed as –
·
The
8 – 80 rule – professional practices suggest that each work
package should not be less than 8 hours of effort & should not exceed 80
hours of effort
·
Rule
of 100 % - the WBS needs to cover the entire scope or
100% defined scope
·
Must
be well presented – the WBS has to be transparent, clear, and
well-presented either as a list or tree structure
·
Build
a WBS dictionary – a WBS dictionary supports the formation of a
robust Work Breakdown Structure
·
Coding
your work – a well planned WBS needs unique coding to
control & monitor the project
·
Forming
a great team – build a great cross-functional team to
develop good quality WBS
·
Progressive
monitoring & evaluation – developed as the scope
evolves through a perpetual progression
When
is the WBS prepared?
·
The WBS is immediately prepared after the
project scope is finalized
·
It evolves based on the scope definition
·
The WBS gets updated when a schedule is
developed
Who
is responsible to create the WBS?
·
The Project Manager is responsible to create
a robust Work Breakdown Structure with a cross-functional team
How
is the WBS prepared?
·
Identify the scope and objectives of the
project
·
Identify the PBS or Product Breakdown
Structure or the complete Product Scope is broken down into smaller units
·
For example, a PBS for a construction project
can be broken down into – living spaces, exterior, etc. This further can be
broken down into dining rooms, visitor rooms, bedrooms, car porch, main gate,
garden, etc.
·
Identify the Work Package or understand how
the product is going to be built
·
Build WBS levels
·
Build WBS dictionaries to answer critical
questions viz.
I.
What are predecessor activities?
II.
What are successor activities?
III.
What are the standards that need to be followed?
IV.
What are the precautionary measures that need
to be followed?
V.
What are the solutions or instructions to
deal with unseen circumstances?
What is Organization Breakdown Structure?
·
Project strategies are based on planning,
organizing, and delivery of large and complex projects
·
An organization contains various people or
stakeholders with multiple interests
·
An OBS contains roles and responsibilities
that need to be allocated accurately throughout the project lifecycle
Steps to create a successful OBS
·
Identify key stakeholders and project
managers in the organization
·
Prepare a robust project execution plan
·
Develop an OBS for the project
·
Identify requirements based on project
controls
·
Join the WBS with the OBS
·
Build a Responsibility Assignment Matrix or
RAM – identify the roles and responsibility of each person
I.
In a RAM the column lists the tasks, and the
row lists the people or stakeholders
II.
It is also known as a RACI chart viz.
Responsible, Accountable, Consulted and Informed
III.
Responsible – Person or Persons responsible
for tasks
IV.
Accountable – Person or Persons who are
accountable to complete the tasks
V.
Consulted – Knowledge and expertise to
complete the task successfully
VI.
Informed – Person who needs to be apprised or
aware of its successful completion
·
Enhance the OBS, WBS, and various Control
Accounts
Wrapping
it up
·
Building projects are undertaken based on
high-risk conditions, and they hold a high risk during the construction stage
·
As cost & time are key indicators on
project outcomes, it is important for project managers to plan, control, and
monitor project progress for effective implementation of construction projects
·
In terms of EVM, key drivers to monitor
performance are budgets and schedules
·
The adoption of EVM in the planning phase has
a significant impact on the monitoring and control phase
·
EVM is a well-known method that collects and
analyzes large information stacks to monitor project progress
For
more information: +91 7350255855
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