New Marketing Mailing Earned Value Analysis

Introduction

According to Ayn Rand, pride is the acknowledgement of the idea that people are their highest value and, like all of man’s values, it must be earned. The earned value analysis is a vital topic in project management, particularly in measuring a specific project’s success and progress in an objective way. For people wanting to measure their projects’ performance, this technique is excellent in helping them to make informed decisions. This paper looks at Jennifer and Ben’s case scenario to determine if the made the right steps. They turned their status report for a newly approved mailing activities. Jennifer feels that there is nothing to worry and they have done well in their tasks. However, this paper looks if Jennifer and Ben had sufficient control over this idea and if their assumptions on the project were right. As such, an earned value analysis (EVA) will be performed below.

 

 

 

 

 

 

 

 

 

 

 

 

Project Metrics

Variances

Cost Variance (CV)

Complete the following tasks:

1. The CV metric is an integral metric in project management. It determines the financial performance of a given project. It also compared the project’s budget, set earlier, before the project began and what has been spent. It is computed by determining the difference between the budgeted cost of work done and the actual cost of work done. An idea CV is when the actual cost of work done is equivalent to the budgeted costs. However, such a scenario is almost impossible in most cases. But, CV can take a negative or positive value depending on how closely the actual budget markets the budgeted costs. The reason of knowing a particular project’s CV is to help the management track the project’s finances as the project progresses. Thus, the following formula is used to find CV.

CV = EV - AC

Where,

CV: Cost Variance

EV: Earned Value

AC: Actual Costs

 

2. Calculating the CV.

Earned Value (EV) = $580,    Actual Costs (AC) is $600          

CV = $580 - $600 = - $20

 

3. The importance of the CV for the new marketing mailing scenario.

As already discussed above, a CV is important because it helps an organization to track a project’s costs as it progresses. The calculated CV above is -$20, which has a negative value.

4. When the EV is less than the AC, it then gives negative CV, which implies that the project is over budget and its schedule variance (SV) would be negative. A negative SV would further suggest that the project is far behind the schedule.

Schedule Variance (SV)

1. The SV metric’s method is given as SV = EV – PV. It denotes how much behind or ahead a given project is and measures if the project is on track. In particular, a project’s success is measured based on the actual progress and against the expected progress. It is often used by the program managers and other experts to establish how best to use their time and remaining resources in attaining set goals. The following acronyms are defined as follows.

SV = EV - PV

Where,

SV: Schedule Variance

EV: Earned Value

PV: Planned Value

2. Computing the SV using the formula given above.

Earned Value (EV) = $850,    Planned Value = $1200      

SV = $850 - $1200 = - $350

 

3. Explaining SV’s importance to the new marketing mailing scenario.

The above SV helps in determining whether a project is ahead or behind the planned schedule. In this case, the SV has a negative value, which means that the project is far behind the planned schedule.

4. It is vital to notice that when the earned value is less than the planned value, then it results in a negative schedule variance (SV).

Performance Indices

Cost Performance Index (CPI)

1. In particular, CPI is extremely important because it indicates the association between the earned value and actual costs of a project.

CPI = EV/AC

Where,

CPI: Cost Performance Index

EV: Earned Value

AC: Actual Costs

2. Calculating CPI using the formula given above;

 

Earned Value (EV) = $580, Actual Costs (AC) is $600          

CPI = $580/$600 = 0.9667

3. What the above CPI value suggest.

A CPI value of 0.9667 indicates for every project dollar spent, only $0.9667 in earned value.

 

 

4. For an increasing CPI value, the company is supposed to implement better cost control mechanisms and controls, including establishing efficient cost reduction practices.

Schedule Performance Index (SPI)

1. An SPI indicates the association between the earned value and the planned value.  

SPI = EV/PV

Where,

SPI: Schedule Performance Indicator

EV: Earned Value

PV: Planned Value

2. Calculating the CPI using the above provided formula.

 

Earned Value (EV) = $850, Planned Value (PV) = $1200      

SPI = $850/$1200 = 0.7083

3. What the above value suggests.

A SPI value of 0.7083 indicates for every dollar of work the project planned to accomplish at that point in time, $0.7083 worth of work was completed.

4. For an increasing SPI value, the organization is supposed to implement better project planning policies and practices.

 

 

 

 

 

Earned Value Management (EVM) Methodology

1. Explaining the EVM methodology using class resources

This technique uses three vital elements, including cost, time, as well as scope. It, thus, compares the planned and actual values of a given project. Nevertheless, it avoids using accounting systems in finding actual costs. Hence, this methodology can be either done using individual names of project team members or by using generic categories.

2. In particular, two project metrics are necessary when computing EVA. The first metric is the percentage of the project completion – denoting the percentage of the amount of completed project. The second metric is the task budget, which denotes the amounts of funds or resources available for the project’s execution.
3. I would compute the project’s EVA by using the formula – EVA =% project completed * the task budget.
4. Usually, there are several limitations associated with EVA, including the following.
   1. It depends on the correctness of information, which therefore, limits EVM’s scope.
   2. It cannot be entirely relied upon in measuring a project’s performance.
   3. Data can be manipulated to produce a desired earned value for a project.

 

 

 

 

 

 

Conclusion

As discussed above, this paper sought to determine whether Jennifer and Ben’s assessment of the given project offered a clear picture about its performance. However, the above analysis proves otherwise because the project has a negative SV.