Multiple Projects Performance Analysis using the Earned Value Method

The assumption made here is that anyone reading this example has some background in Earned Value Management. If not please consult this link Earned Value Management for related literature and references.

For the purpose of illustrating this method, I have created a table containing three hypothetical projects with their respective baselines. Each baseline is defined in terms of duration, effort and cost for each single project.

The idea is to carry out a performance control half way down the timeline for each project and verify that all projects are in line with their respective plan. This could be a major milestone or a check point. Normally, there are many planned check points throughout the life cycle of a project, but for the purpose of this example only one point is taken into consideration.

This method uses the actual cost of the work done, at a given point, and the planned cost to calculate and compare values for cost and schedule variations. This information is also calculated in terms of cost and schedule performance indexes.

The actual cost factor is what really links the operating company to the ongoing project and could comprimise the project or the company or both if not properly monitored and controlled.

The following table summarizes the calculations needed for graphing and deducing the results relative to project performance at a given point.


Cost and Schedule Variances

Variances: positive variance is good; negative is bad.

Situation at half time:
Project A: CV is less than 0 and SV is greater than 0; the cost of the actual work exceeded the value of the work done (the project is over budget and ahead of schedule).
Project B: CV is less than 0 and SV is less than 0; the amount of work done is inferior to the budgeted amount.
Project C: CV is greated than 0 and SV is greater than 0; the cost of the actual work is inferior to the value of the work done and the amount of work produced exceeded the budgeted amount.

Atlhough Project A is ahead of schedule, it's using up too much money too fast with respect to the plan. The risk is that it will use up all the budget before completion of the project.


Cost and Schedule Performance Index


Performance index: greater than 1 is good, less than 1 is bad.

A Simple Method for Keeping Track of Project Performance using the Earned Value Method

The Earned Value method is a little different from the classical approach for keeping track of project performance. It has an extra variable that represents the actual cost of the work done at a given point, and it is obtained from the organization 's accounting system. This data is compared with the earned value to show the amount of work that was planned with what was actually accomplished to determine if cost and schedule performance is as planned. So, it's possible, at any given point, to compare how much actual work has been completed against how much is expected to be completed and graph the results for quick referencing.

Example of Graph


Reading the above curve

CV is less than 0 : the cost of the actual work exceeded the value of the work done.
SV is greater than 0 : the quantity of work done is greater than the budgeted.
CPI is less than 1 : spending more than the value of the work done.
SPI is greater than 1 : more work done respect to the budgeted (ahead of schedule).

The above curve is just for illustration purposes and it was produced with Excel. It's possible to use a different  curve and normalize all numbers so that the data will be uniformely distributed over the graph.

A Global PMO Work Model

Today’s globality can help bring many advantages to an organization and, thanks to the Internet, it’s easy to design, implement a work model for managing projects globally.
Many companies have activities all over the world and need to maintain a company wide standardisation and  an overall co-ordination through the process of monitoring, controlling and reporting all activities. This is important in order to maximize results (profits), minimize risks, optimize use of resources and make improvements in communication.

The above diagram is proposing an integrated global framework model that can provide on-going feedback for alignment and adjusting changes through a structured and distributed effort system.

The framework is simply governed by a on-going "process-improvement-process" management system and serves as the point of reference for all project/engagement management activities. It contains things such as how to set up a project/engagement, project approval processes, planning and estimation techniques, management methodology (structuring and managing projects throughout its life cycle, set of formal deliverables that should be produced, common terminology, etc.), risk management process, issues management process, etc. 

The process-improvement-process management system manages the whole framework in a continuous way, by elaborating feedbacks from the global team and producing output to continuously improve processes, communication and performance and, moreover, assuring alignment within the framework.

Cultural impact in an international context 

Although cultural differences should not constitute a problem there might be some differences in people's approach, but  this can be overcome by experience, understanding and flexibility.