Tree Trimming Project
To establish if Wil is over or below the cost or schedule of his project, Wil requires doing two things; determine the actual expenses occurring during the project and the planned cost of the project at any point in the project life. However, Wil is only having the value of the project at that particular time(earned value), while he does not account for the cumulative cost. The earned value(E.V) of the project is given by
However, Will does not state the actual cost of the partial payment for the contract with the crew boss to shear a portion of the trees in the field. To establish if the project is over, on, or below the schedule, Wil will use Schedule performance indicator (SPI=Eearned value/ Planned value) to determine if Wil is below schedule. Moreover, the cost performance indicator (CPI=Earned Value (EV)/Actual cost (AC)) indicates if the project is over cost or under cost. However, all the cost performance indicator and scheduled performance indicator cannot be obtained since there is no planned value of the project.
Wil is using the correct method to achieve the earned value of the project, but he is not utilizing fundamental components of earned value management such as the planned value and the actual cost. Wil’s evaluation of the project using earned value corresponds to the standard method for determining the earned value. First, he gets the percentage of the work completed, by taking the exact sheared trees and divides by the total number of trees initially to be sheared, and then he multiplies the ratio he obtains with the baseline cost.
Even though Wil calculates the earned value of the project accurately, he is not using earned value management to evaluate the project performance such us being over budget or under budget or being ahead or behind the schedule.
Since Wil has the earned value of the project, he can set the cost and schedule variance by first obtaining the planned value of the project. To achieve the expected value of the project, Wil has to have a clear outline of what percentage of completion he should achieve at any point in the project life. For example, for each week in the project life, the work done should complete 5% of the project, meaning that, by the 8th week, the planned project completion should be 5%*8=40%. After obtaining the planned value, to get the schedule variance, he will use the following formulae, schedule variance= Earned Value-Actual cost. If the figure obtained is positive, it shows how the value in which the project is ahead, and if it is negative, the figure displays the value of how much the project is behind schedule. To obtain the cost variance, Wil has to keep a record of all current cumulative costs that he is incurring to get the actual cost. Cost variance (CV)= Earned Value (EV)-Actual Cost(AC). If CV is negative, it shows by how much the project has cost overrun and if positive, it shows how the project cost has underrun.
For Wil to control any changes in the shape of the shearing from his customers, he has to determine the variance at completion (VAC) and Estimate at Completion. To obtain variance at completion, we add accumulated cost of working project (ACWP) and Expected actual cost(EAC). Also, to get variance at completion (VAC) subtract expected actual cost from the budgeted actual cost. Variance at cost and Estimate at completion will help Wil identify the variance and extra cost for the completion of the budget which will make him adjust his current working schedule or current expenditure to prevent a huge variance in cost at the completion of the project.
Wil can accelerate his project by reducing the period taken after the payment for shearing the trees, whereby he stays up to 5 days before counting the trees cleared. Also, he can accelerate the project by increasing the task force that is clearing the shears by looking for a contract that will provide the most human capacity to clear the shears.