4.2 Earned Value (12:14)

Summary

The video explains how to assess the progress of a project using Earned Value Management (EVM). It focuses on a project with tasks in creative, strategy, and IT, with updates after two weeks. The analysis compares actual performance against the planned schedule and budget, highlighting variances such as delays in creative and IT tasks, and underspending on strategy. The Schedule and Cost Performance Indices (SPI and CPI) are used to assess project status. While the project is slightly behind schedule and over budget, corrective actions are necessary to ensure it stays on track.

Takeaways

• 😀 The project begins on January 19th with a total duration of 12 weeks and a budget of $8,500.
• 😀 The critical tasks for the project include creative work, strategy development, and IT implementation.
• 😀 The project involves monitoring progress with the help of status updates and performance indices like SPI (Schedule Performance Index) and CPI (Cost Performance Index).
• 😀 By February 1st, after two weeks, the project has completed some work but is behind schedule and over budget in certain areas.
• 😀 The creative task is 25% complete, but only 40% of the planned work should have been done by this time, resulting in a delay of approximately 0.75 weeks.
• 😀 The strategy task is 75% complete, showing that it is ahead of schedule and under budget.
• 😀 The IT task is 25% complete, which is behind schedule and has overspent its budget, with $1,000 spent instead of the planned $750.
• 😀 The key performance indicators reveal that the project is behind schedule (SPI = 0.63) and over budget (CPI = 0.50) in some areas, indicating a need for corrective actions.
• 😀 Visual tools like Gantt charts help project managers track progress and quickly identify issues in terms of time and cost.
• 😀 The overall project health suggests a slight delay of 0.75 weeks and an additional $425 in spending, which is manageable but requires monitoring and potential adjustments.

Q & A

What is the purpose of the project update analysis in this video?

The purpose of the project update analysis is to assess the project's progress after two weeks, determine if it's on track with the schedule and budget, and identify any potential issues early in the process.

How many tasks are involved in the startup project example?

The startup project example includes eight tasks in total.

What are the main tasks and their associated costs in the project?

The main tasks include creative (5 weeks, $1,000), strategy (2 weeks, $500), and IT system setup (4 weeks, $3,000). Other tasks are mentioned but not detailed in the script.

What is the planned duration for the entire project?

The planned duration for the entire project is 12 weeks.

What progress was made after two weeks in the project?

After two weeks, the creative task is 25% complete, the strategy task is 75% complete, and the IT task is 25% complete.

What was the actual expenditure at the two-week mark for each task?

At the two-week mark, the project has spent $500 on creative, $300 on strategy, and $1,000 on IT.

What key performance indicators (KPIs) are used to assess the project's progress?

The key performance indicators used are the Schedule Performance Index (SPI) and the Cost Performance Index (CPI). SPI measures schedule performance, while CPI evaluates cost efficiency.

How is the Schedule Performance Index (SPI) calculated?

SPI is calculated by dividing the Earned Value (EV) by the Planned Value (PV). For the creative task, SPI is 0.63, indicating the project is behind schedule.

What does a CPI of 0.50 indicate about the project's cost performance?

A CPI of 0.50 indicates that the project is overspending. For the creative task, the actual spending is twice the earned value, meaning the project is 50% over budget.

What is the projected impact on the project's completion time and cost based on the current performance?

The project is projected to finish 0.75 weeks later than planned and will cost approximately $9,000, which is $500 over the original budget of $8,500.

What steps should be taken to address the delays and budget overruns in the project?

To address the delays and budget overruns, the project team should continue monitoring progress closely, focus on getting back on schedule with critical tasks, and explore ways to reduce costs or allocate additional resources to meet the project goals.