Earned Value Management in “Electricity Bill” Type of Projects
Earned value management (EVM) is the control tool used for cost control, which is one of the most important areas in project management. It also provides additional useful information for the schedule variance. When used with progress reporting to determine schedule variance (SV) and schedule performance index (SPI), EVM becomes a highly valuable tool to track both cost and schedule.
In some organizations, especially in the software development area, we come across projects that need to be managed from a perspective of scope, schedule, resources, communication, and so on—but not from a perspective of cost. As a powerful project monitoring and control tool, EVM requires cost to monitor and control the project for early warnings of the performance problems. This presents a significant challenge when a project manager is assigned to a project that has no budget that he or she can work with. This is especially true when all of the resources required by the project are employees and/or contractors of the organization, and the organization allocates the budget on a department-wide basis but not on the individual project level. This also presents a challenge when it comes to forecasting. For example, if additional projects are added to the portfolio, it becomes difficult for the organization to determine how much of the additional costs the department needs to incur.
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