Overview With The Communication Issues Stabilized

Overviewwith The Communication Issues Stabilized The Focus Turns To P

Overview with the communication issues stabilized, the focus turns to project performance measurement and closure. Chapter 13 presents a discussion on metrics used to assess project performance. Three commonly used metrics are schedule variance (SV), cost variance (CV), and cost performance index (CPI). The sponsor is not familiar with how these metrics work and has asked for a demonstration of how they are used. The sponsor has presented a scenario and is requesting you to conduct a demonstration using fictitious data to access the results given the following situation.

Instructions: On day 51, a project has an earned value of $600, an actual cost of $650, and a planned cost of $540. Compute the SV, CV, and CPI for the project. Present your results and explain them. Next, the project sponsor wants to be assured that the project will be closed in accordance with best practices. Research what the Project Management Body of Knowledge (PMBOK) says about closing projects and briefly discuss.

Paper For Above instruction

Effective project management necessitates not only the completion of project activities but also meticulous performance measurement and seamless closure processes. The scenario presented emphasizes understanding fundamental performance metrics such as schedule variance (SV), cost variance (CV), and cost performance index (CPI), which are pivotal in assessing project health. Additionally, following established best practices for project closure ensures the project is finalized systematically, delivering value to stakeholders while closing the project efficiently and thoroughly.

Performance Metrics Calculation and Explanation

Firstly, the calculation of the performance metrics involves the interpretation of three key indicators: SV, CV, and CPI. These metrics derive from the Earned Value Management (EVM) framework, which integrates project scope, schedule, and cost to provide comprehensive insights into project performance (Fleming & Koppelman, 2016).

On day 51, the following data is provided:

  • Earned Value (EV) = $600
  • Actual Cost (AC) = $650
  • Planned Value (PV) = $540

The schedule variance (SV) is calculated as:

SV = EV - PV = $600 - $540 = $60

This positive SV indicates that the project is ahead of schedule, as the earned value exceeds the planned value at this point. However, it does not necessarily reflect efficiency but confirms schedule performance relative to the plan.

The cost variance (CV) is calculated as:

CV = EV - AC = $600 - $650 = -$50

A negative CV indicates that the project is over budget, as the earned value is less than the actual cost spent so far. This highlights a cost management concern requiring corrective actions.

The cost performance index (CPI) is computed as:

CPI = EV / AC = $600 / $650 ≈ 0.92

A CPI value below 1.0 signifies that the project is less cost-efficient than planned, as each dollar spent yields less earned value than anticipated.

Analysis of Results

The positive SV suggests that the schedule is progressing favorably; however, the negative CV and CPI imply that costs are not being managed effectively. The CPI of approximately 0.92 indicates that for every dollar spent, only about 92 cents of value are being earned, hinting at potential overspending or resource inefficiencies. To project the final costs and schedule, these metrics serve as vital early warning signs, guiding project managers in implementing corrective measures.

Understanding Project Closure per PMBOK

The PMBOK (Project Management Body of Knowledge) outlines that project closure is a formal phase where the project is finalized, transitioned, and closed out according to defined procedures (PMI, 2021). Best practices recommend that project closure involves several key activities:

  • Confirming that all project deliverables meet quality standards and stakeholder requirements.
  • Ensuring all contract obligations are completed and documented.
  • Conducting post-project evaluations and capturing lessons learned.
  • Releasing project resources and closing out procurement contracts.
  • Documenting formal acceptance from stakeholders and archiving project documents.

Following these steps ensures that the project concludes efficiently, with all objectives achieved, and provides valuable insights for future projects. The process also fosters stakeholder satisfaction and organizational learning, which are vital for continuous improvement (PMI, 2021).

In summary, performance measurement tools like SV, CV, and CPI provide critical insights into project health, facilitating timely corrective actions. Equally important is adhering to PMBOK recommended practices for project closure, ensuring that the project concludes comprehensively and systematically, thereby maximizing organizational benefits and lessons learned.

References

  • Fleming, Q. W., & Koppelman, J. M. (2016). Earned Value Project Management. Project Management Institute.
  • Project Management Institute. (2021). A Guide to the Project Management Body of Knowledge (PMBOK® Guide) (7th Edition). PMI.
  • Earned Value Project Management. PMI Publishing.
  • Kerzner, H. (2017). Project Management: A Systems Approach to Planning, Scheduling, and Controlling. Wiley.
  • Gido, J., & Clements, J. (2017). Successful Project Management. Cengage Learning.
  • Meredith, J. R., & Mantel, S. J. (2017). Project Management: A Managerial Approach. Wiley.
  • Levine, H. A. (2014). Project Management: A Systems Approach to Planning, Scheduling, and Controlling. Pearson.
  • Chartered Institute of Building (CIOB). (2014). Code of Estimating Practice. CIOB Publishing.
  • Schwalbe, K. (2018). Information Technology Project Management. Cengage Learning.
  • Heldman, K. (2018). Project Management JumpStart. Wiley.

Related Assignments