Earned Value Metrics

Earned Value Metrics

Earned value metrics are the planned value of the completed work. Earned value is often defined as the budgeted cost for the completed work. Performance is quantified against a combination of the time-phased value of the project that needs to be completed, which is the budgeted cost of the scheduled project. In an earned value management system, it is computed as the difference between the elements quantifying project schedule variance. According to Blokdyk (2020), earned value management system is the collection of templates, tools, procedures, and policies used to do earned value management. Earned value metrics are used to explain project performance by determining a project’s likely outcome and comparing the project budget and progress with the actual project costs. In addition, project managers use earned value metrics to compute burn rates or performance indices for schedule and cost performance, which inform the project’s performance relative to the initial plans. Accordingly, when the indices are applied in future projects, project managers can forecast the project’s performance, assuming that the burn rates will remain the same

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References

Blokdyk, G. (2020). Earned value management a Complete Guide – 2020 edition. 5starcooks.

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Thomas Johnson is a timber and Christmas tree farmer who attended a project management class last year during his off-season. When the subject of earned value (EV) came up in class, Thomas wondered if he was utilizing the concept properly.

Earned Value Metrics

In mid-October, Thomas hires and trains crews who work to shear fields of Christmas trees for the upcoming holiday season. In this practice, each worker uses a large machete to shear the branches of the tree into a cone-shaped tree, which is the desire of most customers. Thomas operates his business in the following:

He counts the number of Christmas trees in the field, which is approximately 24,000.
He agrees with customer Tom Jones to a $30,000 lump sum contract for shearing all trees in the field.
He receives a partial payment about 5 days after starting the project. He then estimates the actual number of sheared trees to be approximately 6,000. The actual number of trees is taken as a per cent of the total to be sheared, multiplied by the per cent completed by the total contract amount for the partial payment [(6,000/24,000 total trees = 25% of trees trimmed), (.25 * $30,000 total payment = 5 days payment of $7,500)].

Write a 1,050- to 1,400-word paper that thoroughly answers the following questions based on the case study:

Is Thomas over, on, or below schedule? Explain.
Is Thomas using earned value as he was taught in his project management course? Explain.
What can Thomas do to set up a schedule and cost variance?
What method do you suggest for Thomas to use for any changes in project scope, such as the shape of the tree that Tom wants?
It appears Thomas is using the traditional method of project management. How can he accelerate the completion of this project that he has contracted for using the Agile methodology?
Analyze Thomas’s project performance on this project, assuming the original quote given to the customer was an estimate.
Format your paper consistent with APA guidelines.

Respond to the following in a minimum of 175 words:
Basic calculations indicate how the project is performing.
Discuss earned value metrics. How is it used to explain project performance?