Applying Earned Value Management in Christmas Tree Farming- Thomas Johnsons Case Study

Applying Earned Value Management in Christmas Tree Farming- Thomas Johnsons Case Study

Is Thomas over, on, or below schedule? Explain.

In five days, the calculated aggregate number of trees sheared will be 6000, just as Thomas had estimated. The estimate of 6000 trees is then calculated as a percentage of the total number of trees to be sheared by the end of the contract, 24000. The result, 0.25 multiplied by 100 percent, will be  25%. After five days of shearing, the amount payable to Thomas Jones will be 25% of the total agreed lump sum of $30,000, which is a quarter of the lump sum. 0.25 multiplied by the $30,000 amounts to $7500, which Thomas had estimated to be paid after five days of work. This implies that Thomas is on schedule and not over or below.

Is Thomas using earned value as he was taught in his project management course?

Earnings are an important technique for reporting progress and measuring the performance of teams. It helps integrate schedule and cost; thus, the project manager knows whether the project performance aligns with the planned schedule and is within budget (Bryde et al., 2018). Given that the Earned Value combines cost and time-related data and integrates them into one metric, we must consider Thomas’ schedule in determining whether or not he is applying EV optimally. The case study provides that Thomas is keen on using EV by applying the data he has on the number of trees on the farm, the number of trees to be sheared, and the number of days within which 25% of the trees need to have been shorn. This implies that Thomas is optimally putting earned value to use. In five days, he gets a quarter of the trees sheared, and in approximately twenty days, the work should be completed. Assuming that mid-October is the 15^th, the work will be done by the 8^th of November, which will allow Tom Jones to package, transport, and market the trees for the holiday season before the 1st of December.

What can Thomas do to set up a schedule and cost variance?

Cost variance is established to determine whether or not the work is above or below schedule. The actual progress is measured against the expected progress. Thomas should calculate this by subtracting the amount of work done from the amount of work that was scheduled to be completed in a given duration of time. As it stands, the amount of work to be done in five days would be 6000 trees sheared, and it would cost $7500. Provided that there is more than enough time before the holidays, Thomas could set up a schedule that would allow him to use the time resource well without straining himself and the workers. The point is to achieve a zero result on schedule variance, meaning that he will not be ahead or behind schedule; i.e.,

Earned Value (EV) – Planned Value (PV) = Zero SV

He can also set up checkpoints before the lapse of a particular duration of time. These checkpoints should be the reference points in measuring the amount of work done within the period extending to that specific moment. In this case, the reference point of five days can be extended to six days to complete the same amount of work, that is, 6000 trees sheared at the cost of $7500.

On the other hand, the cost variance is concerned with whether or not the budget is over or under the amount supposed to be costed. It is the difference between the actual cost incurred and the planned/budgeted cost at a given time on a project. The cost variance would be set up by computing the cost of inflation against the budgeted cost of work, $7500.

What method do you suggest Thomas use for any changes in project scope, such as the shape of the tree that Tom wants?

Thomas should embrace flexibility in regard to small changes that may arise in the course of work. It is also essential that he specifies in the agreement that significant changes or modifications must be covered by additional costs charged to Tom. For example, if the workers have to redo the shape of trees after the five-day lapse, then a 10 – 20% increment in the cost will be charged. The duration of work after five days will be stretched to cover the new needs. However, Thomas has to meet all client needs as the client will be paying based on each additional 25% of work done and quality delivered. To secure the workers’ morale, it will be helpful for Thomas to get all the right details and clear any doubts before signing the contract with Tom, that is, to create a structured approach for defining, evaluating, and approving the preliminary scope of work. Documenting approval of any changes is evidence when demanding compensation.

Such is to avoid any significant changes arising and affecting the workers. Thomas should also have a good grasp of the project’s technicality and be able to handle changes. If any significant change occurs, such as fewer trees required, he should focus on the project’s foundation. Focusing on the foundation will limit the scope of change and effectively manage any changes (Fageha & Aibinu, 2013).

A work breakdown structure will help Thomas work backward from the desired outcomes and expected benefits or goals of the project. A WBS is essential in documenting and validating the full scope of work. It also allows communication that any changes are charged and can only be done upon formal request in writing, getting agreed upon and approved.

It appears Thomas is using the traditional method of project management. How can he accelerate the completion of this project that he has contracted to use the Agile methodology?

Agile methodology allows the project manager, in this case, Thomas, to streamline his project operations, optimize on time, and get the best from his team. To avoid delays due to customer corrections, Thomas should pay keen attention to Tom’s needs. These needs include the cost that Tom is willing to pay and the quality and quantity of work to be delivered. It is easy to be derailed by doing what he thinks should be done and not what the customer asks for.

The agile methodology brings efficiency to the table; both the human and other physical resources are supposed to be up to the task. Thomas should assign a team consisting of only the people he is sure will deliver the quality and requirements of the customer. Instead of using large machetes, Thomas should invest in high-speed electronic blades that reduce the time spent sharing a single tree. Good machinery will simultaneously reduce the volume of the workforce needed to complete the work on time and save on the cost of labor.

A work breakdown structure is essential for Thomas to accelerate the completion of the project as he can define the project scope and subdivide it into small bits or into work bundles that will make the team handle the work faster and more efficiently. It also gives Thomas and his team a good vision of the project goals for each step and instills the commitment to meet the expectations.

Finally, Thomas would keep the communication channels more open to encourage increased collaboration and feedback between himself, the team, and the client, Tom. Open communication means that the project manager is kept on alert at each step of the project.

Analyze Thomas’s project performance on this project, assuming the original quote given to the customer was an estimate

Despite using a traditional method of project management, Thomas’s performance on the project was good. Good performance is demonstrated by using the estimated resources well and not overspending. The cost of work done in five days illustrates that Thomas used the estimated payment as it was supposed to be used and could still use the same amount if it were the amount budgeted for the project.

References

Bryde, D., Unterhitzenberger, C., & Joby, R. (2018). Conditions of success for earned value analysis in projects. International Journal of Project Management, 36(3), 474–484. https://doi.org/10.1016/j.ijproman.2017.12.002

Fageha, M. K., & Aibinu, A. A. (2013). Managing project scope definition to improve stakeholders’ participation and enhance project outcome. Procedia – Social and Behavioral Sciences, 74, 154–164. https://doi.org/10.1016/

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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.

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 approximately 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 percent of the total to be sheared, multiplied by the percent 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 Thomas use for any changes in project scope, such as the shape of the tree that Tom wants?
It appears Thomas is using the traditional project management method. How can he accelerate the completion of this project, which he has contracted to use the Agile methodology?
Analyze Thomas’s project performance on this project, assuming the original quote given to the customer was an estimate.