Project 4

“Using Earned Value Management for Project Managers” Course Project

Part One: Create an Action Plan for Effective Meetings

As you have seen in this module, it’s critical for project managers to plan, schedule, and run effective meetings, yet it’s not uncommon for team members and contributors to resist attending. You will now create an action plan to guide your efforts on the job so that you can plan to get the best value out of meetings and make sure they serve your projects well.

Answer the following questions, using as much space as you need.

Complete the grid below.

Implementing Project Control

Describe how you think you can use project meetings as one of your key implements of project control.

Key Business Problem(s)

Identify one problem regarding your project meetings that you hope to resolve. What is one goal that you need to achieve more effectively through meetings?

Strategies

Identify which strategy or strategies from this module you plan to use to improve your results.

Steps

What are the specific actions you will take to bring about better results in planning and executing meetings? Be as specific as you can in outlining how you will proceed.

Timeline

Identify a timeline for implementation. What will you do (or will you have your project team do) in the next month? Over the next quarter?

Measurement/Results

How are you going to measure your results or demonstrate that your efforts have had a positive impact? Outline your measurement strategies here.

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CEPM504: Using Earned Value Management for Project Managers
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Part Two: Calculate Planned Cost, Actual Cost, and Earned Value

In this part of the course project, you will work with an existing budget from a completed project. You can choose any budget: one from your past work; one from another position; one that another project manager created, if you are not currently in a role in which you typically create budgets yourself; or one from a project outside of your current position. You may attach your budget at the end of this project if you choose.

Answer the following questions, using as much space as you need.

1. For this particular project, what were the total planned costs? Describe briefly the process used to arrive at a planned cost estimate.

2. What were the actual costs? If there was a variance, what do you think caused it? Explain briefly some of the key reasons you think there was a variance between planned costs and actual costs.

3. Examine this past project budget through the lens of resource scheduling and project duration. We know that cost variance has implications for the schedule and for the project’s time to completion. Were there signals in place that indicated to you that based on cost variance, the project schedule would be affected? Describe what you observed (or, alternately, what you wish you had observed).

4. Referring to the work that was done on any completed project: go back to your project schedule and choose a date midway through the project. What was the planned value at that point in time? Alternately, if you don’t have access to the data required to answer this, describe in your own words how you would go about computing planned value for any hypothetical project midway through completion and how doing so would help improve your practice of project management.

5. Refer to any current project underway and its budget. What is the earned value as of today? Alternately, if you don’t have access to the data required to answer this, describe in your own words how you would go about computing earned value for any hypothetical project midway through completion and how doing so would help improve your practice of project management.

Part Three: Forecast Project Cost

Answer the following questions, using as much space as you need.

Refer back to the sample project examined in module two and imagine that everything is executed perfectly. Imagine that you’re now in time period 17. Activity 4-5 is now complete as scheduled, and Activity 3-6 has also just completed, two periods ahead of schedule. Imagine that Resource A cost $6,000 for each period it was active on Activity 3-6: 5 periods, not the 7 periods at $5,000 per period expected. You are now ahead.

Using the methods presented in this module, answer the following questions.

1. What is the cost variance?

2. What is the new forecasted total cost at completion if you use Method 1?

3. What is the new forecasted total cost at completion if you use Method 2?

CEPM504: Using Earned Value
Management for Project

Managers
What you’ll do

Identify strategies for computing planned cost, planned
value, and earned value
Examine strategies for conducting project meetings in a
way that they serve their purpose
Examine Schedule Performance Index and Cost
Performance Index so that you can use them to your
benefit
Forecast project cost using standard methods

Course Description

By calculating how much work has been
completed on your project as progress goes on, you can update
your forecasts regarding how much work is left to do and how long
it will actually take to finish. At the same time, by calculating how
much money you have already invested in your project, you can
forecast how much more money you will have to spend in order to

CEPM504: Using Earned Value Management for Project Managers
Cornell University

finish it. However, to really understand whether a project has gone
off track, we need to connect these two elements, cost and the
amount of work completed, together. That is where earned value
comes in. Earned value helps you understand if the value of the
work completed is consistent with the funds expended. It also
gives you a mechanism to forecast what it might cost to complete
the project, given past performance. Hence, performing earned
value calculations puts you in a position to make informed
decisions as to corrective actions. In this course, from Linda K.
Nozick, Director and Professor of Civil and Environmental
Engineering at Cornell, you will learn about Earned Value (EV) and
how it can be productively used to control a project.

This course is designed for seasoned project managers who seek
an introduction to EVM to achieve better practical results for
implementing project controls, including financial controls and
schedule controls. The calculations presented here are meant for
any experienced project manager, including those who are not
engineers, to apply to any size project. Students in this course
must already have a foundational understanding of standard
project management tools and processes including project
networks, project budgets and schedules, and work breakdown
structures.

Linda K. Nozick
Professor and Director of Civil and
Environmental Engineering
College of Engineering, Cornell

CEPM504: Using Earned Value Management for Project Managers
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University

Linda K. Nozick is Professor and Director of Civil and
Environmental Engineering at Cornell University. She is a past
Director of the College Program in Systems Engineering, a
program she co-founded. She has been the recipient of several
awards including a CAREER award from the National Science
Foundation and a Presidential Early Career Award for Scientists
and Engineers from President Clinton for “the development of
innovative solutions to problems associated with the transportation
of hazardous waste.” She has authored over 60 peer-reviewed
publications, many focused on transportation, the movement of
hazardous materials and the modeling of critical infrastructure
systems. She has been an associate editor for Naval Research
Logistics and a member of the editorial board of Transportation
Research Part A. She has served on two National Academy
Committees to advise the US Department of Energy on renewal of
their infrastructure. During the 1998-1999 academic year she was
a Visiting Associate Professor in the Operations Research
Department at the Naval Postgraduate School in Monterey,
California. Professor Nozick holds a B.S. in Systems Analysis and
Engineering from the George Washington University and a M.S.E
and Ph.D. in Systems Engineering from the University of
Pennsylvania.

CEPM504: Using Earned Value Management for Project Managers
Cornell University

Table of Contents

Meet Your Class

1. Meet Your Class

Module 1: Implement Project Controls through
Meetings

1. Module Introduction: Implement Project Controls through
Meetings

2. Watch: What Are Project Controls?
3. Watch: Project Meetings Done Right
4. Tool: Best Practices for Meetings
5. Getting Great Value from Meetings
6. Course Project, Part One: Implementing Project Controls

through Meetings
7. Module Wrap-up: Implement Project Controls through

Meetings

Module 2: Calculate Planned Cost, Actual Cost, and
Earned Value

1. Module Introduction: Calculate Planned Cost, Actual Cost,

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and Earned Value
2. Tool: The Work Breakdown Structure Tutorial
3. Watch: The Project Budget
4. Top-Down or Bottom-Up?
5. Watch: Understanding “Planned Cost”
6. Watch: Understanding “Actual Cost”
7. Watch: Using “Planned Value”
8. Watch: Determining “Earned Value”
9. Course Project, Part Two: Calculate Planned Cost, Actual

Cost, and Earned Value
10. Module Wrap-up: Calculate Planned Cost, Actual Cost, and

Earned Value

Module 3: Forecast Project Cost

1. Module Introduction: Forecast Project Cost
2. Watch: Understanding Schedule Variance
3. Watch: Understanding Cost Variance
4. Watch: Examine the Schedule Performance Index
5. Watch: Examine the the Cost Performance Index
6. Watch: SPI and CPI: Why Do You Need Both?
7. Examine SPI and CPI
8. Watch: How Variances and Performances Indexes are Helpful
9. Watch: Forecasting Cost Method 1, Using Earned Value
10. Watch: Forecasting Cost Method 2, Using CPI
11. Course Project, Part Three: Forecasting Project Cost
12. Module Wrap-up: Forecast Project Cost
13. Read: Thank You and Farewell

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Meet Your Class
1. Meet Your Class

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Meet Your Class

Using the discussion below, please introduce yourself to the class.
We’re all eager to learn more about you. What do you hope to
learn from the course? What is your profession? Where are you
located? Please respond in a text format or as a video using the
film strip icon that is available when you click “Reply.”

(If posting a video response, we recommend that you do not use
your cell phone as most do not use Flash software which is
required to convert the recording.)

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CEPM504: Using Earned Value Management for Project Managers
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Module 1: Implement Project
Controls through Meetings

1. Module Introduction: Implement Project Controls through
Meetings

through Meetings
7. Module Wrap-up: Implement Project Controls through

Meetings

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Module Introduction: Implement Project
Controls through Meetings

The success of any project depends, in large part,
on how well you can plan and monitor the work
throughout the project life cycle. When project
managers talk about “project controls,” they may

be referring to a broad range of tools, systems, or methodologies,
but all controls have one aim: to minimize the gaps between plans
and execution. In this module, you will examine how you can use
one tool, project meetings, to deliver better results. Project
meetings tend to be an area in which many project managers
struggle to get full team support and helpful participation. Why is
this so? What can you do to get better results?

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Watch: What Are Project Controls?

As a project manager, a large part of your responsibility is not to sit
back passively and collect status reports, but to actively track
progress against goals, measure costs, monitor spending and
schedules, and identify when corrective measures are needed. All
of this has to be done on an iterative basis, and you’ll use tools to
do it.

Transcript

Project controls are a really important element of project
management. Project controls are actually all of the metrics,
processes and tools that we use to understand the current status
of a project, and we use it through the entire course of the project
to understand how it’s performing. These controls also let us
identify when corrective action is needed and what the magnitude
and type of corrective action that is necessary.

So as you can imagine from these definition, project controls are
actually very broad in scope. There are a lot of things that fall
under project controls. For instance, all the stuff on scheduling,
schedule tracking, schedule updating, everything we’ve talked
about related to risk management including identification,
assessment, and the design of interventions, along with everything
associated with cost estimation and controlling costs.

There are actually very few things that are actually outside the

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scope of project control if you think carefully about it. Things like
communication management are not in the scope of project
controls. All the human elements that arise in project management,
those are really not in the scope of project controls. All the things
associated with quality control. Those are not within the scope of
project controls. But many, many important things are within that
scope. Actually, good project management and good project
control, as we know, begins at the very beginning of the project. At
the very beginning of the life cycle. You can’t have a project in
good control if you don’t understand the scope, for instance, of that
project.

So specifying the skill and doing that very carefully, is actually part
of having good project controls. Also understanding how you’re
going to deal with changes as they come up in the project. All the
issues associated with change management, this is part of project
controls. If we don’t know how to do that well, we’re clearly not
going to be able to be in much control of our projects. Also project
controls identify the establishment of milestones, and how we
manage working towards those milestones. Also, project controls
includes all the estimation and tracking elements, and updating of
the cost estimates. All of these things are really important to a well-
executed project over time. Notice that all of these elements of
project controls, they’re not just, you establish them once and you
walk away. They all require monitoring.

So you’re not just identifying the controls and putting them in
place, but you’re monitoring those controls and you’re using those
controls for corrective action to understand when you need

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corrective action and what the magnitude of that corrective action
needs to look like. If you don’t have any monitoring, then you really
don’t have any control over the execution of your project. And the
same is true for budget. So budgetary controls. All this idea of you
establish a budget, you manage to that budget, you understand
when there are deviations from that budget, you update that
budget. All of those things are very important to establish in good
project controls.

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Watch: Project Meetings Done Right

Project meetings are a necessity. Valuable information gets
shared. So why do so many team members resist or even resent
project meetings? Professor Nozick discusses how you, as a
project manager, can make sure that your meetings are actually
serving project goals and delivering value.

Transcript

The design and implementation of project controls will require
project meetings. The exercise of those controls will also require
meetings. Those meetings will be to collect data. They will be
required to address issues as they arise, so that you can—when
project controls show a signal of something not going right, that
corrective action, the right corrective action can be identified and
taken. So project meetings are going to wind up being a very
important element of the process. Some folks on your teams may
feel that the meetings are interfering with progress. This is not an
uncommon feeling in the project management domain.

So we need to think very carefully about how to conduct those
meetings so that that feeling doesn’t permeate the entire group.
How do we wind up with that sort of a feeling? Well if the meetings
aren’t scheduled and conducted properly, this idea of feeling like
they’re a waste of time can creep in. How does this start to happen
in more precise terms? Well, it happens usually very innocently.
You start having meetings and you don’t stop them when the

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purpose of those meetings has been achieved, right? Or you
schedule a meeting in haste as a reaction to an issue and you
don’t think carefully through the goals of the meetings. So
meetings can certainly be necessary to address an issue that
crops up, there’s no doubt about that, it can be very important to
addressing an issue that crops up.

But before the meeting occurs, it’s really important to understand
what are the goals of that meeting, be able to communicate that
goal carefully to everybody so they can understand i, and then
there needs to be a plan in place as to how that meeting will be
conducted so those goals are achieved, okay? And another way
meetings can turn out to feel like they’re a waste of time is when
they’re much too long. So you’ve got to think carefully about how
long a meeting should be to achieve its intended purpose. So, in
fact, all meetings regardless of the motivation, they need to have a
clearly established purpose, and that purpose has to be able to be
understood by all of the attendees. That will include meetings for
which the sole purpose is just to collect data.

Implementing and using project controls, will require the collection
of data. So you’re going to wind up having meetings with
individuals, or collections of individuals, so you can continue to
update those controls to understand what those metrics look like.
Also, project meetings are going to wind up being necessary to
keep people informed so that they can actually work as a team.
That is one of the main mechanisms to coordinate activity. Also, to
clarify scope. As projects go on, there may be questions about is
this inside or outside of the scope? And so, there’ll be meetings

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that only to disseminate decisions to people, so they can
understand them and they can ask questions.

So, meetings have very important purposes, and they need to
occur, but they need to occur in such a way that people feel that
they’re a value to their time, that they’re useful. And also we do
have to pay a little bit of attention to the social dynamic of our
project. We don’t really think of it in these terms, but meetings
actually do lead to a social dynamic on a project. And that social
dynamic is also important to productivity, so that your team really
functions as a team. And this aspects of meetings is actually
particularly important when you talk about younger people to the
team, newer members of the team. And also for folks working on
parts of the project that maybe more solitary in nature. These
meetings are one of the main ways of social interacting with
people. And when you interact more with people in both a social
and a technical level the work turns out to be more effective,
conducted more effectively.

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Tool: Best Practices for Meetings

Use the Best Practices for
Meetings tool

In order to implement project controls effectively, you need to be
able host project meetings that serve their intended purpose. Use
the list of best practices here to guide your efforts and make sure
your project meetings are delivering value for the project and the
team members. This will help avoid wasted effort and the
perception that project meetings are a waste of valuable time.

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Getting Great Value from Meetings
Discussion topic:

It’s not uncommon for team members to complain that project
meetings are a waste of time. What do you do to make sure that
your project meetings serve their intended purpose? Create a post
in which you share your best tip or strategy for getting great value
from project meetings.

Instructions:

Click Reply to post a comment or reply to another comment.
Please consider that this is a professional forum; courtesy and
professional language and tone are expected. Before posting,
please review eCornell’s policy regarding plagiarism (the
presentation of someone else’s work as your own without source
credit).

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Course Project, Part One: Implementing Project
Controls through Meetings

As you have seen, running effective project meetings is critical to
achieving the goals that your organization has set. In this part of
the course project, you will create an action plan to guide your
efforts on the job as you plan, host, and run project meetings with
your team and stakeholders. Completion of this project is a course
requirement.

Instructions:

Download the “Using Earned Value Management for Project
Managers” course project.
Complete Part One.
Save your work.
You will not submit your work now. You will submit your completed
project at the end of the course for instructor review and credit.

Before you begin:

Review the grading rubric for this assignment. Please
review eCornell’s policy regarding plagiarism.

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Module Wrap-up: Implement Project Controls
through Meetings

As you have seen, the success of any size project is dependent on
how well you can plan and monitor the work throughout the project
life cycle. There are many routes to implementing strong project
controls, including network scheduling and Gantt charts, among
other tools and techniques, but all controls have one aim: to
minimize the gaps between plans and execution. In this module,
you examined how you can use one tool, project meetings, to
deliver better results. Project meetings tend to be an area in which
many project managers struggle to get full team support and
helpful participation. A one-size-fits-all approach will not work here.
You have to find a way to be successful within the context of your
project, your team, and your organization. You have now created
an individualized action plan to guide your efforts in this regard.

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Module 2: Calculate Planned
Cost, Actual Cost, and Earned

Value
1. Module Introduction: Calculate Planned Cost, Actual Cost,

Cost, and Earned Value
10. Module Wrap-up: Calculate Planned Cost, Actual Cost, and

Earned Value

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CEPM504: Using Earned Value Management for Project Managers
Cornell University

Module Introduction: Calculate Planned Cost,
Actual Cost, and Earned Value

You have seen the ways in which you can
implement better project controls just through
handling routine meetings with the project team
and stakeholders more effectively. Now you will

examine the ways in which you can monitor and control progress
through the project life cycle by comparing your plans to actual
work accomplished and monitoring for variances. You will define
“earned value,” and look at the ways that you can calculate
planned cost, actual cost, and earned value, and then practice
using this information to your benefit as you make project
decisions.

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CEPM504: Using Earned Value Management for Project Managers
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Tool: The Work Breakdown Structure Tutorial

The Work Breakdown Structure
Tutorial may refresh your memory

To complete this course, it will be important for you to have
familiarity with creating a work breakdown structure, which is a
standard project management tool. As a seasoned project
manager, you are probably already very familiar with work
breakdown structures. In the event that you have not worked with
them recently, Professor Nozick has prepared this tutorial to
refresh your memory about their purpose and creation. If you
frequently work with work breakdown structures, you may not need
this refresher.

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Watch: The Project Budget

There’s more than one way to develop a project budget, as
Professor Nozick explains. Done correctly, a project budget starts
at the very beginning of the life cycle of the project, when you
identify the number and type of tasks to be done, and the skilled
people, materials, and facilities needed. All of these inputs help
you develop your project budget.

Graphic adapted from “Designing to Reduce Construction Costs,” Paulson, Boyd; ASCE
San Diego conference; April, 1976.

Transcript

So, the project budget reflects the magnitude and the timing of the
work to be done over the course of the project. If you look at this
graph here you can see that a cost curve generally has kind of an
S-shaped focus to it. At the very beginning, you spend relatively
slowly on a project, then as it really reaches its full stride, you wind
up spending quite rapidly on the project. This figure also is meant
to remind you that over time the influence, the decisions made at
the early part of the project have a very large influence on how the
project will turn out in the end, how the execution will occur. So if
you look at the other curve that’s on this graph this is just a
reminder that says, those early decisions, you make a number of
decisions that really hem you in for the future of the execution of
the project. If those decisions are good, you’re on a really good
trajectory. If those decisions are not quite as good, you might not

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be on quite as good on trajectory.

So how do we develop a project budget? Because a lot of this
module is all about controls, project controls. And financial controls
and schedule controls are really important elements to that. So
let’s talk for a few moments about developing the project budget.
Actually the developing of the project budget starts at the very
beginning of the lifecycle of the project, when you start to develop
that work breakdown structure. Remember back to when we
described the work breakdown structure. That leads to the
identification of the tasks in the project.

When you identify each of the tasks, you’re identifying the amount
of work that needs to be done. You’re also including in that
identification what kinds of people, and the number of them that
will be needed to do it. What materials you will need to do it, as
well as what facilities will be necessary. Maybe what
subcontractors will be required. So this will actually provide quite a
lot of input to what the budget is going to look like. We take those
tasks and we translate those into a resource-feasible schedule
over time. Once we have that resource-feasible schedule we can
now estimate what the planned budget is going to be, or the
budget at completion. How much it will cost to do the entire project.

This is called bottom-up budgeting. There’s a another idea that
had developed a budget for a project it’s more of a top down
structure. And this sort of a structure assumes that the managers
actually know how much the project should cost and then they
allocate money downwards to each of the tasks. So those are the
two kind of competing ideas of how you can think of building up a

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Cornell University

project budget.

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Top-Down or Bottom-Up?
Discussion topic:

Professor Nozick discussed two methods of deriving a project
budget: “top-down” and “bottom-up.” Which of these do you
prefer?

Create a post in which you make a case for the method you use
more frequently, and explain what you see as the benefits of using
that method.

Instructions:

…

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