Project managers struggle to get accurate project status information on time. Same is the case with owners, PMCs, different engineering disciplines, portfolio managers and program managers. The frequency of receiving project status information ranges from a week to a month, even with frequent follow ups. Resulting in delayed corrective actions. The cost of the corrective actions are directly proportional to the difference between the corrective action date and the date on which the problem happened. For example, a requirements related error which is detected and corrected during the requirements phase itself is the most effective and cheapest. The same error when corrected during the design phase is going to cost ten times more, and in the construction phase it will cost hundred times. Again, there is the question of accuracy. Lack of on time and accurate project progress information for project management decision making is the single biggest problem project managers face world over. The solution to this problem is the adoption of automated project progress monitoring using earned value management principles. What is Earned Value Management?
The two ratios which project managers should track constantly to know the health of their projects are Schedule performance index (SPI) and the Cost performance index (CPI). If both the SPI and the CPI of the project is >=1, then the projects are doing well schedule wise and cost wise. The ability to monitor these two ratios frequently and take immediate corrective actions increases the effectiveness of project managers, which in turn increases the profitability and predictability of projects.
The three basic building blocks of an automated earned value management system are;
1. Activities and their associated costs spread over a period of time.
2.Systems and procedures to update the project progress and cost information
3.Systems and procedures to access and analyze this information without much delay
The point no 1 above is accomplished with the help of work breakdown structures, cost baselines and schedules. The point No.2, Systems and procedures to update the project progress and cost information are generally accomplished by updating data manually which invites delay and inaccuracy. A smarter approach to this would be to provide predefined weights to milestones with automated workflows which will eliminate the need for manual status updates. As and when the milestones or sub-milestones are accomplished, the progress gets updated automatically.
Project managers are able to make right decisions quickly with the help of automated EVM systems. With the forecasting ability of automated EVM systems, project managers get more opportunities to prevent problems before they occur.