Project Management Metrics in non project manger terminology:
Every work needs to be tracked , measured to see where we are and what are the next actions required to meet the target/goal. Its same in IT Project Management as well. That's why projects will have metrics, milestones and critical paths.
Metrics are nothing but measurements or facts. They will tell us if we are on track or behind schedule or ahead of schedule or spending the money more than budgeted or have sufficient number of resources etc..
The more important measurements are Schedule Variable and Cost Variance. As the name suggest, these tell us the variance i.e. difference.. If these values are zero that means there is no difference or variance therefore the project is on track... But how do we measure these? and at what point we measure them?
More important point is at what point we measure them.. if we measure them at the end of the project, do we have any value of these.. no right.. because its already too late. Therefore we have to measure them in very frequent intervals.. or at every project milestone at least.. then look back what went right or wrong and forecast if we are going to complete the project in budget and in time ... otherwise take necessary actions...
No how do we measure them...
Lets assume that we have project estimated as 1000 man days... in 100 days.. i.e. we need 10 employees to complete 1000 days work in 100 days.
Lets assume again that we check every 10 days to see if we are on track.
So after 10 days, we checked. By this time, we should have completed 1/10 of the work right.. but we completed 2/10 of work... this is obviously mean we are ahead.. because we completed more that we thought we will complete.. with this phase we would complete total work in 50 days with 10 employees .. I,e, total cost of 500 days... because we assumed simple number, the calculation is so easy but can we follow same process for complex task.. no right.. so need a help of mathematics... so lets put this into project management metrics terminology..
Our total estimation = 1000 man days .. this is called total planned value or Budget At Complete, known as BAC
Our schedule is 10 days
at our first check point, (i.e. after 10 days).. we planned to completed 1/10th of work... so this is called Planned value at this check point.. known as PV. But
actually we completed 2/10th of work... because this is already completed , we earned this... so called as earned value... know as EV...
Now in terms of the cost, the planned cost is 10*10 (10 employees times 10 days) = 100 days.. But we completed 200days worth... i.e. we spent only 50 days to complete 100 days worth.. so the actual cost is only 50 days for the planned value of 1/10th of work.. so the actual cost 50 days also know as AC.
Note: All AC, EV and PV are calculated as number of hours.
Now, how do we calculate schedule variance.. we planned to complete 1/10th worth but completed 2/10th.. i.e. 2/10th - 1/10th = 1/10th variance.. because we are ahead of schedule, the difference is positive... so that formula is SV = EV - PV
Similarly, cost variance CV = EV - AC
Every work needs to be tracked , measured to see where we are and what are the next actions required to meet the target/goal. Its same in IT Project Management as well. That's why projects will have metrics, milestones and critical paths.
Metrics are nothing but measurements or facts. They will tell us if we are on track or behind schedule or ahead of schedule or spending the money more than budgeted or have sufficient number of resources etc..
The more important measurements are Schedule Variable and Cost Variance. As the name suggest, these tell us the variance i.e. difference.. If these values are zero that means there is no difference or variance therefore the project is on track... But how do we measure these? and at what point we measure them?
More important point is at what point we measure them.. if we measure them at the end of the project, do we have any value of these.. no right.. because its already too late. Therefore we have to measure them in very frequent intervals.. or at every project milestone at least.. then look back what went right or wrong and forecast if we are going to complete the project in budget and in time ... otherwise take necessary actions...
No how do we measure them...
Lets assume that we have project estimated as 1000 man days... in 100 days.. i.e. we need 10 employees to complete 1000 days work in 100 days.
Lets assume again that we check every 10 days to see if we are on track.
So after 10 days, we checked. By this time, we should have completed 1/10 of the work right.. but we completed 2/10 of work... this is obviously mean we are ahead.. because we completed more that we thought we will complete.. with this phase we would complete total work in 50 days with 10 employees .. I,e, total cost of 500 days... because we assumed simple number, the calculation is so easy but can we follow same process for complex task.. no right.. so need a help of mathematics... so lets put this into project management metrics terminology..
Our total estimation = 1000 man days .. this is called total planned value or Budget At Complete, known as BAC
Our schedule is 10 days
at our first check point, (i.e. after 10 days).. we planned to completed 1/10th of work... so this is called Planned value at this check point.. known as PV. But
actually we completed 2/10th of work... because this is already completed , we earned this... so called as earned value... know as EV...
Now in terms of the cost, the planned cost is 10*10 (10 employees times 10 days) = 100 days.. But we completed 200days worth... i.e. we spent only 50 days to complete 100 days worth.. so the actual cost is only 50 days for the planned value of 1/10th of work.. so the actual cost 50 days also know as AC.
Note: All AC, EV and PV are calculated as number of hours.
Now, how do we calculate schedule variance.. we planned to complete 1/10th worth but completed 2/10th.. i.e. 2/10th - 1/10th = 1/10th variance.. because we are ahead of schedule, the difference is positive... so that formula is SV = EV - PV
Similarly, cost variance CV = EV - AC
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