Limitations And Issues Of Earned Value Project Management

Project Performance Analysis

Earned Value (EV) = BAC x Percentage of Work Completed = $2,100,000 x 26% = $5,46,000

Cost Variance (CV) = EV – AC = $5,46,000 – $6,50,000 = – $1,04,000

Schedule variance (SV) = EV – PV = $5,46,000 – $6,00,000 = – $54,000

Cost Performance Index (CPI) = EV / AC = $5,46,000 / $6,50,000 = 0.84

Schedule Performance Index (SPI) = EV / PC = $5,46,000 / $6,00,000 = 0.91

EAC = BAC / CPI = $2,100,000 / 0.84 = $2,500,000

EAC = AC + (BAC – EV) = $6,50,000 + ($2,100,000 – $5,46,000) = $2,204,000

EAC = AC + [(BAC – EV) / (CPI x SPI)] = $6,50,000 + ($15,54,000 / 0.7644) = $2,682,967.032

Earned Value (EV) = BAC x Percentage of Work Completed = $2,100,000 x 38% = $7,98,000

Cost Variance (CV) = EV – AC = $7,98,000 – $6,50,000 = $1,48,000

Schedule variance (SV) = EV – PV = $7,98,000- $6,00,000 = $1,98,000

Cost Performance Index (CPI) = EV / AC = $7,98,000 / $6,50,000 = 1.227 = 1.28

Schedule Performance Index (SPI) = EV / PC = $7,98,000 / $6,00,000 = 1.33

EAC = BAC / CPI = $2,100,000 / 1.28 = $1,640,625

EAC = AC + (BAC – EV) = $6,50,000 + ($2,100,000 – $7,98,000) = $1,952,000

EAC = AC + [(BAC – EV) / (CPI x SPI)] = $6,50,000 + ($13,02,000 / 1.7024) = $1,414,802.631

In Project 1, the Cost Variance (CV) is – $1,04,000. Since, the CV is less than 0, Project 1 is over budget. In Project 2, the Cost Variance (CV) is $1,48,000. Since, the CV is greater than 0, Project 2 is under budget.

In Project 1, the Cost Performance Index (CPI) is 0.84. Since the CPI is less than 1; Project 1 is over budget. In Project 2, the Cost Performance Index (CPI) is 1.28. Since the CPI is greater than 1; Project 2 is under budget.

In Project 1, the Schedule Variance (SV) is – $54,000. Since the SV is less than 0; Project 1 is behind schedule. In Project 2, the Schedule Variance (SV) is $1,98,000. Since the SV is greater than 0; Project 2 is ahead of schedule.

In Project 1, the Schedule Performance Index (SPI) is 0.91. Since the SPI is less than 1; Project 1 is behind schedule. In Project 2, the Schedule Performance Index (SPI) is 1.33. Since the SPI is greater than 1; Project 2 is ahead of schedule.

In Project 1, EAC is $2,500,000, $2,204,000 and $2,682,967.032 respectively. In Project 2, EAC is $2,500,000, $2,204,000 and $2,682,967.032.

Limitations of Earned Value Project Management

Therefore, considering the project performance, it can be concluded that the Project 1 is over budget and is running behind schedule whereas the Project 2 is under budget and is running ahead of schedule.

There are several limitations of earned Value Project that can be observed while conducting a project. The limitations associated with the project are-

The Earned value management only monitors that the project is on time or not. The project manager checks whether a particular work is being completedwithin the stipulated time or budget or not. However, the quality of the project cannot be detected while the project is in progress. The quality of the project can only be measured onlyafter the entire project gets completed.

Thus, the quality of the project can be addressed at the time of hand over. If the client is not satisfied or the project fails, then it can be concluded that the project manager and the associated stakeholders of the project have not worked well. In the other scenario, if the project becomes successful, then it can be concluded that the project manager and the stakeholders have done the work efficiently.

If the employees are trainedin Earned Value Management, confusions will arise among those employees to choose the best mathematical formula. Some employees can suggest using a different mathematical formula while some other employees can suggest using a different project track. Some Earned value Management formula represents projectactual budget and the completion, while another formula represents the cost variance and the estimate of project completion. Moreover, the earned value management cannot be used on a continuous basis on a particular project. The Earned Value Management is applicable to smaller projects and simple projects. Earned Value Management also does not specify what is exactly needed for the project to achieve a definite functionality.

Confusions and conflictions among the stakeholders can be addressed at the time of the execution of the project. It is the responsibility of the project manager to prepare a project plan early and must take approval from the stakeholders. Otherwise confusions will arise.

iii. In an enterprise all the employees are not trained in Earned Value Management, Thus Earned Value Management is out of scope for certain employees or stakeholders. The stakeholders require appropriate training so that they can use the Earned Value Management effectively otherwise the project will fail. The project stakeholders understand the charts and not the complex mathematical formula. The stakeholders expect the project manager to explain the project plan in charts and simple steps. In this way, they can acknowledge the project deliverables.

Addressing Communication Conflicts

Thus, the communication between the project manager and the stakeholders must be smooth and straightforward, and the stakeholders should understand the project deliverables. The stakeholders like the simple graphs and chart and not the complicated mathematical formula, the limitation can be addressed while the project manager explains the project plan and the budget figures to the stakeholders.

There are issues related to CPI calculation and SPI calculation. CPI remains same for the entire project until and unless AC or EV changes in a significant way. CPI depends on the AC for the accuracy. CPI will give inappropriate value if AC excludes all the appropriate costs and the payments. Again, the SPI can give unreliable value if any ahead-of-schedule noncritical task outweighs any behind-of-schedule critical task.

The issues related to CPI and SPI can be addressed at the time of the project execution. The stakeholders can acknowledge thee issues. 

Fulton Hogan has more than 80-year’s expertise in mining, civil construction and land development infrastructure. They carry out their operations in South Pacific, New Zealand and Australia. Julius Fulton and Robert Hogan in Dunedin founded the company in the year 1933. Fulton Hogan reported an annual profit of NZ$96.5 million. They have currently over 1000 employees in Australia working on Australia construction projects. They have over 5000 employees working in New Zealand, and those employees are working on New Zealand construction projects. Recently they have taken the responsibility of revised construction of the Auburn Stadium.

Jordan-Hare Stadium was previously known as Auburn Stadium. Auburn Stadium is the playing venue for Auburn’s football team. The stadium is located on the campus of Auburn, Alabama. The current seating capacity of Auburn Stadium is 87, 451. The Stadium is known as the 10^th largest stadium in the NCAA.

Background               The Director of the Auburn Stadium has decided to refurbish the Auburn Stadium. However, due to lack of stadium construction resources like steel, lumber, sand and cement, the project is left unfinished. Some stakeholders have failed to deliver their best, and the quality of the project degrades. The project manager decides to make some alterations in the stakeholder list. The project manager wants to initiate the unfinished task and want to finish the refurbishment work of the stadium. The stadium construction project is scheduled for 3 years. The project is already running 2 months late. Moreover, due to lack of construction resources and skilled labourers the construction project suffers. To repair stadium roof and floor and to manage all the resources and the skilled labourers the project will be delayed extra 1 month. The project manager has developed a revised project plan. The stakeholders will follow the project plan, will work accordingly, and will complete the construction project. Objectives · To arrange all the construction materials required for the construction like steels, lumbers, sand and cement · To alter unskilled workforce with a skilled workforce · To finish the task as early as possible Scope               The project manager has been given the responsibility to refurbish the Auburn Stadium. The project manager has prepared a revised project plan for the project. The project plan will contain the following summary tasks, which the stakeholders need to follow. The primary tasks that need to be carried out by Fulton Hogan Pty Ltd, Revised Documentation Review, Bids and Contracts Revision, Construction Project Backlog. The stakeholders will require about one and a half month to clear all the backlogs associated with the project. After the clearance of the backlog, they will set up utility service of the stadium. Later they will carry out the improvement works for the Auburn Stadium. The stakeholders will install the hardware, paint the stadium and finally will clean the Auburn Stadium. In this way, they will prepare the final project. Key Stakeholders                 Fulton Hogan Pty Ltd Construction Department, Fulton Hogan Pty Ltd Construction Subcontractor, Fulton Hogan Pty Ltd Mechanical Subcontractor, Civil Engineer, Builder, Field Superintendent, Auburn Stadium Sponsor, Wood Machinist, Project Manager, Mason, Electrician, Plumber, Sales Department, Sediment Controlling Inspector, Cleaning Staff, Content Writer, Law Officer, Fire Extinguishing Staff, Painter and Decorator are the stakeholders associated with the project. Project Milestones  Task Name Expected Start Auburn Stadium Construction Revised Plan Fri 13/04/18       Milestone 1: Completion of Stadium Construction Reinitiating by Fulton Hogan Pty Ltd Thu 26/07/18       Milestone 2: Completion of Revised Document Review Thu 13/12/18       Milestone 3: Completion of Bids and Contracts Revision Thu 06/02/20       Milestone 4: Completion of Construction Project Backlog Thu 09/01/20          Milestone 5: Completion of Setting Up of Utility Service of Stadium Thu 16/04/20       Milestone 6: Completion of Improvement Works for Auburn Stadium Thu 30/07/20       Milestone 7: Completion of Hardware Installation Thu 24/09/20       Milestone 8: Completion of Painting of Stadium Thu 17/12/20       Milestone 9: Completion of Cleaning of Auburn Stadium Thu 04/02/21       Milestone 10: Completion of Project Thu 08/04/21 Project Budget  Task Name Cost Auburn Stadium Construction Revised Plan $255,640.00    Stadium Construction Reinitiating by Fulton Hogan Pty Ltd $36,360.00    Revised Documentation Review $47,560.00    Bids and Contracts Revision $69,000.00    Construction Project Backlog $17,520.00    Post-Construction Stadium Works $27,080.00       Setting Up Utility Service of the stadium $27,080.00    Improvement Works for Auburn Stadium $27,600.00    Hardware Installation $10,240.00    Painting of the Stadium $8,640.00    Cleaning of Auburn Stadium $4,200.00    Project Closure $7,440.00 Approval Signatures [Name], Project Client [Name], Project Sponsor [Name], Project Manager

Project Integration Management involves collection of procedures that are needed to assure that the projects’ elements are coordinated. The project plan defines list of activities. At first, the sales manager prepares the revised sales agreement, after that the project manager will prepare the contract plans for the stadium. The project manager will revise the contract specifications for the construction of the stadium. Later the project manager will finalise the plan for the constructing the Auburn Stadium, will finalise the specifications required for the stadium construction. The civil engineer will print the design of the construction. The revised review of bids will be done by the construction department of Fulton Hogan. Again, the construction subcontractor will carry out the revised permits for the construction of Auburn Stadium Construction. The field superintendent will visit the site and will supervise the site. All the project activities must be conducted one after another and they are interrelated. After the revised documentation review, bids and contracts revision, the construction project backlog will be covered.

Limitations of CPI and SPI

The sales manager will order the extra steel, extra lumber, order sands and cements. The masons and the builders will rectify the defects in the roofs and the floors. The project manager will rearrange the stakeholders and will appoint for the project. The utility services of the stadium will be set up the stakeholders. The plumber will set up the water supply system. The electrician will set up the electric supply at Auburn Stadium. The mechanical engineer will set up the hardware for the stadium. The stadium will be painted. Finally the cleaning staff will clean the stadium.

WBS	Task Name	Duration	Start	Finish
1	Auburn Stadium Construction Revised Plan	156 wks	Fri 13-04-18	Thu 08-04-21
1.1	Stadium Construction Reinitiating by Fulton Hogan Pty Ltd	17 wks	Fri 13-04-18	Thu 09-08-18
1.2	Revised Documentation Review	24 wks	Fri 29-06-18	Thu 13-12-18
1.3	Bids and Contracts Revision	60 wks	Fri 14-12-18	Thu 06-02-20
1.4	Construction Project Backlog	6 wks	Fri 29-11-19	Thu 09-01-20
1.5	Post-Construction Stadium Works	15 wks	Fri 03-01-20	Thu 16-04-20
1.5.1	Setting Up Utility Service of the stadium	15 wks	Fri 03-01-20	Thu 16-04-20
1.6	Improvement Works for Auburn Stadium	15 wks	Fri 17-04-20	Thu 30-07-20
1.7	Hardware Installation	8 wks	Fri 31-07-20	Thu 24-09-20
1.8	Painting of the Stadium	12 wks	Fri 25-09-20	Thu 17-12-20
1.9	Cleaning of Auburn Stadium	7 wks	Fri 18-12-20	Thu 04-02-21
1.10	Project Closure	9 wks	Fri 05-02-21	Thu 08-04-21

Task Name	Duration
Auburn Stadium Construction Revised Plan	156 wks
Stadium Construction Reinitiating by Fulton Hogan Pty Ltd	17 wks
Revised Sales Agreement	4 wks
Revised Contract Plans for the Stadium	7 wks
Revised Contract Specifications for Constructing the Stadium	6 wks
Revised Documentation Review	24 wks
Finalising Plans of Constructing Auburn Stadium and Preparation of Documents	7 wks
Finalising Specifications Required for the Stadium Construction	7 wks
Printing Design of the Construction	4 wks
Bids and Contracts Revision	60 wks
Revised Review of Bids	4 wks
Subcontractor Revised Agreements for Conducting Construction	5 wks
Revised Permits for Auburn Stadium Construction	5 wks
Requirements Meet for Sediment Control Inspection	6 wks
Revised Issuing Grading Permit	4 wks
Revised Pay Permit Approval for Auburn Stadium Construction	4 wks
Revised Site Work	4 wks
Lot Clearance	5 wks
Construction Project Backlog	6 wks
Ordering Extra Steel for Completing the Construction	2 wks
Ordering Extra Lumber for Completing the Construction	2 wks
Ordering Sand and Cements for the Construction Purpose	2 wks
Rectifying the defects in Roof and Floors	3 wks
Stakeholder Rearrangement	1 wk
Post-Construction Stadium Works	15 wks
Setting Up Utility Service of the stadium	15 wks
Setting Up Water Supply System	4 wks
Setting Up Electric Supply at Auburn Stadium	6 wks
Setting Up Mains Gas Supply at the Auburn Stadium	4 wks
Telecommunications Set Up at Auburn Stadium	5 wks
Improvement Works for Auburn Stadium	15 wks
Auburn Stadium Hard Landscaping Plaza edge	5 wks
Setting Up Pathways, Roadways and Drainage	5 wks
Hardware Installation	8 wks
Steel Doors Installation	4 wks
Door Installation for the stadium Washroom	4 wks
Painting of the Stadium	12 wks
Trim Coating	6 wks
Auburn Stadium Drywall Coating	6 wks
Cleaning of Auburn Stadium	7 wks
Project Closure	9 wks

Task Name	Cost
Auburn Stadium Construction Revised Plan	$ 255,640.00
Stadium Construction Reinitiating by Fulton Hogan Pty Ltd	$ 36,360.00
Revised Sales Agreement	$ 4,000.00
Revised Contract Plans for the Stadium	$ 14,840.00
Revised Contract Specifications for Constructing the Stadium	$ 12,720.00
Revised Documentation Review	$ 47,560.00
Finalising Plans of Constructing Auburn Stadium and Preparation of Documents	$ 14,840.00
Finalising Specifications Required for the Stadium Construction	$ 14,840.00
Printing Design of the Construction	$ 4,160.00
Bids and Contracts Revision	$ 69,000.00
Revised Review of Bids	$ 3,680.00
Subcontractor Revised Agreements for Conducting Construction	$ 4,600.00
Revised Permits for Auburn Stadium Construction	$ 5,200.00
Requirements Meet for Sediment Control Inspection	$ 6,240.00
Revised Issuing Grading Permit	$ 4,160.00
Revised Pay Permit Approval for Auburn Stadium Construction	$ 4,160.00
Revised Site Work	$ 11,360.00
Lot Clearance	$ 4,600.00
Construction Project Backlog	$ 17,520.00
Ordering Extra Steel for Completing the Construction	$ 2,000.00
Ordering Extra Lumber for Completing the Construction	$ 2,000.00
Ordering Sand and Cements for the Construction Purpose	$ 2,000.00
Rectifying the defects in Roof and Floors	$ 10,320.00
Stakeholder Rearrangement	$ 1,200.00
Post-Construction Stadium Works	$ 27,080.00
Setting Up Utility Service of the stadium	$ 27,080.00
Setting Up Water Supply System	$ 2,880.00
Setting Up Electric Supply at Auburn Stadium	$ 4,800.00
Setting Up Mains Gas Supply at the Auburn Stadium	$ 7,200.00
Telecommunications Set Up at Auburn Stadium	$ 9,000.00
Improvement Works for Auburn Stadium	$ 27,600.00
Auburn Stadium Hard Landscaping Plaza edge	$ 9,200.00
Setting Up Pathways, Roadways and Drainage	$ 9,200.00
Hardware Installation	$ 10,240.00
Steel Doors Installation	$ 3,520.00
Door Installation for the stadium Washroom	$ 6,720.00
Painting of the Stadium	$ 8,640.00
Trim Coating	$ 4,320.00
Auburn Stadium Drywall Coating	$ 4,320.00
Cleaning of Auburn Stadium	$ 4,200.00
Project Closure	$ 7,440.00

The project’s primary objective is to refurbish the Auburn Stadium. The project activities must be conducted efficiently so that the stadium can be constructed successfully. The stakeholders must be skilled enough to finish all the work activities within the scheduled time in an efficient manner. The project manager wants to ensure good quality of the project that is why he appoints best workers for the project. He wants to make sure that all the resources are properly for the project. For this reason, he orders extra sand, cement, steel, and lumber for the construction of the stadium. The project manager does not want to neglect and he is doing his best for completing the project.

The project manager has appointed the following list of stakeholders. Fulton Hogan Pty Ltd is the enterprise who has been given the responsibility to construct the stadium. Fulton Hogan Pty Ltd Construction Department will carry out the construction work of the stadium. The Department will finalise the plan for the stadium. They will finalise the specifications required for the construction of Auburn Stadium.  The Fulton Hogan Subcontractor will carry out the revised site work. They will also conduct the improvement works for Auburn Stadium. The Auburn Stadium Hard landscaping Plaza edge will be reconstructed by the subcontractor. The subcontractor will set up the drainage, pathways and roadways. The mechanical subcontractor will install hardware at the stadium. The steel doors will be installed by the mechanical subcontractor. They will install doors for the stadium Washroom as well. The civil engineer will make the construction design of the stadium. He will direct the construction department The Sediment Controlling Inspector will check whether the project is meeting the sediment control. The builders are responsible to set up the mains gas supply at the Auburn Stadium. The painters and decorators conduct the trim coating and the drywall coating for the stadium. The cleaning staff will clean the stadium after completion of construction work. The Field Superintendent will visit the work site. The mason will work with sand and cement will lay out the basic foundation of the stadium. The electrician will set up the electric supply at Auburn Stadium. The plumber will set up the water supply at the cost management. The fire extinguisher will set up the fire extinguishing services at the stadium. 

Case Study: Refurbishment of Auburn Stadium by Fulton Hogan Pty Ltd

The stakeholders associated with the project must communicate with each other. The builder, mason, electrician and plumber should go hand in hand completing one task after another. The project manager should keep in touch with the project stakeholders. Also, the project manager must advise the stakeholders, whenever they face any problem. The effective communication can help the project to complete successfully within the scheduled time. The efficient communication sometimes also reduces project mismanagement. The project manager also should communicate with the project sponsor. The project must satisfy the wishes and demands of the sponsor. Therefore, effective communication must be established between the project manager and the project sponsor. The sponsor should also communicate and clarify the project deliverables. In this way, the construction project can be completed successfully.

In the procurement management, the role of the project manager is to develop, read and manage contracts.  There are certain points associated with the procurement management. The contracts made in the project must be formal. The contracts of the project are legally binding, the stakeholders, the suppliers and the sales manager must agree to the contract. In this way, the contracts can help to mitigate the risks associated with the project. Also, the contracts save the project from being failed. In this case, the project manager must read and understand the construction contracts. The project manager must ensure that the project scope and the project deliverables are included in the contracts.  The project manager will have to make sure that the reporting, inspections and legal deliverables of the stadium construction project are met appropriately. 

The project manager is responsible for refurbishing the stadium and handing it over to the project sponsor. The Auburn Stadium Construction consists of several activities, which the project stakeholders need to carry out. The construction project halts in the mid-way due to lack of resources and skilled workforce. The project manager has made a revised project plan. The sponsor will have to approve the new project plan so that the stakeholders can start working on the stadium construction project. Fulton Hogan Pty Ltd will carry out the research work. At first, the sales manager will make the sales agreement, after that the project manager will prepare revised contract plan for the project. He will prepare contract specifications plan and contract site plan as well. Fulton Hogan Pty Ltd Construction Department is associated with the refurbishment of the Auburn Stadium. After reinitiating the construction project, the revised project documentation will be reviewed. The project manager will finish the project plan and will prepare the documents for the project plan. After that, the project manager will finalise the stadium construction specifications. Fulton Hogan Pty Ltd. will prepare the revised construction design for the project. They will print the design of the construction. After that, the law officer will review the documents and will permit the construction. Sediment Control inspector will check whether the requirements are meeting for sediment control inspection or not. Later Fulton Hogan Pty Ltd construction department will carry on the revised site work.

The content writer will prepare the construction plan copies of the stadium based on consent of project manager. Later they will review the bids. Fulton Hogan Pty Construction Subcontractor will carry out the revised permits for the construction of Auburn Stadium Construction. The subcontractor revised agreements for carrying out the construction is carried out by the Construction Department of the Fulton Hogan Pty Ltd. The law officer will permit for constructing the Auburn Stadium. The construction subcontractor will prepare the schedule of lot stake-out in details. The sediment control inspector will conduct the inspection for sediment control and in this construction. The law officer prepares revised filing for the grading permit. The law officer will permit approval for the Auburn Stadium Construction. The field superintendent and Fulton Hogan Pty Ltd Subcontractor will carry out the revised site work. The construction subcontractor will again carry out the lot clearance.

The project consists of certain backlog. The project requires extra steel, extra lumber, sand and cements for conducting the purpose. The project manager will analyse the requirements for the project and will instruct the sales department to order for the same. The Sales Department will order extra steel that are required to complete the construction. The Sales Department will order extra lumber that are needed to complete the construction. They will again the order the sands and the cements for continuing the construction procedure. The steel, lumber, sand are cement are needed to rectify the roofs, floors of the stadium. The builder, mason and the construction department will carry on the reconstruction works. After the reconstruction work gets finished, the stakeholders will have to carry out the post-construction stadium works. The plumber, electrician and fire extinguishing staff will conduct the post-construction work. The plumber will set up the water supply system. The electrician will carry out the electric supply at Auburn Stadium. After that, the fire extinguishing staff will set up the fire extinguishing services at Auburn Stadium. After the post construction work, the stakeholders will carry out the improvement works of the stadium.

The construction department will work on Auburn Stadium Hard Landscaping Plaza edge. They will set up the drainage system, they will set up the pathways, and they will set up the roadways. Fulton Hogan Pty Ltd will carry out the boardwalks and Lake Works. After that, the builders will install the steel doors. The builder and the wood machinist will install the door for the washroom. After the installation of hardware, the painting of the stadium will be conducted. The painter and the decorator will carry out the trim coating. Again, they will carry out the drywall coating of the stadium. After conducting the painting, the cleaning of the stadium will be conducted. The cleaning staff will clean the entire stadium. In this way the construction of the entire stadium will be constructed. The construction project will be handed over to the Director of Auburn Stadium. The Director will have to agree with the project plan and the deliverables of the project. If the Director approves the project plan and then the plan is successful, if the Director wants some modifications, then the project manager will have to make modifications to meet the demands of him. The content writer will prepare the documentation after the completion of the project. At last the project manager will release the resource.

The construction project is already running 2 months late. Moreover, due to defects in roof and floor, lack of resources and skilled workforce, the refurbished construction project is being delayed by 1 more month. The sales manager will order extra steel, extra lumber, extra sand and cement for the rectifying the defects. Post-construction stadium work will start after rectifying all the defects. The utility service of the stadium will be set up, Fulton Hogan Pty Ltd construction department will conduct the electric lines set up, water supply set up, and telephone lines set up. The construction department will install a door for the stadium. The painter will complete the painting the drywall and will complete the trim coating. The cleaning staff will clean the stadium and will make it ready for the handover to the sponsor. The Auburn Stadium Refurbish work will take about 3 years and 3 months. The overall budget for the project is $255,640. It will require about $ 17,520.00 to complete the project backlog. 

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