Relationships Between Project Scope, Budget, and EVM Research Paper

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Introduction

Earned value management (EVM) is a process that enables managers to measure more effectively project performance by looking at work planned and work performed, forecasting costs, and controlling the schedule. As Vandevoorde and Vanhoucke (2006) state, it is a method to “measure and communicate the real physical progress of a project and to integrate the three critical elements of project management (scope, time and cost management)” (p. 298). EVM, in other words, is a kind of tool that a project manager, acting as a kind of mechanic, uses to keep the steering in alignment—i.e., it keeps the project scope and budget firmly managed and where both need to be. This paper will explain in detail how this relationship between scope, budget and EVM works by comparing and contrasting the relationship between project scope to the project budget and EVM, using the destination wedding event planning project for the WBS.

Work Breakdown Structure (WBS)

Scoping the Project

In destination wedding event planning, the scope of the project is enormous: the site has to be booked months in advance, prepped and readied; the musical act has to be booked; the catering has to be arranged, the hosting has to be orchestrated; photography, seating, and so on are all aspects of the event planning that must be arranged. There are numerous parties involved in the arrangement of the event. At the top is the business owner, working with the event sponsor/client or the steering committee. The project manager/team works below and interacts with reference groups, working parties (staff) and consultants. The governance structure looks like this:

Figure 1: Governance Structure for Destination Wedding Event Planning

WBS as Foundation for EVM

WBS is the foundation of EVM (Xu, 2009), just as an outline is the foundation of an essay: it provides the overview or road map—the parameters—of what the project is, where it is going, and which groups are responsible for what portions of the project. The whole aim of the project is defined and the sum of the parts equals the whole. The WBS identifies the level of work within the project, the activities, tasks or milestones that are to be completed, the % of the work that is expected to be completed, who or which groups are assigned to complete the tasks, the duration that it is expected for them to take to complete their assignment, and the predecessor task required to be finished before this one can commence.

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In destination wedding event planning, meeting with the client is the first stage, followed by selecting the destination, choosing a theme, selecting guests, meals, music, and program. Preparation is then delegated to the designated groups to accomplish each task individually within the given time frame.

Planning the Project

Planning the project is the most vital stage, as this is the period where the six constraints of project management are identified and considered: 1) schedule, 2) customer satisfaction, 3) quality, 4) scope, 5) risk, and 6) resources (Westerveld, 2003). The planning phase sets the schedule, places the customer’s satisfaction at the top as the end goal, details the quality of the event, sets the scope, identifies the risks, and measures the resources available within the timeframe required.

Scheduling an Earned Value Project

Scheduling for performance management is an essential part of EVM as well: as Iqbal, Akbar and Budhwar (2015) point out, performance management is critical because it identifies and defines the goal for all parties, measures performance, appraises the work with milestones and goals checked off as the project progresses, and provides feedback for workers so that they know whether they are meeting or not meeting expectations. Scheduling the EVP is essential ahead of time as it provides a pre-arranged time frame in which measurements can be expected to be taken, in which goals and milestones can be expected to be reached.

Earned Value Baseline (EVB)

The baseline execution index is a tool to measure the efficiency with which work has been accomplished with respect to the baseline. This helps stakeholders to see whether expectations are being met, whether more focus or direction is required in one particular area, or whether tasks are being met on time and on budget. The EBC is the sum of all control account plans—the subprojects, teams and project subdivisions.

How Budget, Scope and EVM Interact

How Project Scope Relates to EVM

Mutually supportive. Project scope relates to the EVM in a mutually supportive way by providing the parameters in which the EVM is situated. The scope sets the terms of what expectations are, who should meet what, and when milestones should be achieved. The EVM provides restraint on scope: it keeps the vision from growing beyond the bounds of….....

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