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Chapter 15. Analyzing Progress and Revis... > Analyzing Performance with Earned Va...

Analyzing Performance with Earned Value Analysis

As discussed in the preceding sections, one way to analyze the status of a project is to look at the cost, work, and finish variances. These measures tell you the impact of experience to date on the total work, total cost, and finish date of the project and its component tasks. One problem with using these variances for analysis is that when one is favorable and another is unfavorable, it’s difficult to tell which value is more critical to the project’s success. They are measured in different units: the cost variance is measured in dollars, the work variance is measured in hours, and the date variances are measured in time units.

Another problem with using the simple variances is that you can’t tell if the costs you have incurred to date have produced as much work and output as you had assumed in the baseline plan. In other words, they don’t tell you whether productivity (output per dollar cost) is at the levels you planned. If there is a problem with productivity, then an unfavorable cost variance you might have detected may be just the beginning of an ever-expanding cost variance as work continues on the project and actual values replace estimated values. You can’t tell from the simple variances if there is enough left in the budget to finish the project as planned.


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