One of the biggest challenges to implementing earned value as a project management system is creating cost-loaded schedules. Time and time again we hear that creating the initial cost-loaded schedule is not too painful, but most engineering and construction projects are continually barraged with changes, making it extremely cumbersome to keep estimates and schedules in-sync as things change. Further, in many companies, estimating software and scheduling software are entirely separate disciplines, each of which may have a different perspective of the project. Earned value forces tighter interaction between these two disciplines, which is ultimately good for both the owner and the contractor. Many of the key elements of earned value require the integration of cost and schedule, including:
- Budgeted Cost of Work Scheduled (BCWS)
This value shows how much money should have been spent to accomplish the work performed on a project to date. This is the essence of earned value, as it reflects the value of the project put in place to date.
- Estimate At Completion (EAC)
This value shows the current forecasted cost at completion, based on the cost to date and the work remaining. When graphed over time, this value shows the owner of the project the expected spend level, which can be matched to budget levels to ensure adequate funding is available for the project.
Many estimating and scheduling software packages are adding features to address earned value, but currently HD estimating software is the only application that can dynamically link cost estimates to Microsoft Project and Primavera schedules. This live, two-way integration between cost and schedule can reduce the time and effort spent on earned value calculations by 50% to 90%.
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