Earned value reporting can be used to highlight unacceptable project performance variances. What corrections and updates are required to resolve these variances?
Let us take a look at the following situations and review potential corrections and updates:
- Unacceptable negative cost performance variance
- Unacceptable positive cost performance variance
- Unacceptable negative schedule performance variance
- Unacceptable positive schedule performance variance
Unacceptable negative cost performance variance.
If the cost performance index is less than 1.0 and exceeds the tolerance level for cost performance, consider the following actions, corrections, and updates:
- Determine which control accounts are causing the variance.
- Determine the root cause of the variance. Potential root causes can include but are not limited to using more resources than planned, unexpected additional expenses, unplanned scope expansion, unplanned overtime, insufficient contingency reserve, unexpected risks, and poor estimates.
- Determine the estimate at completion (EAC) due to the variance.
- Review the TCPI (to-complete-performance-index) to determine if cost performance can be improved to bring the costs back to the original budget. For example, if the calculated TCPI is 1.10 and the current cost performance index is 0.90, this indicates that to bring the cost performance needs to be improved from 90% to 110%.
- If it is not realistic to bring the costs back to the original budget, consider updating the performance measurement baseline to increase the budget or adjust the budget among control accounts. This may require submitting a change request.
Unacceptable positive cost performance variance.
If the cost performance index is greater than 1.0 and exceeds the tolerance level for positive variance, consider the following actions, corrections, and updates:
- Determine which control accounts are causing the variance.
- Determine the root cause of the variance. Potential root causes for a positive variance include but are not limited to using fewer resources than planned, planned expenses were not used, the scope being reduced, unexpected positive risks, and poor estimates.
- Determine the estimate at completion (EAC) due to the variance.
- Determine if the performance measurement baseline needs to be updated. This may require a change request along with the justification for the change.
Unacceptable negative schedule performance variance.
If the schedule performance index is less than 1.0 and exceeds the tolerance level for schedule performance, consider the following actions, corrections, and updates:
- Determine which control accounts are causing the variance.
- Determine the root cause of the variance. Potential root causes can include but are not limited to work taking more time than planned, unplanned scope expansion, schedule delays due to external influences, longer wait times for review or approval of work, insufficient schedule reserve, unexpected risks, and poor estimates.
- Consider adding resources to achieve the original schedule target. Adding resources may require moving resources from other control accounts or increasing costs by adding resources not already in the plan. In most cases, these actions will require a change request.
- Determine if the performance measurement baseline needs to be updated. This may require a change request along with the justification for the change.
Unacceptable positive schedule performance variance.
If the schedule performance index is greater than 1.0 and exceeds the acceptable tolerance level, consider the following actions, corrections, and updates:
- Determine which control accounts are causing the variance.
- Determine the root cause of the variance. Potential root causes for a positive schedule variance include but are not limited to work taking less time than planned, scope was reduced, unexpected positive risks, and poor estimates.
- Determine the estimate at completion (EAC) due to the variance.
- Determine if the performance measurement baseline needs to be updated. This may require a change request along with the justification for the change.
Lessons Learned
Additionally, in these situations, the project team should record lessons learned. The lessons learned may benefit the project team in resolving future variances. The lessons learned should be captured in a lessons learned repository to benefit future projects.
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