Chapter 14: Using Earned Value Management in Software (Web hosting packages)
Chapter 14: Using Earned Value Management in Software Projects 285 question: What did we say would be the value of the work that the team completed as of this particular date? Actual cost (AC): Actual cost refers to how much the project work actually costs as of a certain date. It answers the question: How much have we spent on this debacle I mean project anyway? Actual cost includes the indirect costs of the project as well as the direct costs of the project if you considered these in your project planning process. The direct costs include all monies spent directly for your software project. For example, wages for resources assigned to work only on your software project are direct costs. Indirect costs refer to monies spent on resources or other items that may be shared among several projects, such as overhead. Subtract the AC from the PV (or the PV from the AC). The difference between these numbers tells you how much over or under budget you are. Earned value (EV): EV provides you with a measure of your project s progress as of a certain date. EV answers the question: What is the value of this project work as of this particular date or particular point in the schedule? To determine your project s EV, combine all the costs budgeted for work that your team has accomplished at this point. The formula for figuring the EV is total budget multiplied by the percentage of work complete. For example, if you have completed 50 percent of a $300 project, your EV is $150. You can plot these values (PV, AC, EV) on a spreadsheet so that you can easily see (and show stakeholders) the variances. If all the lines on the graph line up on top of each other, you don t have a variance the work is progressing exactly as you said it would, and you re up for the Supreme Project Manager of the Universe award, the envy of all the other project managers who now grovel at your feet and constantly seek your advice on estimating costs. Table 14-2 gives you a quick understanding of how these formulas work. Table 14-2 Earned Value Formulas Term Meaning Planned value (PV) Planned percentage complete the amount Budgeted at Completion (BAC) Actual cost (AC) Indirect costs + Direct costs + All other costs from your original project plan Earned value (EV) Actual percentage complete the amount Budgeted at Completion (BAC)
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