Corporations that have business units operating as silos inevitably experience process, efficiency, quality, cost, and schedule issues. Similarly when projects are managed as if the schedule and the budget are unrelated a series of issues arise. Fortunately project management software enables managers to direct projects in an integrated fashion.

Time and Cost Management

Time is money and each minute of the schedule represents one or more resources that will be paid for that time. If the project is contractually subject to liquidated damages the cost of time can be substantial. In project management the reality of time is money can be managed with project management software.

Fortunately a comprehensive group of tools and techniques exist to manage the schedule, budget and resources concurrently. This is known as earned value management (EVM). The key is to use the project management software, when setting it up the project, to leverage this suite of tools and techniques.

A few basic elements are required for effective earned value management. Use the project management software to facilitate the project team’s creation of a well-defined work breakdown structure (WBS). Use the software to document who will be performing the work at the activity level, also known in the earned value management practice standard as the work package. Define, with your client if appropriate, the milestones that will be tracked and measured. Agree how completion will be measured. For example 50% upon starting and the remaining 50% upon completion, there are many ways to measure milestones. The last element needed to put in place earned value management is using the software to build a resource loaded schedule.

The resources in the schedule should have information on rates of pay so it reflects the actual cost of their time. If you are in an organization and there are confidentiality reasons making the access of this data difficult ask either the accounting or human resource organization for the dollar value of the blended pay rates and that will, at minimum, provide the project manager with averaged pay rates that can be used in lieu of specific salary information.

Remember that the start and end dates represent the total duration of an activity. Within that duration one or more resources will contribute work time known as the level of effort. Fortunately the project management software allows you to differentiate between the two to secure more accurate earned value management metrics.

Earned value management is extremely useful because it provides holistic and meaningful data on the schedule, resources and cost. With the software it can also output trending intelligence that informs management of issues before they happen. The application can graphically show if the current rate of work will result in cost overruns or late end dates while there is still time to proactively take action to recover. Earned value management can indicate, in advance, a myriad of potential resource issues. Use the project management software to leverage this powerful suite of integrated tools known as earned value management because time is money.