Time tracking has become a norm of late. Almost all the industries, from manufacturing to service, leverage time tracking software in project management. Whichever project we work on, we see time tracking as one of the activities that management focuses on. But why is time tracking becoming so important these days? Every now and then, we hear “Time is Money”. How does time tracking materialize into value, monetary or of some other form?

As a project manager, one has to quantify value creation through time tracking. Using a project management software, this is done through earned value analysis (EVA). Earned Value Analysis is one of the important techniques to monitor the project in different phases. EVA can be used to control project constraints like budget and schedule. In other words, EVA allows the manager to compare the amount of work completed against the amount that was expected to be completed at any given point in time. EVA can be performed at any stage of the project cycle which enables management to get early warnings about any potential threat to the project in terms of meeting the deliverables on time and tracking the project costs. This, in turn, allows management to review their budget and change their future course of action to use employee time tracking software get around these threats.

What specific information does EVA provide?

In general, EVA answers the following 4 questions.

  1. Whether the project progress is in line with the schedule at any point in time?
  2. Whether the project costs are in line with the approved budget at any point in time?
  3. What will be the tentative completion time of the project?
  4. What will be the probable cost for the entire project?

How is EVA performed?

EVA can be easily performed using the following steps.

  1. Determine the Percentage of Completion
  2. Determine Planned Value (PV)
  3. Determine Earned Value (EV)
  4. Actual Cost (AC)
  5. Calculate Schedule Variance (SV)
  6. Calculate Cost Variance (CV)

 

  • 1.Determine the Percentage of Completion: The first step in EVA is the determination of the task’s percentage of completion (POC). For instance, if there is one 100-hour task, 50% completion means 50-hour work has been completed.

 

  • 2.Determine Planned Value (PV): It is defined as the amount of the task that should have been completed at any point in time. In monetary terms, it is a portion of the task budget. For instance, consider a task worth $10,000 is supposed to be completed in 10 days. After 5 days, the task is supposed to be 50% complete. Therefore,

PV = 50% * $10,000 = $5,000

  • 3.Determine Earned Value (EV): It is defined as the amount of task that is actually completed. In monetary terms, it is a portion of the task budget. For instance, consider a task worth $10,000 is supposed to be completed in 10 days. After 5 days, the actual task completed is 40%. Therefore,

EV = 40% * $10,000 = $4,000

  • 4.Actual Cost: As the term suggests, it is the actual cost incurred in a particular task. For instance, consider the actual cost of the above task is $3000.

 

  • 5.Calculate Schedule Variance: Schedule Variance pertains to the schedule status of the project. Mathematically, it is defined as

SV = EV – PV

In the above instance, SV = $4000 – $5000 = -$1000

  • 6.Calculate Cost Variance: Cost Variance pertains to the cost status of the project. Mathematically, it is defined as

CV = EV – AC

In the above instance, CV = $4000 – $3000 = $1000

Interpretation of EV

Schedule Variance (SV) and Cost Variance (CV) are considered as the basic indicators of the project progress.

  • 1. If the SV is positive, you are ahead of the project schedule. If it is negative, you are behind the project schedule.
  • 2. If the CV is positive, you are cost-positive which is desirable. If it is negative, you are cost-negative or over budget.

Conclusion

In the end, we can conclude that as the basic indicators give us relatively important information about the project progress and free time tracking software, be it schedule progress or cost-efficiency, EVA is a significant technique for project management professionals. Since it can be used to monitor real-time project progress, it is a preferred tool for complex projects where the complexity is high.

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Further Reading

How to Opt Between On-premise and Cloud base time tracking software?

Mitigating Production Challenges Through Time Tracking

Why your Office needs an Employee Time Tracking Software.

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