It is estimated that implementation of the Arabia e-procurement system will save the company $200 million annually and also reduce spending streamline the recurrent process and expedite user adoption. An additional benefit of the project is going to be nationwide compliance with negotiated agreements, maximizing the company’s purchasing power and reducing processing costs and cycle times. The implementation will also allow tracking of purchasing behavior and retrieval of historical information and help MED-X realize a significant return on investment.
The project plan involves rolling out Arabia Buyer 7. 0 to establish an enterprise-wide e-procurement solution and support System by first rolling out a common baseline solution to 250 people t the home office by October 1 . Critical success factors for the project include a plan for organizational change effectiveness, quick resolution for business decisions affecting policy and establishment of clearly defined project objectives. Another critical factor is to understand MED-Ax’s business to business (BIB) strategy and its current BIB projects underway.
It is end of September and CIO has been told that the project cannot be finished on time. This project has ;o critical paths – Technical Infrastructure Plan and Software Customization plan. The Technical Infrastructure plan is over budget and behind schedule. The project manager does not understand why the project is delayed given that the overall project progress shows that the project is on schedule and under budget so far. Since both activities are equally critical the project success, a delay in either one will delay the entire project.
Ariba Implementation At Med-x Managing Earned Value Case Study
A separate earned value analysis of the individual plans showed us that the Software Customization plan is ahead of schedule and under budget and is, therefore, overshadowing the fact that the Technical Infrastructure Lana is not performing well and is delayed and over-budget. The project is actually delayed by 9 days at the current time. Our team’s recommendation is that Chris either ask the management for an extension on the project or request 5 extra workers to be able to finish the project on time.
Statement Of the Problem When managing a project, one might easily focus on the whole process and ignore important details necessary for project completion. Any unexpected delay in critical activities can harm the planned schedule and cause delays of certain tasks and even the entire project. As a result, many project managers utilize the Earned Value Method as a tool to keep their projects on track. Terry Baker, CIO of MED-X Inc. Never found anything wrong with the project while reviewing the budget variance and combined earned value reports; hence her surprise when she was informed that the project will not be delivered on time. Martin, the project manager for this project is an expert in technical development, with very little experience in Earned Value Method. Our purpose is to help Martin find out which components are underperforming according to the plan, and make recommendations to avoid the same mistake from happening again.
The key tasks are to review the budget and earned value data for each task and figure what can be done to finish the project on time. We will also discuss the different options available to MED-X Inc. For this project. Background All discussions about this analysis are based on a case from Kellogg School of Management: Arabia Implementation at MED-X: managing Earned Value. The main idea and strategy is using Earned Value Management Method to solve problem stated in the case.
Most of the background knowledge comes from case itself while our solution is mainly based on the technologies of cost control which are introduced during lecture 4 by Professor Jose. By determining if cost (AC), schedule (UP), and work accomplished (EVE) are progressing as planned, we created an integrated performance report which uses consistent, numerical indicators (like C.V., SF, ICP, SIP, etc. ) to evaluate Arabia Implementation project and compare its process with the estimated plan.
Methodology In this case, we need to investigate the status of the MED-X implementation project. The method we adopt is FEM., Earned Value Management. Earned Value Management is a project management technique for measuring project performance and progress. We measure the project performance not only as a whole, but also by performance of its components. We used UP (planned Value), AC (actual cost), and EVE (earned value) to calculate SIP (schedule performance index), SF (schedule variance), ICP (cost performance index), and C.V. (cost variance).
Among these indicators, SIP and SF show whether a project is behind schedule or not, and ICP and C.V. indicate whether a project is under budget. Therefore, the statuses of the schedule and cost of technical infrastructure, software customization, and combined projects can be easily and clearly checked, respectively. MS Excel is the main software we used in this analysis, and all the information came from the case. Result In order to understand why the project could not be delivered on time, we did an earned value management exercise as shown in the tables below.
First We decided to focus on the technical infrastructure and software customization components of the project because they were on the critical path. Table 1 & 2 low summarized the earned value exercise for the technical infrastructure and the software customization portion of the project respectively. As you can see in table 1 , the technical infrastructure component of the project is underperforming compared to the software customization.
The cost variance (C.V.) and schedule variance (SF) for the technical infrastructure are both negative: C.V. is which indicate that it is over budget and SF is which indicate that it is behind schedule. This can be confirmed by the fact that both the cost performance index (ICP) and schedule performance index (SIP) are under 1 Table 1: Earned value activity for the technical infrastructure component of the project On the other hand, when looking at table 2, we realize that the software customization component of the project is well ahead of schedule and under budget.
The cost variance and schedule variance are both positive, C.V. is $1 59,250 and the SF is $1 17,250. This is confirmed by the fact that the calculated cost performance index and schedule performance index are above 1 Table 2: Earned value activity for the software customization component of the project After doing the analysis for the separate components of the reject, we decided to do the earned value exercise for the combined components (table 3) in order to understand the surprise reaction of the CIO Terry Baker when she discovered that the project could not be delivered on time.
When looking at the earned value analysis for the combined critical component in the project, the project appears to be on track to be delivered on time. According to table 3, the calculated cost variance (C.V.) and schedule variance (SF) for the combined projects are both positive, which indicate that the project should be ahead of schedule and under budget. Those conclusion re supported by the Schedule Performance Index (SIP) and Cost Performance Index (Cup) value being above 1; confirming that the project should be delivered on time or even before the due date.
Table 3: Earned value analysis for combined projects After the analysis of the two activities both separate and together, we determined that it will take an extra 9 days to complete the project as calculated in the table 4 below. We calculated the percent completion for the technical infrastructure component of the project using the rolling earned value and estimated budget at completion for September (5 months). We hen calculated the needed time to complete 100% of the activities and deducted the extra time needed assuming 30 days in a month.
Table 4: Extra time needed to complete the technical infrastructure part of the project Conclusions and recommendations In general, based on the combined rolling ratios, the MED-X implementation project was not out of control and was performing well on the whole. According to the overall results, it was still under budget and ahead of schedule. However, when our team examined the components in details, we found that the technical infrastructure setup was the main reason that undistributed to delaying and over-budgeting in terms of its negative schedule variance (SF) and cost variance (C.V.).
The project completion at the time was 97. 22% and still needed extra 9 days to complete their objectives. Moreover, the control ratio (CRY) less than one also implies the underperforming of technical infrastructure component in the project. In spite of knowing the standard implementation technology earned value analysis template, to figure out what was going wrong, Martin should have kept checking the individual earned value in detail so that he could monitor which components or activities) had exactly influenced or delayed the project and had immediate reactions toward the problems.
For instance, he could have put more resources on the underperforming components right as soon as the initial problems appeared. To prevent this from happening Martin and his team should have implemented the following measures in the earlier phase Of the project: 1) managed workflow with reviews and approval Of project deliverables, including milestones 2) focused more on project issues/risk management, and 3) designed FAME early and consistently in the placement cycle so that his team could identify actions to mitigate the potential failures.
What should Martin do going forward? Our team suggests that he ask for an extension or discuss the project scope with the CIO to determine whether there can be some compromises as a remedy. Otherwise, to meet the completion date, Martin can ask for more resources. For instance, our team assumes that 4. 5 current staffers were involved in the technical infrastructure setup component (as shown in exhibit 4). Five extra full time workers will be needed in order to complete the project on time.