In today's world, everyone can try their hand at business. There are more than enough opportunities, restrictions are becoming less and less, so all you need is a desire. However, this alone will not be enough. Everyone can open a business, but keep it afloat, develop and move forward - units. To do this, you need more than just desire, you need skills, you need an understanding of how the business world works. As an example, take project management - many beginning businessmen do not use any project management tools that they or their subordinates are working on, thereby making a very gross mistake.
If you have certain tools, then you can much more effectively cope with your tasks. And for this you do not need to be a genius of the economy - just look at the method of mastered volume. In project management, it allows you to achieve maximum efficiency and accuracy, but at the same time it is elementary simple and affordable. What is the utilized volume method? This is what will be discussed in this article.
What it is?
The utilized volume method is a system of techniques that allows you to monitor and measure the effectiveness of the project in comparison with the previously created plan. This method uses several numerical indicators that add up to the formulas and allow you to accurately and accurately demonstrate the state of the project in a given period of time, what is the delay or ahead of schedule, how much the budget is exceeded, and what will be the expected results for the moment the project is completed on a pre-agreed day, which is now called the deadline.
If we talk about the real world, then the developed volume method is really very popular - it is used everywhere, and among similar methods it is the most used in practice. The huge advantage of this method is not only its simplicity, transparency and accessibility, but also its versatility. The fact is that you can use it absolutely in any field and for any project that you or your employees are engaged in. However, no matter how simple this method may be, it still needs to be studied, and also considered in practice, so that later it can be applied calmly in any conditions. Further in the article, we will talk about each of the indicators that are used in this method, and at the end a simple example will be presented that will help you more clearly see how this method works.
PV
As you already understood, the utilized volume method allows you to calculate the lag or ahead of schedule, as well as budget expenditures. Accordingly, in the calculations should be present the source data, which will now be discussed. First of all, you need to look at an indicator called PV, which stands for “planned volume”. There is nothing complicated here - this indicator is exactly what its name indicates. This is the planned cost of the work that will be carried out within the project - in other words, this is the budget of the project. It is a specific quantity and cannot be calculated by any formulas. However, naturally, this indicator will be actively used to calculate other indicators used in the framework of this method. The utilized volume method allows you to maximally accurately estimate deviations from the budget. However, what is this most mastered volume?
EV
The utilized volume method in project management is good in that it allows you to evaluate absolutely all aspects of a particular project and the features of its implementation. And you can do this, for example, using this indicator, which is in the name of the whole method. This is the mastered volume, but what is it? If the planned volume was quite simple and understandable, then with the mastered volume everything is not so clear. The fact is that this is not an accurate indicator, but an estimated one - it denotes the planned cost of exclusively those works that were actually performed at a particular point in the project. Accordingly, this indicator is calculated by assessing the amount of work that was carried out within the framework of the project - and it is assigned an amount that is calculated in relation to what was the planned budget at that particular moment. In words, this sounds rather confusing, but you can figure it out. If it’s still not very clear to you what the disbursed volume means, then you should wait for a concrete example using the accumulated volume method in project management, which will be described later.
AC
As you already understood, the utilized volume method in project management is not just a set of different numbers, it is a network of relationships that will allow you to analyze how the project was implemented. But for this it is important to consider also one more main parameter - the actual cost. As with the planned volume, the actual cost is extremely simple to understand. As a matter of fact, this is the amount that was spent on the implementation of the project at the particular moment in time during the implementation of the project. When you have received all three main parameters, you can take on the relationship between them, which is the key point, the main goal, for which there is a method of mastered volume in project management. The tasks of this method are simple - to compare the actually performed amount of work with the planned one, as well as compare the actual budget expenses with the planned ones. And for this you now have all the necessary tools.
SV
So, it's time to consider what this method is used for. The utilized volume method is primarily used to determine the excess of budget expenditures in relation to the amount of work performed. Actually, this value is used for this, which stands for "deviation from the graph." It is calculated quite simply - PV is subtracted from EV. What does it mean? This means that you need to subtract the mastered volume from the planned volume. So you can understand how much work the employees did in comparison with how much they should have done at the moment. Accordingly, a negative value indicates a lag behind the schedule, and a positive value indicates its lead. The mastered project method is applied at the project stage, which will interest you - this means that you can use it on the first day, on the tenth and last. On each of the days of the project, this method will give you useful information.
CV
This indicator is very similar to the previous one - except that it changes the deviation not from the schedule, but from the budget. Accordingly, for its calculation it is necessary to use slightly different parameters. As before, you need to subtract from the mastered volume (this indicator, as the name of the method implies, is the key), but this time it is not the planned volume that is taken away, but the actual cost of the work. Accordingly, if the utilized volume is less than the actual cost, more funds were spent than was planned for a particular moment, but if more, then vice versa. These two indicators are basic for each project manager, it is precisely for their receipt that the utilized volume method is used. These, however, are not the only indicators that you can ultimately get.
CPI
What else does the method of the mastered volume of the formula contain? You have already familiarized yourself with the basic concepts and methods of calculating them - now it's time to take a look at a couple of relative indicators. For example, the deadline fulfillment index is a very interesting parameter that will allow you to visually see how much ahead of schedule you are or are behind them. To obtain this indicator, you need to divide the disbursed volume into the planned one. The result can be considered as a fractional number - or converted into percent for greater clarity. The result can be considered as the speed of advancement in percent relative to the planned pace. You can see good examples later, when a specific project will be dealt with.
SPI
As with the previous pair, the SPI score is very similar to the CPI score. The fact is that this is also a relative index, but this time it does not demonstrate the speed of the project, but the budget costs. If the CV showed what specific amount the budget was underused or overspended, then the goal of this parameter is to demonstrate how much money is spent on one planned dollar. The result here may be one dollar (if the budget is respected one hundred percent), and seventy-five cents, and even one and a half dollars. In general, this indicator allows us to generally assess how much the budget is underused or overspent.
Other options
That’s all the main indicators that you need to keep in mind when you use the earned volume method in project management. You can start to look at an example right now - but it’s better to linger for a while and consider a couple of indicators that can be used on a more professional level if you want to get more detailed results. For example, professionals also introduce the BAC indicator, which corresponds to the amount of the budget for the entire project - and it is from it that some other parameters come from. There is an EAC indicator, which stands for "assessment of completion." It demonstrates what kind of cost you can expect to get as a result of the project at a particular moment. If the previous indicators helped you to navigate with what exactly the state of the project is at a particular point in time, then this indicator (and subsequent ones) will help you calculate the estimated data at the time of the completion of the project.
So, the completion estimate is calculated by dividing the budget amount by the cost index of the work performed. As for the ETC parameter, it shows the estimate until completion, that is, how much it will take to complete the project. It is calculated by subtracting from the estimate upon completion of the real value of all the work. Well and one more parameter - VAC. This is the deviation from the budget upon completion, that is, a parameter that allows you to calculate the estimated deviation from the budget at the time of completion of the project. You can get it by subtracting the completion estimate from the budget amount. That's all you need to know about this method - now it's time to consider a specific example.
Application example
Naturally, for the first contact with this method, it makes no sense to take any real project - it is better to take a simplified example that will allow you to visually consider each of the above parameters. So, the essence of the project is as follows - it is necessary to build four walls in four days, spending $ 800 on it. This is all the information you may need in the process. In this example, the accumulated volume method is applied at the stage close to completion, that is, on the third day of the project.
In three days only two and a half walls were built, but at the same time 560 dollars of the budget were spent. It would seem that this is less than planned - but less work was done. Do workers do their job so well? This is where this method will help you. First, you need to parse three basic indicators - PV, EV and AC. The first is $ 600, since on the third day it was planned to spend exactly that much. The second - $ 500, since that is exactly how much should have been spent on the construction of two and a half walls. But the third - $ 560, that is how much the workers spent on the construction of two and a half walls on the third day of the project. You can also immediately note the BAC indicator - it is $ 800, the full project budget. Well, it's time to calculate the deviations - by timing and cost. $ 500 minus $ 560 is minus $ 60, that is, the budget was overused for just that much. 500 dollars minus 600 dollars - it turns out minus one hundred dollars, that is, there is a lag behind the schedule. It's time to make the indicators more accurate, that is, calculate the CPI and SPI. If you divide $ 500 by $ 560, you get 0.89, that is, one dollar is spent instead of 89 cents - an extra cost of 11 cents is spent for every dollar. If you divide $ 500 by $ 600, you get 0.83 - this means that the speed of the project is only 83 percent of the originally planned speed.
That's all - now you have received all the main indicators and have an idea of what state your project is on a specific day of its implementation. Now you can calculate the remaining parameters - EAC, ETC and VAC. The completion score is 800 divided by 0.89. It turns out that at this rate, the estimated cost of the project at the end of the work is $ 900 instead of $ 800. The estimate until completion is 900 minus 560, that is $ 340. That’s how much estimated it will take to complete the project. Well, the deviation at the end will be 800 minus 900 - minus $ 100, that is, the budget will be overspended by one hundred dollars. Naturally, the disbursed volume method is applied at the project stage, which may differ from the above - this method is universal and can be used at any stage.