Business Case Analysis

2002 Words 9 Pages
Introduction
Spokane Industries has contracted Franklin Electronics for an 18 month product development contract. Franklin Electronics is new to using project management methodologies and have not been exposed to earned value management methodologies. Even though Franklin and Spokane have worked together in the past, they have mainly used fixed price contracts with little to no stipulations. For this project Spokane Industries is requiring Franklin Electronics to use formalized project management methodologies, earned value cost schedules, and schedules for reports and meetings. Since Franklin Electronics had had no experience with earned value management, the cost accounting group was trained in the methodology in order to bid for the
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Case questions Cost variance is calculated by subtracting budgeted cost for work performed from actual cost for work performed and schedule variance is calculated by subtracting budgeted cost for work scheduled from budgeted cost for work performed. The vice president’s analysis that the project’s costs are overrun is correct and it appears they are also behind schedule. I would agree with the vice president’s analysis that improvements need to be done to keep the cost and schedule under control. One thing that the vice president forgot to include in his analysis is the fact that the schedule variance does not measure time by itself. Even though the project currently has a negative schedule variance at this point in the project, it does not mean that the project manager can’t make up the time later in the project and get the schedule variance back on track. Franklin Electronics should have included a real schedule analysis to show where the timeline really stands. It is important to see a real schedule analysis to determine if the project is truly in danger of not getting done on time. Franklin Electronics has a simple understanding of earned value management. They understand how to calculate cost and schedule variance, but they don’t know how to analyze the data that they gave to Spokane Industries. If they understood how to analyze these metrics in depth, they would have understood why the vice president was calling the emergency meeting and would have been
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