Value Management

To analyze The Goal, Part 2, I have chosen the second option to analyze a complex value creation system using management concepts. Management is being able to prioritize, making decision and coordinate the entire process effectively and efficiently through others, while utilizing all the resources to achieve the organization objectives and goals. The novel continues as Mr. Rogo seeks for more suggestion from his colleague Jonah to keep the plant operating producing revenue. Mr. Rogo is having some personal issues at the moment, he is having a difficult time managing his family which is probably affecting his professional life and the decision he tries to make regarding in managing Bearington Manufacturing Plant. I would suggest that Mr. Rogo take into consideration the Theory of Constraints (TOC) to assist him in evaluating the production of enhancing the performance of the Plant. According to, Dalton, M. A. (2009). “This is a tool that has been used to help manufacturing operations identify and eliminate bottlenecks. This approach enables innovators to rapidly improve their growth results while gradually creating a culture of continuous innovation improvement.” (p.52).

The paper is divided into three sections, the first of which will establish a timeline of events. This project background will serve as a case study for the analysis in the following section that will be structured such that each of the previously mentioned facets will be independently analyzed and contrasted with project management principles. Finally the paper will conclude with a summary of the analysis and recommendations based on

Part of the Earned Value Management technique is the monitoring of variances from the approved baseline of costs and schedule. The variances are useful in determining the overall project health and status.

The impact of Earned Value analysis in managing project cost control is undeniable. When EVM is implemented on a project, there are significant benefits to the project manager and the customer. Project manager benefits include increased visibility and control to proactively respond to issues that can impact project schedule, cost and objectives. Customer benefits include increase confidence in the PM’s ability to manage the project and track the progress of their project. Additionally, EVM provides a wealth of information for accountants. Accountants can use the data to report profitability to the investment community (Wilkens, 1991). There is a true connection between project management and corporate accounting. PMs use data provided by finance departments as inputs to determine cost performance of projects via EVM. This includes information used to create financial statements such as the cash flow statement, used to track the actual cash in hand. Said financial statements are to be crafted in compliance with the U.S. GAAP (generally accepted accounting principles). GAAP impacts every item on a qualifying financial statement. GAAP guidelines dictates how financial statements are produced every step of the way, covering hundreds of different components, according to Stanford University’s Cardinal Money Management website (Gresham, 2012). GAAP encompasses basic accounting principles and guidelines and detailed standards issued by the Financial Accounting Standards Board

According to the Project Management Body of Knowledge (PMBOK) there are four phases in the project procurement process. The PMBOK Guide (Project Management Institute, 2008) defines these as Plan Procurements, Conduct Procurements, Administer Procurements,

Project Management Institute. (2000). _A Guide to the Project Management Body of Knowledge (4th ed.)._

The triple constraints of project management are Cost, Time, and Scope. A proper balance of these three constraints is necessary for successful project completion. Every project, regardless of size or complexity, has to deal with these constraints. The Aurora Water project was initially projected to cost $854 million dollars. Through extensive and successful use of Earned Value Management (EVM), CH2M HILL was able to slash the project cost by $200 million dollars. By fast tracking the project they were able to complete the project 2 months before the original completion date. This was almost a 25% savings from the projected cost. Without innovative ideas to share the savings or fast track the project timeline, the project’s cost could have gone over budget or resulted in fewer savings than

The completion of all phases can determine a project success. The success of a project includes the completion being completed within the allocated time period, within the budgeted cost. It must be completed at the proper performance/quality level with acceptance by the consumer. During this phases there should be minimum scope changes and no disturbance to the main work flow.

Value engineering is not just about reducing costs. The concept of “value analysis” came into being during World War II at General Electrical crop. people were struggling to produce badly needed products when faced with shortfalls of everything like, raw materials, skilled labor and all kinds. A team of engineers, led by Larry Miles, was forced to find authoritative substitutes. While substitutes to reduce costs, they found that in many cases, the product is also improved.

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

1. Introduction 2. Analysis of current position 3. Analysis of new project 3.1 Methodologies and processes of Valuation 3.2 processes of Valuation 4. Conclusion

c After the acceptance of all stakeholders is achieved, actual growth begins and a project management methodology needs to be selected based on the major areas seeking improvement. A project tracking and monitoring system has to be in place for improved estimation of project life-cycle.

Kerzner (2003, p6) states that the definition of project success has to be modified from the previous constraints of Time, Cost and performance to include Completion:

Value chain is identified as a chain of activities where value is continuously added to the product and service from the product design to final product delivery. Basically, there are many works that are included in the producing process no matter whether it is consume good or service. But not all of the producing activities could be seen as valuable to the entire process, which could offset the cost of time, money, and labor. So when companies are doing the business optimization, the basic things they do are integrating the process and shortening the chain line via cutting off the unnecessary and highly costly links, in order to increase the efficiency of business chain. Generally speaking, when the producing line is long, it is too

In order to achieve their business objective, project management and the used methodology are key factor which will be responsible for the success or failure of this project.