CASE STUDIES IN PROJECT MANAGEMENT SYSTEMS 1
Bad Metrics for Earned Value
Don Hallum
I. PROBLEM AND SOLUTION
Problem:
Increasing Cost Performance Index (CPI) on the Boeing 787 Project of Acme Avionics, Inc.
despite having acceptable Schedule Performance Index (SPI) mainly due customer- mandated
changes in the project scope during its implementation.
Solution:
The TPM must use new tools and define more metrics to measure and monitor the project progress
and also prepare a risk analysis while considering the project from all aspects. Moreover, it is
important to base the decision regarding the completion of the project according to various criteria
such as market share, customer satisfaction, resource’s availability as they may have to start with
a new project, also what are the risks if they handle it or continue for both contractor and customers.
II. EXECUTIVE SUMMARY
Controlling a project is key to the success or failure of the project. Earned Value
Management (EVM) is a well-known technique to control the time and cost performance of a
project and to predict the final project duration and cost. It is an easy tool to generate early warning
signals to timely detect problems or exploit project opportunities. The case showed the
chronological events of Acme Avionics, Inc. Company wherein there was a bad failure on a
specific project concerning manufacturing a new brand Airplane Boeing 787 which was not
derived from an existing certified airplane. In the new project, all customer’s necessities with a
large margin of safety relative to the’ typical’ strength properties of the new process should be
met. The Boeing 787 Project was assigned to Howard Bono, a Technical Project Manager. He did
all the possibilities to succeed in his career and at the same time to obtain success in the project.
Meanwhile, he saw that the customers were uncomfortable with the mechanical properties of the
material produced with the new process since the material it produced was very hard and
inconsistent. As a result, they thought that the process was getting out of hand and made corrective
actions to accommodate the desires of the customers in this project by being on schedule. However,
the project still failed. To sum it up, the case showed how bad metrics can have a hostile effect on
Earned value which affects the overall project adversely.
III. BRIEF HISTORY
Acme Avionics, Inc. is one of the leading companies for aviation electronics that was
established in the 1980s. It delivered products to the military, commercial, and business aircraft
market sectors and were able to generate annual sales of around $ 4 billion. The Program Manager
for the new development project, Mike Thompson, hired Howard, who was a Mechanical Engineer
in 14 years as a Technical Project Manager. He also assigned the new project to “Howard”.
Meanwhile, the company won the project due to their lower recurring cost for the system, and
attaining this level of the recurring cost was dependent on using the new process. The new project
was about manufacturing a new brand Airplane Boeing 787 which was not a derivative of an
Bad Metrics for Earned Value
Don Hallum
I. PROBLEM AND SOLUTION
Problem:
Increasing Cost Performance Index (CPI) on the Boeing 787 Project of Acme Avionics, Inc.
despite having acceptable Schedule Performance Index (SPI) mainly due customer- mandated
changes in the project scope during its implementation.
Solution:
The TPM must use new tools and define more metrics to measure and monitor the project progress
and also prepare a risk analysis while considering the project from all aspects. Moreover, it is
important to base the decision regarding the completion of the project according to various criteria
such as market share, customer satisfaction, resource’s availability as they may have to start with
a new project, also what are the risks if they handle it or continue for both contractor and customers.
II. EXECUTIVE SUMMARY
Controlling a project is key to the success or failure of the project. Earned Value
Management (EVM) is a well-known technique to control the time and cost performance of a
project and to predict the final project duration and cost. It is an easy tool to generate early warning
signals to timely detect problems or exploit project opportunities. The case showed the
chronological events of Acme Avionics, Inc. Company wherein there was a bad failure on a
specific project concerning manufacturing a new brand Airplane Boeing 787 which was not
derived from an existing certified airplane. In the new project, all customer’s necessities with a
large margin of safety relative to the’ typical’ strength properties of the new process should be
met. The Boeing 787 Project was assigned to Howard Bono, a Technical Project Manager. He did
all the possibilities to succeed in his career and at the same time to obtain success in the project.
Meanwhile, he saw that the customers were uncomfortable with the mechanical properties of the
material produced with the new process since the material it produced was very hard and
inconsistent. As a result, they thought that the process was getting out of hand and made corrective
actions to accommodate the desires of the customers in this project by being on schedule. However,
the project still failed. To sum it up, the case showed how bad metrics can have a hostile effect on
Earned value which affects the overall project adversely.
III. BRIEF HISTORY
Acme Avionics, Inc. is one of the leading companies for aviation electronics that was
established in the 1980s. It delivered products to the military, commercial, and business aircraft
market sectors and were able to generate annual sales of around $ 4 billion. The Program Manager
for the new development project, Mike Thompson, hired Howard, who was a Mechanical Engineer
in 14 years as a Technical Project Manager. He also assigned the new project to “Howard”.
Meanwhile, the company won the project due to their lower recurring cost for the system, and
attaining this level of the recurring cost was dependent on using the new process. The new project
was about manufacturing a new brand Airplane Boeing 787 which was not a derivative of an
