Weekly Discussion Question – (25 points)
Situation — As you are nearing the completion of the DIT Project Cost Management Template (CMPT), you want to get some feedback from your team
members because you hope to get your Program Manager’s support for an ASDG peer review sometime in the next week or two
Assignment — On the Week 10 discussion board forum, discuss how forecasting project performance using alternative assumptions to control costs is conducted
Explain how NPV is performed and how information gathered from both NPV and EVM calculations can be used to forecast the progress of the project.
Weekly Discussion Question: NPV & EVM
NPV is the difference between the present value of cash inflows and the present value of cash outflows over some time. The NPV is used in capital budgeting and the investment planning of the organization as well. The NPV helps to understand and also helps to know how much of the money the project will gain or lose according to today’s funds. In short, it can be said that it provides detailed information about the fund and whether the investment made today will generate a profit or not (Bogataj & Bogataj, 2019, p.15). The main purpose of the NPV is that it helps to provide information that the investment that has been made is good for the organization or not.
Earned value management can be considered as the project management technique for objectively measuring project performance and progress. It measures and monitors the level of the work which has between completed as per the plan made on this.
It can be said that information gathered from both NPV and EVM calculations can be used to forecast the progress of the project impact of scope changes on the project plan using EVM. IEEE Access, 8, 154589-154613.
(Tariq et al. 2020, p.5). The information provided by both of them helps the project in getting the correct information and some of it is stated below-
Helps to understand the profit and loss- Both NPV and EVM help to forecast the project. Both help to understand the profit and the loss of the project which simultaneously helps to forecast whether it is profit or loss which will take place in the project as well. With the investment done in it at the initial helps to know whether the investment made will provide profit or the loss from it or not. It can be said that forecasting helps to understand whether investing should be done or not.
Helps to understand the progress in the project- With the help of both it can be said that it can be easier to understand how much progress is taking place in the project or what other requirements are needed in the project as well. With the progress of the project, it can be easy to forecast or determine the project and how it will go or how long time is required for the completion of the work as well. It can be said both of them are essential to understand the project and its progress.
Information about where to invest- The NPV helps to understand whether the investment made is correct or not or at which place the investment is required to be made or not. The information on where to invest helps to forecast the progress of the work. The NPV helps to provide the information at which place the initial investment should be done so that it can provide the profit in the project and the project will not go into the loss as well. It can be said that the information which is received from the forecast has been done beforehand so that the investment can be made in a better place and not get any loss on that.
Monitor the work and guide as well- One of the help that the EVM and the NPV provide is the monitoring of the work. It can be said that EVM helps to monitor that work and what are the works which get completed or which need more attention before the completion. Both help to forecast and provide information that where the improvement is needed so that the project can get completed properly within the provided time limits (Nadafi, Moosavirad & Ariafar, 2019, p.5). The EVM helps to provide the information related to the information of the work. So it can be said that both guide the project whether it is related to the investment or for the performance of the work.
References
Bogataj, D., & Bogataj, M. (2019). NPV approach to material requirements planning theory–a 50-year review of these research achievements. International Journal of Production Research, 57(15-16), 5137-5153.
Nadafi, S., Moosavirad, S. H., & Ariafar, S. (2019). Predicting the project time and costs using EVM based on gray numbers. Engineering, Construction, and Architectural Management.
Tariq, S., Ahmad, N., Ashraf, M. U., Alghamdi, A. M., & Alfakeeh, A. S. (2020). Measuring the impact of scope changes on project plans using EVM. IEEE Access, 8, 154589-154613.
