Fixed price project has some challenges for businesses to measure the performance via Earned Value (EV) analysis. As a client who outsourced this type of projects, you may have no control over resources in your contractors companies, so you don’t have the detailed cost breakdown of your project. Moreover, multi-vendor projects add more level of complexity to measure Earned Value indicators.
Here is my suggestion method to calculate Earned Value in your fixed price, multi-vendor projects.
As you know you have a couple of options in Project sever to enter costs of the project:
- Resource costs
- per use cost
- fixed cost
- cost resource
- Task Cost
For resource costs, depending on the type of the resource (work, material or cost) these costs act differently.
To analyze earned value for fixed price multi-vendor projects, you should not use the resource cost in your analysis. Since you do not have control over the vendor resources. You should not use cost resource either since the value of cost resource do not calculate over the Earned Value analysis indicators (ACWS). You should use fixed cost at the project level! Here are the benefits of using fixed cost in your projects:
- You can assign it to the whole project, there is no need to assign it to an individual tasks
- Values of fixed cost don’t roll up in your project summary task, so you can assign it to every step you need
- You can specify Accrual cost for fixed price, to be billed at the beginning of the task, when finished or prorated.
So here are my suggestion steps for you to analyze the earned value (EV) for fixed price multi-vendor projects:
- Enter project tasks and time schedules
- Enter the fixed cost of the project at the Project Summary Task
- Save the project as the baseline
- Have update on the project for %complete field
- See the results of EV.