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Getting my head wrapped around the PMP / PMI earned value methodology. Traditionally have tracked a project budget vs the actual spend on a simple basis with that being the variance etc.

The scenario is that you built your original WBS / costs then get hit with work that was 100% not planned. My thought here was that these items get tracked separately and don't belong to a specific WBS because they were not planned. This way you can show the progress of the original scope of work and then clearly identify the items that were 'out of scope'.

That being said I also see that perhaps the better way to do this is that if that new scope of work is approved it's a change order and you should be revising your budget accordingly. The down side I see is that the the new estimate at completion is now showing 'on budget' when in reality it is beyond the original budgeted amounts.

Is there a preferred or better defined method to manage these changes of scope and resulting costs?

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You should never perform work that is out of scope without a change request that would modify the scope and provide additional budget and time.

When you complete a change request, assuming the scope changed caused the budget to increase, both the BAC and EAC will be revised to accommodate that change. The original BAC disappears as if it never existed because, if the new scope was identified before work ever began, then the original BAC would have never existed. So it follows that you treat the original BAC, after a change, as if it never existed.

It makes no sense to compare the new post-change EAC with the original, pre-change BAC and then declare the project is overrunning. The only two stakeholders who are allowed to do that are the media and politicians.

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  • I would add senior management to that list of stakeholders lol. In hindsight you are right and my second statement in my post aligns with that. In my case the scenario I have in mind is where the change is a 'screw-up` and they want to quickly point to the budget and say $X over the pre-change BAC.
    – Dan Tappin
    Feb 9 at 20:53
  • There shouldn't be a change request for a screw-up. If a mistake was made and rework had to occur, then the original work package never really completed and you would simply continue to accrue costs and time. That would be a variance. The rule is: no change requests for the sole purpose of removing a variance. Feb 9 at 21:00
  • Also a good point - the scenario I had in mind here was where the client specifically wanted the original budget changed. In hindsight I should have pushed back or just tracked it separately on my end. The project came in 'on buget'! lol
    – Dan Tappin
    Feb 9 at 21:04
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    Well, there's the right thing to do and the right thing to do. From an EVM standpoint, I wouldn't pursue more budget for a work error but, as a seller of services, if the customer wanted to give me more budget (and fee) and let me report a better variance, I don't think I would turn it down if I was being honest with myself. Feb 9 at 21:23

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