Variance At Completion (VAC) is the difference between what the project was originally expected (baselined) to cost, versus what it is now expected to cost.

Every month, our vendor is required to report this total on the project as a whole and on key deliverables.  I’m used to seeing the numbers reported and how to calculate them.  I’m not asking for the Cost Performance Index (CPI).  I want to know how far over or under we’re going to be compared to the budget.

The formula I memorized for the PMP exam and the same formula I use to calculate VAC today is: Variance At Completion = Budget At Completion – Estimate At Completion
(VAC = BAC – EAC)

So, I ask myself, [1] why is there no VAC definition and [2] VAC formula in the PMBoK?

There are probably two primary reasons you would go with an offshore team.

(1) Your customers are also offshore, or (2) you’re hoping to save money on development costs.

I’m going to assume your reason is number (2).  Though this post is brief for such a complicated topic, it should give you some things to think about.  Yes, you can certainly save a lot on development expenses. Then again, it can come back to bite you in rework expenses if there are communication issues.

How do you bridge the language barrier?
(1) You need a go-to guy or gal who speaks the same language as your developers but will be working at your location. This is a must. Your probability for success is going to go way up by ensuring there is no breakdown in communications.

How do you receive the quality of code you need?
(1) Use continuous integration
(2) Use test scripts to understand requirements
(3) Use short iterations
(4) Have regular builds
(5) Separate teams by functionality (not activity)

How do you communicate?
(1) If you can afford to send/bring someone (an ambassador) over to work with the other team at the beginning of the project, do it.
(2) It is critical that your “go-to” has a daily meeting with the team. Select a method that allows each side to see one another. (webcam/Skype)
(3) Have everyone use Skype (VoIP) and/or a chat client for one-on-one communications.
(4) Keep a Skype connection open between the offices.
(5) Use wikis or other collaborative solutions for common project information.
(6) Stay away from email, unless it is for formal communication. Information is going to get lost along the way and it will take longer to clarify.

Remember to use parallel communication methods, not serial.

As I study the collection and reporting of metrics and project statuses, I find many reports just do not deliver what they should. I believe there should be a stand-alone deliverable that a project manager is able to provide to a stakeholder at any time, illustrating the total project status.  I created a report and used the name “TPS Report” from the movie Office Space.  I try to interject a little humor into a project, where I can, without raising too many eyebrows.  Because I do not think I should keep all of the good stuff for myself, I hope others will download my free template.  It captures everything from overall project status to schedule, budget, scope, and quality, including a RAG (Red, Amber or Green) status.  What milestones were planned and accomplished?  What is planned for the next period?  Though I believe a subjective narrative does have its place in project reporting, I like the more objective approach.  Give your stakeholders the facts!
Please enjoy this free copy of  my Total Project Status Report Template.

Should all projects or programs utilize Earned Value Management?

Short answer: No
Long answer: The industry standard for project control systems described in American National Standards Institute (ANSI) EIA-748, Earned Value Management Systems, must be implemented on all projects with a total project cost (TPC) greater than $20M for control of project performance during the project execution phase.

Earned Value Management (EVM) is a systematic approach to the integration and measurement of cost, schedule, and technical (scope) accomplishments on a project or task. It provides both the contractee and contractor(s) the ability to objectively examine detailed schedule information, critical program and technical milestones, and cost data.

In layman’s terms, it quantifies the estimated value of the work actually accomplished.

While I was doing some research for my book, I came across an excellent quote by Bill Hewlett.  Do you think your boss understands this quote?

“You cannot manage what you cannot measure…and what gets measured gets done.”
— Bill Hewlett, Hewlett Packard