Question

Case Study That "Which Is Not Earned Is Never Valued" by Sabin Srivannaboon Famous for its reliable service and low price campaigns, DXT was one of the well-known mobile operators in the area. The company customer base comprises prepaid customers, and it was doing well in this territory. To take the company into another level, the management team started looking at expanding the com- pany business into an uncharted areathe postpaid customer segment. DXT was a program-driven company. Last year, DXT initiated more than 40 programs, addressing various issues from the organizational structure to the competition perspectives. This year, many programs were dedicated to the post- paid customer segment as efforts in diversifying the company business. However, the postpaid customer segment was something that DXT wasn't familiar with. And the company was still unclear as to what competitive advantage it would and should provide to its postpaid customers. As a result, several programs were mov- ing in different directions, and the company ended up nowhere. The deadlines for many programs were clearly defined from the beginning. Nevertheless, DXT failed to provide a clear idea of what kind of strategies and actions they really wanted to see. Eventually, many programs failed. The lack of the alignment seemed to be a major issue at DXT these days. XTRA AND THE EARNED VALUE CONCEPT Xtra was a program that was carried out at the end of the year. Because of its strategic importance, the program delay wasn't acceptable. To make sure the pro- gram would be completed on time, the program team decided to use the Earned Value concept. Although it was a good intention, the program team faced one big challenge: the earned value concept had never been implemented in the company before! And as one could expect, the team ran into multiple problems and difficul- ties not only in managing the program itself, but also understanding and using the earned value concept. Figure 17.2 is the Earned Value Chart of the recently closed-out Xtra program. The program objective was to develop a set of marketing projects for DXT's postpaid customer segment over a period of three months. WHAT WENT WRONG? Trying to understand what went wrong and the earned value concept better for future programs, the team looked back at the history of the Earned Value Chart. Although the Xtra program status appeared to be ahead of the schedule and budget plans at the beginning, the turning point was around December 21, the long vacation period, because of a lack of the company's clear direction. Since then, things got worse as the program progressed. As an effort to recover the pro- gram status, the Xtra program team tried to cut down several program scopes with hopes of improving the earned value. But problems never ceased coming. In the end, the program was not fully able to recover, and less work was accomplished than planned. In other words, the program was not able to deliver its full results. Eventually, the program was called off. At the termination time (February 22), the program was behind both schedule and budget. The Xtra program ended up spending $10,000, but only accomplished $8,600 worth of work, while the fore- casted budget at completion was $13,000 (March 8). One major lesson learned was that in implementing the earned value concept both the Schedule Performance Index (SPI) and Cost Performance Index (CPI) Figure 17.2

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1 . Summary 2. Analyze the program history and calculate the program schedule performance index (SPI) and the program cost performance index (CPI) at different major points in time of the program life cycle. 3. What could have been done when the cost and time overruns were detected? 4. Whatwouldbethemajorchallengesinimplementingtheearnedvalueconcept? How can such challenges be overcome? 5. Why does the SPI become less significant as the program neared completion? 6. Conclusion

Figure 17.2 The Earned Value Chart of the Xtra Program $ 12,000 Planned Value 10,000 Actual Cost Earned Value 8,000 6,000 4,000 2,000 0 Dec 7 Dec 14 Dec 21 Dec 28 Jan 4 Jan 11 Jan 25 Feb 1 Feb 8 Feb 15 Feb 22