Introduction
The study’s main objectives include identifying the role of SMEs in the U.S. economy. The research will consider the number of SMEs in a specific city, identify their primary activities, find the number of employees working in a specific SME, and estimate these changes. The project will also aim to assess whether the owners of these SMEs are aware of their impacts on the economy. Other projects’ goals include identifying the rate at which these SMEs help alleviate poverty. Conversely, the project will aim at helping the major stakeholders of SMEs, including the government, non-governmental organizations, and financial institutions, understand the impact of SMEs on their economy to create an enabling environment that will enhance their growth.
The project will be covered in three milestones: data collection, analysis, and interpretation. Information gathering will entail using questionnaires to collect first-hand data from entrepreneurs. Random sampling will choose entrepreneurs who have viable information regarding the project milestones. Secondary data will be sourced from the SMEs to help identify their history. Data interpretation will be through SPSS and other statistical tools, such as ANOVA, to enhance accuracy and analyze the data collected. The ethical objectives will entail seeking consent from entrepreneurs to collect data from various enterprises. Filling and submitting the questionnaires in this project will thus be free and voluntary to avoid any cases of bias.
The project’s objectives seek to identify the beneficial roles of SMEs in the U.S. economy by identifying the number of SMEs currently operating in each state, the number of employees who depend on these enterprises, and the revenue collected from these businesses organizations. Families and individual citizens who have experienced transformation in their well-being are expected to be identified. These results will be critical in attracting more support for these enterprises, especially from the government expected to create an enabling environment to enhance their expansion. In the long run, more support from the government and other non-governmental organizations will be expected once they learn of these SMEs’ impact on enhancing the economy’s growth.
Project Risks
Risks are an integral part of projects as they are almost inevitable in a business organization. However, the project manager needs to ensure that risks are minimal. Risk management is the practice of identifying, evaluating, and preventing or mitigating risks to a project that have the potential to impact the desired outcomes. The most significant risks affecting this project include modification of project scope, erroneous budget control, unrealistic deadlines, and communication challenges.
Changes to the scope and schedule of a project may lead to additional features, functions, and, ultimately, costs. The scope creep risks are inherent to every project and possess an undesirable challenge to project completion. This is due to demanding additional resources, which lowers team morale as they are forced to work extra hours to complete the added work. Scope creep is where the project outline is not well documented; thus, the solution entails having clearly defined expectations. (McHale, 2019) The project manager should set up a change control process that entails a favorable contingency plan for all parties. This entails a standard for reviewing, approving, and implementing the identified changes. In addition, the project schedule should be flexible in considering changes to improve the project. The project manager should finalize the project schedule and scope with the team to avoid miscommunication issues that lead to unfavorable project changes.
Budgetary controls can be the difference between a successful project and a failed one. Inaccurate budget estimates due to project assumptions that lead to wrong cost estimates may lead to an unplanned increase in budgetary costs. This increase in expenses above the set limit in the budget occurs as a result of a lack of detailed budgeting in the project planning phase. The project budget should be evaluated and determined to approximate real expenses to reduce cost variances. For project performance data, the actual costs of each budget component, such as the contingency reserve against identifiable risks and the management reserve against undiscovered risks, can be documented individually (Kwon & Kang, 2019). Improving project cost management requires analyzing and evaluating the discrepancy between budgets and actual costs for each budget component.
The risk of unrealistic deadlines emanates from discrepancies between project participants. The lack of a clear plan with detailed requirements and expectations leads to difficulties due to mismatching expectations. In addition, the uncertainty regarding project scope and lack of information on the work amount leads to unrealistic deadlines. Unrealistic deadlines are indicated by missed delivery dates and overrunning costs. It is prudent for the project manager to set detailed expectations based on the team’s capability, available resources, and project outcomes. The planning stage is critical as it ensures team members understand the project plan and deadline dates. In addition, the plan should consider contingencies to ensure that project modifications do not affect performance by having clearly defined roles, task dependencies, an established key performance index, and a communication plan.
The lack of productivity due to communication issues can lead to project delays. Poor communication leads to misunderstandings leading to team members’ confusion. Project managers need to keep team members updated on project changes to ensure project completion. Regular communication at each stage of the project is necessary as it ensures each team member knows what has been done and the next project phase, thus eliminating unnecessary delays.
Earned Value Management Tool
Earned value management assesses project progress by integrating the project scope, schedule, and resource management. EVM measures and forecasts the achievement of a project against its targets. Three values are used to determine a project’s efficiency: planned value, actual cost, and earned value. Planned value entails the project objective and its cost measures. The actual cost highlights how much the project costs, while earned value entails what the project has achieved. These values can reliably measure the performance status and predict the project finish date and the final cost. The project baseline is an essential component of EVM and serves as a reference point for all EVM-related activities. EVM provides quantitative data for project decision-making due to its superior cost-performance evaluation. The first metric entails cost variance, which is the difference between the earned value and actual cost.
The earned value is the current cost of the work in progress. The project costs are under-planned when the cost variance is positive, overestimated when the variance is negative, and unplanned in case of a zero variance (Ray, 2022). Projects are prone to unexpected delays regarding completion dates and budgetary constraints. Therefore, it is prudent for project managers to regularly assess the project to determine bottlenecks that hinder project completion.
The most significant factor in project management is failing to meet critical milestones on time. Earned value management provides vital information to project managers regarding the running and cost control of the budget. EMV can be used to assess the root causes of project delay, including wrong deadline estimations. In addition, earned value management can be used to determine whether a team’s multitasking efforts create project bottlenecks that lead to project delays. Multitasking ties key resources to one part, thus depriving other departments of the resources required to complete tasks. EMV is a flexible project management metric as it determines a flexible and specific process for monitoring and closing a project.
The second metric entails schedule variance, expressed as the difference between earned and planned values. The planned value refers to the projected cost of work in progress. A positive schedule variance value indicates that the project is on track, whereas a negative schedule variance indicates that the project is delayed. A zero variance highlights that the project is on schedule. The third metric is the cost performance index, expressed as the ratio of earned value and the project’s actual cost. Where the cost performance index is less than one, the project is overbudgeted, while an index above one means the project is underbudgeted. A zero ratio means the project is on budget.
The schedule performance index, which is expressed as a ratio between the project’s earned and planned value, is the fourth metric used to manage the project. A project is delayed if the ratio is less than one, ahead of the project timeline if the ratio is greater than one, and on track, if the index is zero (Thakur, 2019). These metrics ensure that the project is improved continuously to gain cost efficiencies. The primary objective of analyzing the earned value metrics is to create core competencies for effective project management that maximizes value for the team.
A project manager collects and analyzes data from the project schedule to determine its efficiency and whether the project timeline aligns with the budget. EMV objectives include predicting project performance, reducing expenditure risks, and better accountability and tracking. EMV shows objective data and analyzes the probability of a team reaching its milestones and budget. In addition, a project manager can easily avoid risk as it helps one discover the project’s progress.
The team can better manage budget flow with EMV metrics and help project managers communicate progress objectively. The most effective project management strategy based on the EMV is to use a work breakdown structure that schedules tasks logically where lower-level elements support high-level milestones. In addition, the project manager can allocate budgetary resources to control accounts. The control accounts help with fiscal constraints as funds are released after completing work regarding the previous milestones. EMV analysis of performance variances helps develop corrective measures and control changes to the baseline
Conclusion
The research objectives aim to identify SMEs’ role in the U.S. economy to ensure increased funding. Information gathering will entail using questionnaires, and data interpretation will be through SPSS and ANOVA to enhance accuracy and analyze the data collected. The four most significant risks impacting this project entail changes to the scope and schedule, inaccurate budget estimation, unrealistic deadlines, and lack of team commitment due to communication issues. Earned value management tool will be used to assess the competency of the project through metrics, including cost variance and schedule variance.
Sources
Kwon, H., & Kang, C. W. 2019. Improving project budget estimation accuracy and precision by analyzing reserves for both identified and unidentified risks. Project Management Journal, 50(1), 86-100.
McHale, B. 2019. What are the different types of risks in project management? Project Central.
Ray, S. 2022. Using earned value management to measure project performance. Project Manager.
Thakur, M. 2019. Earned value management system; three crucial metrics of EVM. EDUCBA.