Earned Value Management

Transcription

1 Earned Value Management Program and Project Management Enablement April 2010 Contact:

2 What is Earned Value Management and Why Do I Need It? Complex projects have a need for accurate and consistent status information 70% of large projects are over budget and behind schedule 1 50% of all projects finish at 190% of their initial budget 1 And some, after huge investments of time and money, are simply never complete 1 EVA compares the PLANNED amount of work with what has actually been COMPLETED to determine if COST, SCHEDULE, and WORK ACCOMPLISHED are progressing as planned Work is earned or credited as it is completed Earned Value Management (EVM) is needed because There are different measures of progress for different types of tasks There is a need to roll up progress of many tasks into an overall project status There is a requirement for a uniform unit of measure (dollars or work-hours) Additionally, EVM provides an early warning signal for prompt corrective action Earned Value Management is required for ARRA projects and DOE Grants, but is also a premium project management tool in its own right ScottMadden has built, managed, and evaluated Earned Value systems on behalf of our clients with projects as large as $250 million in value Note 1: The Standish Group 1

3 Why is Earned Value Different? Integrated project performance is determined by the three parameters displayed in the Performance Triangle below All three dimensions of project performance must be monitored and controlled to ensure that all project deliverables are attained Scope Cost/Resources Schedule Traditional project management often reverts to pick any two; EVM is a way to look at all three simultaneously, a true measure of project effectiveness 2

4 Earned Value Basics 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 In comparing Earned Value Management to Traditional Management, Traditional Management does not allow for analysis of the physical amount of work performed. Earned Value Management allows for both schedule and cost analysis against physical amount of work performed The inputs required for an EVM system include: Work Breakdown Structure (WBS) Organizational Breakdown Structure (OBS) Project schedule Time-phased baseline budget Cost/resource control plan Change control plan WBS/OBS Project Schedule Resource Planning Define/Assign Schedule/Budget Establish Baseline Accounting System $$$ The Earned Value Management system includes: Earned Value (EV) Actual Cost (AC) Metrics and performance measurements Forecasting Integrated baseline review Earned Value Management system Performance Measurement Early Warning & Detection Informed Management Decisions Corrective Actions Recovering Planning The outputs required for an EVM system include: Reporting requirements Proper analysis of reports Correct action taken 3

5 Earned Value is a National Standard Earned Value Management (EVM) has become an ANSI standard primarily driven by PMI (Project Management Institute) sponsorship since the 1990 s, and is prominently included in PMBOK EVM is a system that manages project cost and schedule performance measurements as integrated elements and not as separate entities EVM is a primary element of the all government sponsored projects, but is also utilized by major construction companies, nuclear organizations, and some fossil organizations EVM is essentially based on three basic metrics: Budgeted Cost of Work Scheduled BCWS How much work (in terms of both time and money) is planned for the project? Actual Cost of Work Performed ACWP How much did that same work actually cost (labor, materials, etc.) to perform? Budgeted Cost of Work Performed (or Earned Value) BCWP (or EV) What was/is the value of the work that was/is planned for a given time period in the project schedule? The BCWS can be depicted as an S curve with cost on the vertical axis and schedule (time) on the horizontal axis The BCWP is the % task complete multiplied by the task s total project budget (BAC or Budget at Completion) The ACWP (actual cost incurred) will be reported from the company financial system at a total project level Earned Value is the standard for all federal projects including all stimulus work, and is an industry standard used by large construction EPC contract management firms 4

6 Earned Value Starts With the WBS and OBS The Work Breakdown Structure (WBS) is a tool that defines a project and groups the project s discrete work elements in a way that helps organize and define the total work scope of the project WBS provides the necessary framework for detailed cost estimating and control along with providing guidance for schedule development and control. Additionally the WBS is a dynamic tool and can be revised and updated as needed by the project manager WBS WBS = Work Breakdown Structure OBS = Organization Breakdown Structure Control Accounts (CA), where work scope, schedule and cost are planned and managed OBS The Organization Breakdown Structure (OBS) indicates the organizational relationships and is used as the framework for assigning work responsibilities The OBS is structured by Responsible Department and then by Performing Department at the lowest level. The Performing Department level is where the responsibility and resource needed to accomplish the project will be assigned Source: PMI 5

7 Calculating Earned Value Metrics There are a variety of useful metrics that can be generated within the EVM system all derived from the three basic measurements of BCWS, ACWP, and BCWP Metrics Basic BCWS = Budgeted Cost of Work Scheduled ACWP = Actual Cost of Work Performed BCWP (or EV) = Budgeted Cost of Work Performed or Earned Value BAC = Budget at Completion (total dollars budgeted for project) Variance CV (Cost Variance) = BCWP ACWP CV % (Cost Variance %) = (BCWP - ACWP) / BCWP SV (Schedule Variance) = BCWP - BCWS SV % (Schedule Variance %) = (BCWP BCWS) / BCWS Performance Indices CPI (Cost Performance Index) = BCWP / ACWP Is the work tracking above/below budget given the actual work completed to date? SPI (Schedule Performance Index) = BCWP / BCWS Is the work tracking above/below schedule given the actual work completed to date? Managing through a well-constructed Earned Value system will provide the ability for project managers to identify schedule and cost issues early enough to positively react 6

8 EVM Dashboard Displays From ScottMadden Toolkit Project-Level Summary Basic Metrics Status Metrics Summary (BCWP) Budgeted Cost of Work Performed (BCWS) Budgeted Cost of Work Scheduled (ACWP) Actual Cost of Work Performed (BAC) Budget at Completion % Scheduled: (BCWSc/BAC) % Complete: (BCWPc/BAC) Proj X $0 $0 $0 $21,117, % 0.0% Variance Metrics Performance Indices Data Updated: xx/xx/xxxx Reporting Month: xx/xxxx (CV) Cost Variance: (SV) Schedule Variance: (CV %) Cost Variance %: (SV %) Schedule Variance %: (CPI) Cost Performance (SPI) Schedule Performance Index: (BCWP-ACWP) (BCWP-BCWS) (BCWP-ACWP/BCWP) (BCWP-BCWS/BCWS) Index: (BCWP/ACWP) (BCWP/BCWS) $0 $0 0.0% 0.0% $22,500,000 $20,000,000 $17,500,000, $15,000,000 $12,500,000 $10,000,000 $7,500,000 $5,000,000 $2,500,000 $- The Blue line is the BCWS 7

9 Earned Value Management Terminology EVMS BASIC COMPONENTS AC = actual cost = ACWP = actual cost of work performed EV = earned value = BCWP = budgeted cost for work performed PV = planned value = BCWS = budgeted cost for work scheduled BAC = cumulative PV = cumulative BCWS = budget at completion VARIANCES CV = EV - AC = BCWP - ACWP = cost variance SV = EV - PV = BCWP - BCWS = schedule variance CV% = (EV - AC)/EV = (BCWP - ACWP)/BCWP = cost variance, percentage SV% = (EV - PV)/PV = (BCWP -BCWS)/BCWS = schedule of variance, percentage VAC = BAC - EAC = variance at completion OVERALL STATUS % scheduled = PV cum /BAC = BCWS cum /BAC % complete = Ev cum /BAC = BCWP cum /BAC %b budget spent = AC cum /BAC = ACWP cum /BAC WR = BAC - EV cum = BAC - BCWP cum = work remaining BR = BAC - AC cum = BAC - ACWP cum = budget remaining PERFORMANCE INDICES CPI = EV/AC = BCWP/ACWP = cost performance index SPI = EV/PV = BCWP/BCWS = schedule performance index TCPIBAC = WR/BR = to complete performance index, BAC TCPIEAC = WR/ETC = to complete performance index, EAC

10 S Integrating EVM Into Other ScottMadden Project Management Tools Project Management Tools Overview Risk Map Low Value High Low Technological Architecture Project Documentation Resources Data Migration and Go-Live Resources Change Management Project Governance Change Management Data Migration and Go-Live Project Governance Interfaces Project Management Manageability Project Management Technological Architecture Application Legacy Systems Legacy Systems Application DOE PVMS (for stimulus projects) PROJECT PRGTnnnn Implementation REF. 1 / 24 MONTH MARZO 2001 PHASE PROTOTIPAZIONE MONTHLY STATUS REPORT PROJECT STATUS E stato definito il System Integrator. E' stato definito il Piano di progetto. E' stata impostata la proposta di Struttura Organizzativa di Progetto. E' stata impostata la baseline per i costi di Progetto Sono state attivate le Procedure di Gestione Scope Change Request, di Gestione Issue List e di Gestione della Documentazione. E' stato Definito il tool di gestione della documentazione di Progetto. E' stata impostata l'analisi del Rischio. High Interfaces Project Documentation OPEN ISSUES ACTIONS RESPONSILE DUE DATE 1 - L'Ambiente di Prototipazione non è disponibile. Predisporre ambiente prototipazione p IT Project Manager 06/04/01 / NEXT STEPS Ufficializzazione Struttura Organizzativa di progetto. Definizione dei componenti dei team da parte dei Responsabili/Referenti. Verifica profilo di spesa e budget Architettura Tecnologica. Impostazione attività di Quality Assurance. Dashboard F.G.P. PROJECTS DRIVING BOARD 30-Apr M ay-01 Tendency Tendency Status TIME COST (Euro) Open issues (previous) (actual) Project Manager Type Impact Baseline Baseline Forecast Budget Order Project Description Actual Forecast & Critical Points Start End End CMFR0027 PRGT00PB Powerbrain Sorrenti F M 1-Nov Aug Aug-01 26,550 26,085 26,550 CMEV0007 PRGT1572 Impl. Verrone Plant Serafino F M 15-Jan Sep Sep-01 82, ,633 CMSP0015 PRGT2982 HRMS new. Devel. Pukly F H 1-Jan Dec Dec , ,785 CMSP0015 PRGT3044 Web professional Pukly F M 15-Apr Dec Dec-01 71, ,975 CMSP0039 PRGT0017 Estesa Di Carlo O L 7-May Jun Jun-01 23, ,750 CMSP0015 PRGT3047 I.I.S. HR FGP Pukly F L 1-Jan Jul Jul-01 77, ,468 CMSP0028 PRGT0014 Engine Sperim. Appl. Brezigar O M 12-Apr Dec Dec , ,479 Legend Total 549,640 26, ,640 Type Compulsory (O) Impact High (H) Statust Critical Tendency Flat Firm (F) Medium (M) Medium Raising Opportunity (O) Low (L) On track Falling Integrated Cost and Progress (EVM) Baseline (Core) Baseline (Contingency) Actual Forecast CODE NAME TYPE ORDER XXX XXX Date 05/17/ PROJECT PRGTnnnn CODEImplementation NAME Compulsory Firm TYPE Opportunity ORDER XXX XXX Date 05/17/ PROJECT PRGTnnnn CODEImplementation NAME Compulsory Firm TYPE Opportunity Description: References Architecture ORDER XXX XXX Date 05/17/ Client: Operating System: Windows NT Client Legal Entity/Functions: PROJECT PRGTnnnn Implementation Compulsory Firm Opportunity CODE IT Project Manager: NAME HW Platform: TYPE Description: References Architecture Server Compaq NT ORDER XXX IT Client Manager: XXX Data Base: Date 05/17/ Client: Operating System: Windows NT User Legal Entity/Functions: IT Application Manager: Client Legal Entity/Functions: PROJECT PRGTnnnn CODEImplementation IT Project Manager: NAME Compulsory Firm HW Platform: TYPE Opportunity Server Compaq NT Description: IT Architect: References Architecture ORDER XXX IT Client Manager: XXX Data Base: Client: Operating System: Date 05/17/2001 Windows NT User Legal Entity/Functions: IT Application Manager: Impact on other Client Projects/Applications Legal Entity/Functions: PROJECT PRGTnnnn Implementation Compulsory Firm Opportunity Description: IT Architect: Notes IT Project Manager: Operating HW Platform: References Costs Forecast Architecture Server Compaq NT 5000 IT Client Manager: Data Base: Operational: Client: Operating System: Windows NT User Legal Entity/Functions: IT Application Manager: Maintenance: Impact on other Client Projects/Applications Legal Description: Entity/Functions: Notes IT Project Manager: Operating HW Platform: Costs IT Architect: References Forecast Architecture Server Compaq NT IT Client Manager: Data Base: Operational: 0 Client: Operating System: Windows NT Milestones User Legal Entity/Functions: Costs (Euro) IT Application Manager: Maintenance: Issues Impact on other Client Projects/Applications Legal Entity/Functions: Notes IT Project Manager: Operating HW Platform: Costs Forecast Server Compaq NT Start 28-Feb-01 Initial Budget IT Architect: IT 40,949 Client Manager: Data Base: Operational: End (Baseline) Milestones User Legal 31-Mar-03 Entity/Functions: Actual Costs (Euro) IT 19,208 Application Manager: Open Issues Issues 10 Maintenance: End (Estimate Impact to date) on other Projects/Applications Start 31-Mar Feb-01 Total Cost Initial Forecast Budget IT 38,489 Architect: Notes Operating Costs Forecast 40,949 Operational: Expected End gap (Baseline) 0.00% 31-Mar-03 Expected Actual gap -6.01% 19,208 Closed Open Issues Issues 20 Milestones Costs (Euro) Issues 10 Maintenance: End (Estimate Impact to date) on other Projects/Applications Start 31-Mar-0328-Feb-01 Total Cost Initial Forecast Notes Operating Costs Forecast Budget 38,489 40,949 todayy actual Total Issues Operational: 30 Expected End gap (Baseline) 0.00% 00% M Expected At gap -6.01% 6 Closed Issues 20 Milestones 31-Mar-03 Actual Costs (Euro) 19,208 Open Issues 10 Maintenance: Issues 50% 100% 150% End (Estimate 200% to date) Start 31-Mar Feb-01 50% 100% Total 150% Cost Initial Forecast 200% Budget 38,489 % Open 40,949 Issues/Total Issues 33.33% today Total Issues 30 Expected actual End gap (Baseline) 0.00% Expected gap -6.01% Closed Issues 20 Milestones 31-Mar-03 Actual Costs (Euro) 19,208 Open Issues Issues 10 total 50% duration 100% forecast150% End (Estimate 200% to date) total 50% cost forecast Start 31-Mar-0328-Feb % Total 150% Cost Initial Forecast 200% Budget 38,489 % Open 40,949 Issues/Total Issues 33.33% today actual Total Issues 30 Expected End gap (Baseline) 0.00% 31-Mar-03 Expected Actual gap -6.01% 19,208 Closed Open Issues Issues total 50% duration 100% forecast150% End (Estimate 200% to date) 31-Mar-03 total 50% cost forecast 100% Total 150% Cost Forecast 200% 38,489 Overall Project Status Project Characteristics % Open Issues/Total Issues 33.33% today Best Practice Total Adherence Issues 30 Expected gap 0.00% actual Expected gap -6.01% Closed Issues 20 Costs Detail total duration forecast total cost forecast CRITICAL MEDIUM GOOD 50% 100% 150% 200% Impact: HIGH MEDIUM 50% LOW 100% 150% 200% Overall Project Status Project Characteristics 0 1 % Best Practice 2Open 3Issues/Total Adherence 4 Issues 33.33% today actual Total 30 Supplier: ORDER COMM NameComm BASELINE VS ACTUAL VS FORECAST F.G.P. total duration forecast total cost forecast CRITICAL MEDIUM GOOD 50% 100% 150% 200% 50% 100% 150% 200% Impact: HIGH MEDIUM LOW Overall Project Status Project Characteristics 0 1 Best % Practice 2Open 3Issues/Total Adherence 4 Issues 33.33% PROJECT PRGTnnnn Implementation Back to index Supplier: total duration forecast total cost forecast CRITICAL MEDIUM GOOD Impact: HIGH MEDIUM LOW Overall Project Status Project Characteristics 0 1 Best Practice 2 3Adherence 4 Supplier: COST (Euro) CRITICAL MEDIUM GOOD Impact: HIGH MEDIUM LOW Overall Project Status Project Characteristics 0 1 Best Practice 2 3Adherence 4 Supplier: Cost Type Cost Element Baseline Actual Forecast Notes CRITICAL MEDIUM GOOD Impact: HIGH MEDIUM LOW Supplier: Development & Implementation 18,550 2,434 18,550 External Resources Operational/Applicational li l Mngt , ,783 3,783 Total System Development 22,333 6,217 22,333 Schedule HW/SW Design & Consultancy 1,572 1,572 1,572 HW/SW Acquisition 6,500 6,500 6,500 I costi relativi all'architettura tecnologica saranno dettagliati al termine SW Licences 3,145 3,145 3,145 della fase di definizione dei requisiti Total HW/SW Mgnt 11,217 11,217 11,217 Project Scorecard (each project and a roll-up) System Dev velopment HW/SW Management Gen 01 Feb 01 Mar 01 Apr 01 Mag 01 Giu 01 Lug 01 Ago 01 Set 01 Ott 01 Nov 01 Dic 01 Gen 02 Feb 02 Mar 02 Apr 02 Mag 02 Giu 02 Lug 02 Ago 02 Set 02 Ott 02 Nov 02 Dic 02 Gen 03 Feb 03 Mar 03 Total External Costs 33,550 17,434 33,550 APPROVED CHANGE REQUESTS Nr. Description Approval Allocated Date Contingency Total Internal Resources 4,564 1,674 4,564 Partial Project Total 38,114 19,108 38,114 Contingency 2, Sono state attivate 3 Scope Change Request Overall Project Total 40,949 19,208 38,489 9

11 Jere (Jake) Jacobi Sustainability Practice Leader ScottMadden, Inc Piedmont Rd, Bldg 10 Cristin M. Lyons Partner ScottMadden, Inc Glenwood Ave Suite 805 Suite 480 Atlanta, GA Raleigh, NC Phone: Phone: Mobile: Mobile: