Orange County Convention Center Orlando, Florida June 3-5, Using SAP PS Earned Value to Manage IT Projects Michael Kim

Transcription

1 Orange County Convention Center Orlando, Florida June 3-5, 2014 Using SAP PS Earned Value to Manage IT Projects Michael Kim

2 AGENDA What is a typical problem with IT projects? What is Earned Value (EV)? How can EV help IT projects?

3 LEARNING POINTS Steps to get IT projects ready for Earned Value (EV) Steps to set up SAP EV in Project System (PS) How to make the best use of EV for your organization

4 TYPICAL PROBLEM WITH IT PROJECTS Unlike projects that build physical objects such as buildings or houses, it is hard to measure progress on IT projects On IT projects, it is easy to spend money without knowing where it is being spent Money is spent with no meaningful or measurable progress Money & resources are gone and you still have work that is not complete By the time you realize your mistakes, it is TOO LATE You cannot Manage what you cannot Measure

5 WHAT IS EARNED VALUE (EV)? Earned Value Management is a project management technique for measuring project performance and progress in an objective manner. EV is commonly used by government contractors and companies that work on Engineering and Construction projects, such as Power Plants and Aircraft Development NASA, DOD, DOE, Utilities, Aerospace & Defense Contractors and Construction Companies are some of the biggest EV users Using the objectivity EV provides, it can help alleviate the typical IT problem we discussed earlier For more examples and explanations of EV, please refer to

6 Most Reports do not show Progress Most Plan vs. Actual Reports show planned vs. actual only This does not provide enough insight into progress Is the project shown below behind or ahead on schedule and budget? Cum. Budget Cum. Actual Period Cum. Budget Cum. Actual

7 EV adds the third dimension, Progress EV ($54) is greater than Actual Costs ($50), i.e., project earned more than it spent got more bang for the buck EV ($54) is less than Plan ($60) project is behind schedule Cum. Budget EV Cum. Actual Period Remarks Cum. Budget BAC (Budget At Completion) % Complete 15% 30% 45% PC (Percent Complete) Earned Value EV = PC * BAC Cum. Actual

8 How can EV help IT projects? Using EV forces Project Manager to use rigor & discipline Since you cannot manage what you cannot measure, break up IT deliverables in measurable chunks of work For each project, come up with a list of deliverables or tasks in chunks of 80 to 100 hours each For example, if an Enhancement requires 400 hours of work, try to divide it down to four 100 hours per deliverable Use an objective EV method such as Start/Finish (0/100, 20/80, or 50/50) or Milestones to determine progress If possible, try to avoid Percent Complete (Estimates) method - it is hard to make this a consistently objective figure Measure progress every week or two, and identify issues and risks early on, before these turn into disasters EV can be used as an early warning system for IT projects.

9 EV Methods Supported in Standard PS Eight EV methods are supported in Standard SAP PS For IT Projects Milestones & Start/Finish Methods are recommended

10 Steps to set up SAP EV in Project System Shown below are the minimum CONFIGURATION Steps Required Create a Progress Version (a special CO Version) 100 is a Standard Progress Version reserved for EV, so this can be used More than one Progress Version can be used Set Plan Version, EV basis, Early/Late Dates Set up PS Value Categories Labor, Material, ODC, OH, G&A, etc. are recommended The best way to do this is to map CO CE Groups to PS Value Categories Assign Default Methods for WBS, NW Activity, CO/PM Order, etc.

11 Steps to set up SAP EV in Project System Shown below are APPLICATION Steps Required Depending on business requirements, more steps may be required Use CJ20N to perform the following tasks: Plan labor, material, and ODC on WBS or Network Activity Assign EV methods on WBS or Network Activity Perform Progress Update on WBS or NWA each period Use CNE1 to calculate EV After the EV parameters are set up, CNE1 should run to update EV figures in ECC Run EV Reports CNE5 Tabular Report and Period Drilldown Report S_ALR_ Report Painter Report

12 EV Set Up in Project Builder Using a typical PS structure, EV can be set up on the WBS element or NW Activity Level The Start/Finish 20/80 Method is selected

13 EV Set Up in Project Builder The Milestones Method is shown as an example Milestones method chosen for both Plan & Actual Prog. Analysis must be checked with POC completed Multiple Milestones can be set up for WBS/NWA

14 EV Set Up in Project Builder Using a typical PS structure, EV can be set up on the WBS element or NW Activity Level The Estimates Method is shown as an example

15 How to make the best use of EV for your team Resistance from Change Management Perspective Many PM s will view EV as a tax on their time and resources How to Handle the Challenge After Senior Management agrees to implement EV, use a small number of key projects to implement EV to demonstrate the following: EV is a standard solution in SAP it is free and you already have it You already have it. Why not use it to improve project management and objectivity in evaluating performance? Use 3 to 6 pilot projects and savvy Project Analysts to start with After initial training and set up, EV is simple to maintain EV - by definition - will enforce discipline among project personnel Incorporate lessons learned from pilot Come up with company-wide EV requirements and Rollout to strategically important projects

16 SAP PS EV Standard Reports CNE5 shows the basic three key figures in EV: BCWS, BCWP and ACWP or Plan EV, Actual EV and Actual Costs. In CNE5 use Period Drill Down Menu Selection for the Graph

17 SAP PS EV Standard Reports S_ALR_ shows the key EV figures as well as Performance Indicators such as CPI, SPI and EAC This is a Report Painter Report that can be modified without ABAP

18 Steps to get IT projects ready for EV Get Senior Management Buy In - without this you will fail Allocate budget for EV implementation it takes time to set up and maintain Educate Project Managers and PM Analysts on Earned Value Align the Charge Numbers - Cost Objects such as WBS, Network Activity, Internal Order, PM/PP Order, etc. - with the Work or Work Packages for which you want to implement EV Ideally, the charge numbers to work packages should be one to one However, in reality, many organizations using one charge number for multiple work packages and EV can still work if you set it up properly

19 Key Learnings What is Earned Value? Project Management Technique used by many PM s How can it help IT projects? By introducing rigor and discipline, it can be useful as an early warning system for IT projects What will it take for EV to be successful for my organization? Management Leadership, Commitment, and Support Business Readiness Rigor and Discipline Willingness to put in rigor for meaningful and measurable progress

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21 THANK YOU THANK YOU FOR PARTICIPATING Please provide feedback on this session by completing a short survey via the event mobile application. SESSION CODE: 2204 For ongoing education on this area of focus, visit