Earned Value Analysis with Mary Repetto. To help you maintain control and forecast accurately

Transcription

1 Earned Value Analysis with Mary Repetto To help you maintain control and forecast accurately

2 What is it?? Earned Value is a technique used to assess the true status of the project, taking into consideration the scope, costs and the schedule. It compares the plan with the actual results

3 Why do we care? 70% of projects are: Over budget Behind schedule 52% of all projects finish at 189% of their initial budget And some, after huge investments of time and money, simply never complete

4 Project Status Nine possibilities: On schedule, on budget On schedule, over budget On schedule, under budget Behind schedule, on budget Behind schedule, over budget Behind schedule, under budget Ahead of schedule, on budget Ahead of schedule, under budget Ahead of schedule, over budget

5 Let s look at some examples The plan is to upgrade 1000 computers per month Each computer costs 2 hours to upgrade, including software and labor If we upgrade 1000 computers, what is the earned value? EV = 1000 x 2 hrs = 2000 hours

6 Now, how are we doing? Plan is to upgrade 1000 computers Each costs 2 hours We spent 2000 hours We budgeted 2000 hours How are we doing?

7 Let s try another We planned to upgrade 1000 computers We upgraded 1000 computers We planned to spend 2000 hours We spent 2000 hours How are we doing?

8 Again We planned to upgrade 1000 computers We upgraded 1000 computers We spent 1500 hours We budgeted 2000 hours How are we doing?

9 And Finally We planned to upgrade 1000 computers Each upgrade costs 2 hours Budget for the month is 2000 hours We spent 2000 hours We upgraded 1200 computers How are we doing?

10 The Language of Earned Value Actual Cost (AC) = actual cost, in dollars or hours, of work completed in a given period Planned Value (PV) = planned cost of the work that is scheduled to be performed in a given period Earned Value (EV) = planned cost of the work that was actually performed in the given period

11 The Formulas of Earned Value Schedule Variance (SV): SV = EV PV Cost Variance (CV): CV = EV AC

12 We Can Also Use Indices: Schedule Performance Index (SPI) SPI = EV PV Cost Performance Index (CPI) CPI = EV AC

13 Calculating EV Plan is to upgrade 1000 computers per month Each computer costs 2 hours If you upgrade 1000 computers, the EV is 2000 hours If you upgrade 800 computers, the EV is? If you upgrade 1200 computers, the EV is?

14 Calculate the Variance Plan is to upgrade 1000 computers Each upgrade costs 2 hours At the end of the month, 800 computers have been upgraded The cost of the 800 computers was 2200 hours What is the SV? What is the CV?

15 Using the Indices SPI = EV/PV SPI = 1600/2000 =.8 CPI = EV/AC CPI = 1600/2200 =.73 A value of =1 right on plan A value of <1: over budget, behind plan BAD! A value of >1: under budget, ahead of plan GOOD!

16 Methods of Earning Value Discrete Work Packages Equivalent units

17 Method of Earning Value - Factored Work Packages Interim milestone Apportioned effort Percent complete

18 Building the Performance Measurement Baseline It is the time phased budget plan against which we will measure performance. Horizontal axis is time Vertical axis is cumulative hours spent We will plot our actuals against our plan or budget Also called the PV line

19 EAC BAC Variance at Completion (VAC)=BAC-EAC Cumulative Cost ($ or hrs) Planned Actual ETC Schedule Variance (SV) = EV-PV Planned Value (PV) Cost Variance (CV) = EV-AC Actual Cost (AC) Earned Value (EV) Today Planned Forecasted

20 What it Takes Identified tasks with estimates Scheduled tasks network diagram or timeline that becomes the baseline Cost per task in hours Actual time and/or monies spent

21 Dealing With Variance All should be investigated If never any, beware Managers should set the parameters around variance Early detection can save a project Determine appropriate escalation procedures

22 EV as a Forecasting Tool The future is grounded in the past We can calculate our estimate at completion using our actuals to date. EAC = BAC CPI Assumes our performance to date will continue to end of project

23 Other Indices Variance at Completion (VAC) VAC = BAC EAC To Complete Performance Index (TCPI) TCPI (BAC) = BAC EV BAC AC TCPI (EAC) = BAC EV EAC - AC

24 Q & A Today s Web Seminar is apart of our Business Analyst & Requirements Curriculum. Visit www. ASPE-SDLC.com for details.