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Mahmood porter

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    Mahmood porter Mahmood porter Presentation Transcript

    • 2012 NASA PM Challenge:Low Cost Earned Value Management System (EVMS)ImplementationPresented by:Zakir Mahmood CGFM, PMPAndrew Porter PMP, SSGBPresented on:February 22-23, 2012
    • AgendaIntroduction to Earned Value Management (EVM) • Concepts • Business caseCase Study: Earned Value Management System (EVMS)Implementation at a Federal Agency • Background • Alternative Analysis • Requirements • Approach • Recession Proof EVM Solution • ResultsEVM with AgileConclusionQuestions & Answer 2
    • Introduction to EVM Concepts How well is this project performing? $1,400 $1,200 Plan $ Actual $ $1,000Costs $800 $600 $400 $200 $0 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Time 3
    • Introduction to EVMConceptsWhat is Earned Value Management (EVM)?EVM is a project management tool, which effectively integrates the scope ofwork with the schedule and cost elements for optimum investment planningand control.Why is EVM important right now? Investment capital is scarce Greater emphasis on project success and value Increased demand for improved efficiency and ROI Increased demand for accountability and transparency 4
    • Introduction to EVM Concepts Estimate At Completion Budget At Completion Variance at Planned Value (PV) Completion Projected Schedule Delay Estimate ToCosts at Completion Complete Schedule Projected Costs Variance (SV) Cost Variance (CV) Actual Costs Status Date Earned Value (EV) Time 5
    • Introduction to EVMBusiness Case Benefits DrawbacksIntegrates project’s scope, schedule, Time required for data measurement& cost can be considerable Schedule variances do not addressImproves organizational effectiveness the critical pathAllows for performance analysis Value earned without respect to qualityProvides early warning signals ofschedule slippages & cost overruns Root cause of performance issues are not revealed 6
    • Case Study: EVMS ImplementationBackgroundEconomic Correction of 2008 Businesses • Slashed budgets & projects • Abandoned or delayed applications Fee-Funded Federal Agency • Revenues drop by 50% + • Discretionary budgets cut by similar rate Office of Chief Information Officer (OCIO) • Virtually all projects reevaluated or halted • Delivering successful projects became top priorityOur task: Develop a mechanism, process, artifacts to convey state of IT Investments 7
    • Case Study: EVMS ImplementationBackground Start of 2008; significant issues within organization Culture Reactive, low morale, high turnover Policies SDLC was not adhered Project Scheduling Approach varied Project Budgeting Processes not standardized Integration Little internal coordination Reporting Ad-hoc Analysis Rarely performed 8
    • Case Study: EVMS ImplementationAlternative Analysis Recession-Proof Criteria COTS EVMDuration of implementation < 1 year > 1 yearprocess 2-4% of projectImplementation cost 1-2 FTE portfolioChange management requirement Low ModeratePersonnel training requirement Low ModeratePMO maturity requirement Low HighForecasting accuracy Moderate High 9
    • Case Study: EVMS ImplementationApproach Issue • Limited investment capital available • Little leverage from existing systems & artifacts Requirements • Develop a project budget process • Improve project schedule process • Link schedule & budget processes • Develop project reporting & analysis processes Approach • Recession-Proof EVM • Leverage existing systems and artifacts 10
    • Case Study: EVMS ImplementationRecession-Proof EVM Solution Analyze existing processes for EVM capabilities • Identify process to improve • Identify opportunities for automation Design EVMS solution • Improve existing project scheduling process • Design new project budget process • Identify ways to link schedule & budget: “Four-way Match” Implement EVMS • Build EVM tools to standardize and automate processes • Integrate schedule and budget processes • Standardize reporting & analysis procedures 11
    • Case Study: EVMS ImplementationRecession-Proof EVM Solution EVMS Elements Activity Statusing Actual Costs Activity Costing Actual Schedule Planned Schedule Planned CostsActivity Sequencing Activity Resourcing “Four-Way Match” 12
    • Recession Proof EVM SolutionPlanned Schedule EVMS Requirement Solution Standardize project planning Use SDLC phases to proxy activities Summarize planned start & end dates Estimate duration at activity level at SDLC phase level 13
    • Recession-Proof EVM SolutionPlanned Costs EVMS Requirement SolutionDevelop cost estimates at activity Require costs to be planned at SDLClevel phase levelLink resource rates to planned hours Upload blended government and contractor ratesAssign all procurement costs to an Require PM to select a SDLC phaseactivity for all procurementsProvide time phased estimates by Require PM to select a SDLC phaseactivity level for all procurementsMap control accounts to activities Links Budget Organizations with Project Codes 14
    • Recession-Proof EVM SolutionPlanned Costs (cont.)Project Resource Estimation Worksheet (PREW): Excel based model - derives planned costs from planned schedule Feature Previous Tool Implemented ToolCosts linked to phase Labor only Both labor & materialTime to cost project Two days Two hoursExcel lines 1,000 150Rate table linkage Manual Macro-enabledTime phased Yes; generic dates Yes; precise dates 15
    • Recession-Proof EVM SolutionActual Schedule EVMS Requirement SolutionProject activity start & end dates are PM updates project schedule weeklyroutinely updatedAll project activity % physical PM updates physical percent completecomplete amounts are updated 16
    • Recession-Proof EVM SolutionActual Costs EVMS Requirement SolutionEnter internal labor time into T&A Leverage cost accounting system,system by project activity provide training to ensure accuracy Provide PM resource usage data forProvide PM resource usage reporting validationLink internal labor costs to project Leverage Time & Attendance system,activity level General LedgerLink actual procurement cost to project Leverage General Ledgeractivity level 17
    • Recession-Proof EVM SolutionActual Costs (cont.)General Ledger, Time & Attendance System: Queries actual costs by project activity; links to project budget Previous Implemented Feature Method ToolLeverage of Cost accounting Weak SubstantialReporting level Project ActivityData source for procurement costs Cuff records General ledgerData source for internal labor Not used T&A systemInternal labor reporting Not Available Bi-weekly 18
    • Recession-Proof EVM SolutionIntegrate Schedule and CostEVM Model: Leverages “Four-Way Match” to calculate EVM scores; generate reports Previous Implemented Feature Method ToolIntegrity of EVM Calculations Non-credible Highly credibleReporting process Ad-hoc Mostly automatedCost & Schedule reporting level Project level Activity levelVariance reporting $ variance at % and $ variance at project level activity levelForecasting level Not Available Activity levelForecasting accuracy Not Available Moderately dependable 19
    • Recession-Proof EVM SolutionIntegrate Schedule and CostAnalysis Tool: Provides analyst with overview of key metrics Evaluates EVMS elements • Planned costs vs. actual costs • Planned schedule vs. actual schedule Examines key trends & variances of EVM scores Values outside tolerances are flagged Large variances are researched for root cause • Programmatic • Accounting • Reporting 20
    • Recession-Proof EVM SolutionProcess MapIntegrated Process Project Management Office Finance Division Managerial Financial Analyze Analysis Analysis Performance Trend & Variance EVM Monitor & Reporting Control Status Reports Project Actual Actual Costs Execution Schedule General Ledger, Status Updates Time & Attendance System Project Planned Planning Planned Costs Schedule Budget Tool Project Plan 21
    • Case Study: EVMS ImplementationResults EVM reports generated for 30 reports (>$100+M) • Standard reporting performed • Forecast reliability increased • Executive reporting for strategic decision making EVM analysis is routinely performed • EVM dashboards to draw focus to key EVM metrics • Client staff trained to analyze metrics Accountability & transparency have increased • Project Manager • Project performance Project success rate has improved 22
    • ConclusionImplementing Recession-Proof EVM Requires: • Smaller capital investment (~2 FTE for 1 year) • Lower personnel impact Succeeds by leveraging existing: • Systems - General Ledger & Time and Attendance • Tools - Project formulation & execution • Policies & procedures – SDLC Yields: • Majority of EVMS benefits • Foundation for transitioning to a COTS EVMS 23
    • EVM Schedule Informationfor Agile Investments• Graphical comparison of scheduled Budget vs. Actual (using percentages over time) – Time phased line graph comparing: • Linear burn rate of planned execution for investment • Planned Burn rate (if non-linear and known) – Requires a tool that captures this data; update and refine throughout the project life • Actual execution – Are we on ahead or behind schedule and why? 24
    • EVM Cost Information for Agile Investments• Compare percentages over time for the following: – Total Cost vs. Planned Cost – Labor Category Breakout Cost vs. Planned Cost • Separate Labor, SW/HW, Indirect Costs, project contingency funds, etc. – Labor only vs. Planned Labor Cost • More predictable than HW/SW purchases • Timing and amount of non-labor purchases are known and under control 25
    • Lessons Learned• EVM is a management tool – Requires leadership sponsorship • Update policies and procedures to drive success – Metrics should drive decision making• Budget at Completion (BAC) is critical – Tied to every EVM metric except actual cost – Evaluate and improve budgeting tools• EVM is only as good as the data used to report• Consider Materiality of Investments – How significant are non-labor costs? – What is the probability that they will be different than the plan?• Leverage best practices, but allow flexibility to make a tailored solution that works for your investment(s) 26
    • Question & AnswerThank You! 27
    • Appendix EVM Formulas • Foundation • Variance • Efficiency • Forecasting 28
    • EVM MetricsFoundation Metric Definition Analytical question Budget At What is the budget for this BAC Total baseline costCompletion project? What is the estimated value Planned Estimated cost of all work PV of the work planned to be Value scheduled to be completed done? What is the actual cost Cost incurred to accomplishActual Cost AC incurred for the work the work accomplished? What is the estimated value Earned Budgeted cost of actual EV of the work actually Value work completed accomplished? 29
    • EVM MetricsVariance Metric Formula Analytical question Schedule How is the project progressing against SV SV=EV-PV the planned schedule? Variance Cost How is the project progressing against CV CV=EV-AC the budget? Variance 30
    • EVM MetricsEfficiency Metric Formula Analytical question How are we progressing vs. the Schedule original plan? SPI SPI=EV/PVPerformance IndexCost Performance What is the value earned per CPI CPI=EV/AC dollar spent ratio? Index 31
    • EVM MetricsForecasting Metric Formula Analytical questionEstimate at What is the new projected total EAC EAC = BAC/CPI estimate based on CPI?CompletionEstimate to How much more will the Complete ETC ETC = EAC - AC project cost? 32