Downloaded 362 times
Uploaded byFahad Ali
EVM of Project Management...
1.2.1 tweetie 1.2.2 road 1.3.1 Mgt 1. Varmint Control 1.1 Small Animals 1.1.1 wascally rabbits 1.2 Birds 1.2.1 tweetie birds 1.2.2 road runners 1.3 Program Management 1.3.1 Management 43 EVMS Assign Control Accounts • Assign control accounts to specialists 1.1 Small Animals 1.1.1 wascally rabbits - L.M. Fudd ($5,000) 1.2 Birds 1.2.
In this document
Powered by AI
Overview of EVM basics and introduction by Eleanor Haupt from Earned Value Associates.
EVM integrates technical, schedule, and cost parameters; best for well-defined projects.
EVM guidelines and the primary steps in performance management focusing on planning and control.
Comparison of project status with and without EVM, demonstrating the importance of insight and actions.
Concepts of planned expenditures, budgeted costs, and importance of establishing a baseline.
Process of planning projects including work definition, scheduling, and integrating baseline.
Establishing Budgeted Cost for Work Scheduled (BCWS) and actual performances to evaluate progress.
Measuring performance using BCWP, ACWP and understanding cost and schedule variances.
Calculating Estimate at Completion (EAC) and Variance at Completion (VAC) for project forecasts.
Steps for organizing work breakdown structure (WBS) and assigning tasks with budgets.
Defining control account concepts and summarizing learnings about EVM basics and planning.
More Related Content
Similar to EVM of Project Management...
EVM of Project Management...
- 1. EVMS Basics of EarnedValue Management Part I Eleanor Haupt Earned Value Associates LLC ehaupt@earnedvalue.biz 937-572-2586 1
- 2. EVMS What is EVM? EVMis the primary project management tool... that integrates the technical, schedule, and cost parameters of the contract. All work is planned, scheduled, and budgeted in timephased ''planned value'' increments. As work is performed, it is measured and controlled against the baseline. 2
- 3. EVM Defined EVMS • EVMis: – performance measurement • how am I doing against my baseline plan? – performance management • what do I need to do to bring the project in on cost and schedule? 3
- 4. EVMS Where can EVMbe Applied? • EVM suitable for projects that have: – Clear definition of work scope – Project schedule range from a few months to many years – Small to very large cost • EVM not suitable for: – Projects without a clear work definition or deliverable products • Example: research projects 4
- 5. EVMS EVM Guidelines • EVMhas a recognized set of guidelines – A company’s business planning system should meet these guidelines = Earned Value Management System • Most are existing project management practices • Relatively few practices unique to EVMS – Guidelines do not specify a particular process or business system, but only set an expectation • Some countries have national standards – U.S., Australia, Canada, U.K. – Guidelines may be mandatory in some cases • Can be tailored or scaled for smaller projects 5
- 6. EVMS • Primary Steps inPerformance Management Plan all project work – Create an integrated performance management baseline • Objectively assess work progress at the level of performance – Compare to the plan and to actual costs • • • • • Analyze significant deviations from the plan Forecast impacts to cost and schedule Take corrective actions as needed Summarize data for progressively higher levels of management Maintain performance management baseline – Update for contract changes (work scope) – Maintain realistic baseline for remaining work 6
- 7. Why use EVM? EVMS Lifewithout EVM • • • • Given: – total budget of $100,000 – 12 month effort – produce 20 units Status: – spent to date: $64,000 – time elapsed: 6 months – units produced: 8 complete, 2 partial How are you doing, and how do you know how you are doing? How far along are you? – 64% spent (cost) – 50% spent (time) 7
- 8. EVM is ProjectManagement with the Lights On
- 9. Why use EVM? EVMS Lifewith EVM • • • Given: – total budget of $100,000 – 12 month effort – produce 20 units Status: – spent to date: $64,000 – time elapsed: 6 months – units produced: 8 complete, 2 partial Real Status: – You should have completed 50% of the work • You’ve completed 42% of the work – A major vendor was late in delivering certain parts • You’ve spent 64% of your budget – You’ve isolated the main cost variance to aluminum prices • You’re forecasting additional cost overruns for the remaining work – You now know what the drivers are – You can now take the appropriate actions 9
- 10. EVMS Earned Value GivesInsight TIME NOW Planned Expenditures Expenditures $ “Earned Value” TIME 10
- 11. EVMS Benefits of EVM •Requires development of integrated baseline – Results in better project definition and planning • Early identification of trends and problems • Accurate picture of project status – Cost, schedule, and technical – Segregation of schedule and cost variances • Projection of final costs • Project control by the team – Enables project manager to make informed decisions based on facts • Results in successful projects – On time, on cost 11
- 12. EVMS How does EVMdiffer from Project Management? Project Management EVM WBS Team organization Integrated Schedule Budget Integrated Baseline Earned Value measurement Work authorization Variance analysis Trend projection 12
- 13.
- 14. EVMS EVMS measures progress Progress= Movement Forward to measure progress, there must be a standard against which the forward movement may be compared EVMS establishes a baseline to measure progress 14
- 15. EVMS Five Basic Elements BCWS BudgetedCost for Work Scheduled “Planned Value” BCWP Budgeted Cost for Work Performed “Earned Value” ACWP Actual Cost of Work Performed “Actual Cost” BAC Budget at Completion EAC Estimate at Completion 15
- 16. EVMS It’s my pleasure toaward you this contract for a new railroad track Total Performance Budget hmm...5 miles of track, 5 months to do it all....$5000 budget....This is going to be tough! What is the total job What is the total job supposed to cost? supposed to cost? What is the value of the What is the value of the contract at cost? contract at cost? = Performance Budget = Performance Budget 16
- 17. EVMS Planning is a3 Step Process Planning is a 3 Step Process 1. DEFINE THE WORK AND ORGANIZE TEAMS CONTRACT BUDGET BASE BA SE LI NE 2. SCHEDULE THE WORK PM $ 3. ALLOCATE BUDGETS 100 40 60 15 25 TIME 30 30 17
- 18. EVMS • • • • The Integrated Baseline Preliminaryplanning during proposal phase Finalized as soon as possible after award – PM approves the baseline Integrated baseline – Work scope – Integrated master schedule – Time phased budget Tenets for managing the baseline – Control – Maintain realism – Reviews 18
- 19. Budgeted Cost forWork Scheduled (BCWS) I’ve broken my work plan into 5 sections of track. I plan to lay 1 section of track each month. I estimated the cost of each section at $1,000. I’m establishing the BCWS for each section at $1,000. BCWS = performance budget Month 1 BCWS = $1,000 Month 2 BCWS = $1,000 Month 3 BCWS = $1,000 Month 4 BCWS = $1,000 Month 5 BCWS = $1,000 each dollar of BCWS represents a specific dollar of work scope each dollar of BCWS represents a specific dollar of work scope
- 20. EVMS Budgeted Cost forWork Scheduled (BCWS) Month 1 BCWS cumulative Month 3 Month 4 Month 5 $ 1,000 BCWS Month 2 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 1,000 $ 2,000 $ 3,000 4 $ 4,000 $ 5,000 20
- 21. EVMS Budget at Completion(BAC) $ m su S CW ll B fa o BAC $5,000 $5,000 The baseline is composed of many lower level elements. These sum up to the total value of the contract. $ $ $ = $ $ $ $ time •• when all work has been phased, cumulative BCWS = BAC when all work has been phased, cumulative BCWS = BAC e.g., $5,000 = $5,000 e.g., $5,000 = $5,000 21
- 22. EVMS Budgeted Cost forWork Performed (BCWP) the EARNED VALUE concept We’re at the end of the second month, but only 1 section of track is complete. Earned value of work completed = $1,000 ••Assess progress on recurring basis Assess progress on recurring basis ••There are different methods of There are different methods of earning value (described in 300B) earning value (described in 300B) ••You earn value the same way as it You earn value the same way as it was budgeted in baseline was budgeted in baseline 22
- 23. EVMS • Measuring Performance BCWP General Principles –Establish valid metrics as you establish the time phased baseline • Metrics should be objective and quantifiable • Relate true work status – Should be a quantitative and discrete way to measure the work – May tie in with success criteria or technical measure • e.g., successful completion of a specific test • Must be consistent in following established metric as work progresses 23
- 24. Budgeted Cost forWork Performed (BCWP) EVMS Month 1 Month 2 Month 3 Month 4 Month 5 cumulative data BCWS Planned Value BCWP Earned Value $ 1,000 $ 2,000 $ $ 3,000 $ 4,000 $ 5,000 1,000 time now 24
- 25. BUDGET BASED EVMS Schedule Variance BCWS BC WP of the work I scheduled to have done, how much did I budget for it to cost? of the work I actually performed, how much did I budget for it to cost? SCHEDULE VARIANCE is the difference between work scheduled SCHEDULE VARIANCE is the difference between work scheduled and work performed (expressed in terms of budget dollars) and work performed (expressed in terms of budget dollars) formula: formula: SV $ = BCWP --BCWS SV $ = BCWP BCWS example: example: SV = BCWP --BCWS = $1,000 --$2,000 SV = BCWP BCWS = $1,000 $2,000 SV= -$1,000 (negative = behind schedule) SV= -$1,000 (negative = behind schedule) 25
- 26. EVMS Schedule Variance Month 1 Month2 Month 3 Month 4 Month 5 cumulative data BCWS Planned Value BCWP Earned Value SV (cum) Schedule Variance $ 1,000 $ 2,000 0 $ 1,000 -$1,000 $ 3,000 $ 4,000 $ 5,000 -$1,000 26
- 27. EVMS Actual Cost ofWork Performed (ACWP) Labor came to $1,300, and materials cost $1,100. We’ve spent $2,400 to date. Value of ACWP comes from Value of ACWP comes from actual accounting records actual accounting records 27
- 28. EVMS BC WP AC WP PERFORMANCEBASED Cost Variance of the work I actually performed, how much did I budget for it to cost? of the work I actually performed, how much did it actually cost? COST VARIANCE is the difference between budgeted cost COST VARIANCE is the difference between budgeted cost and actual cost and actual cost formula: formula: CV $ = BCWP --ACWP CV $ = BCWP ACWP example: example: CV = BCWP --ACWP = $1,000 --$2,400 CV = BCWP ACWP = $1,000 $2,400 CV= -$1,400 (negative = cost overrun) CV= -$1,400 (negative = cost overrun) 28
- 29. EVMS Cost Variance Month 1Month 2 Month 3 Month 4 Month 5 cumulative data BCWS Planned Value $ 1,000 $ 2,000 BCWP Earned Value 0 $ 1,000 SV (cum) ACWP CV (cum) Schedule Variance Actual Costs Cost Variance -$1,000 $ 800 -$800 $ 3,000 $ 4,000 $ 5,000 -$1,000 $ 2,400 -$1,400 29
- 30. EVMS BCWP Allows Isolationof Schedule and Cost Variances TIME NOW 5,000 $ CV SV BCWP TIME schedule variance = BCWP - BCWS = negative number cost variance = BCWP - ACWP = negative number 5 months behind schedule, behind schedule, over cost over cost 30
- 31. EVMS Estimate at Completion (EAC) Justa few little glitches…. We should be able to do the complete job….ack… let’s see, for about $7,500 31
- 32. EVMS Variance at Completion(VAC) B AC what the total job was budgeted for E AC what the total job is projected to cost VARIANCE AT COMPLETION is the difference between what the total VARIANCE AT COMPLETION is the difference between what the total job is supposed to cost and what the total job is now expected to cost. job is supposed to cost and what the total job is now expected to cost. FORMULA: FORMULA: VAC = BAC --EAC VAC = BAC EAC Example: Example: VAC = $5,000 --$7,500 VAC = $5,000 $7,500 VAC = --$2,500 (negative = overrun) VAC = $2,500 (negative = overrun) 32
- 33. EVMS Variance at Completion(VAC) EAC VAC 5,000 BAC $ TIME 5 months 33
- 34. EVMS EVM Variances Positive Negative SV Ahead ofSchedule Behind Schedule CV Under running costs Over running costs VAC Projected underrun Projected overrun 34
- 35.
- 36. EVMS The Organizing Process •Process – Step 1: define the authorized work using a work breakdown structure (WBS) • break the work down into manageable pieces • provides a framework for – program and technical planning – cost estimating and resource allocation – performance measurements and status reporting – Step 2: define the organizational structure • Organizational Breakdown Structure (OBS) – Step 3: assign a single element of work to a single manager • control account manager (CAM) 36
- 37. EVMS Assigning Work WBS Assignment ofa single work element to a single team allows you to roll up the costs up either direction ORGANIZATION control account control account control account control account control account control account control account 37
- 38. EVMS The Control Account •Fundamental building block for EVM • Established at lowest WBS level • Properties – Assigned to Control Account Manager – “Mini Project” work schedule budget 38
- 39. What is ina Control Account? EVMS SCHEDULE SOW BUDGET Labor 1,000 hrs Labor $ 75,000 Material $ 25,000 TIER 1 1.3.4.1 Build ejection seat TIER 2 CONTROL ACCOUNT PLAN CAM name: ______ Work Work WBS: _______ Total Budget: _________ $ $ $ $ $ $ $ $ $ Work 39
- 40. EVMS • Work Package Development ofControl Account Plans – MAY break down the control account budget into smaller work packages • Work Packages – – – – – – subset of control account Work Pkg #1 reasonably short in duration Work Pkg #2 single element of cost (e.g., labor) Work Pkg #3 single technique for earning value consistent with detail schedules has same characteristics as control account • • • • CONTROL ACCOUNT PLAN $ $ $ $ $ $ $ $ $ scope of work milestone completion criteria single performing organization start and end dates – A group of activities on the schedule 40
- 41.
- 42. EVMS • • Contract Award You arethe program manager, I. M. Taz You just won a contract to eliminate varmints within the state of Arizona – birds (tweetie and road runner types) – small animals • You have an organization of highly trained specialists – – – – • L. M. Fudd Sil Vester the cat Wile E. Coyote Daffie Duck (your deputy and the CAM for management) You have allocated the following budgets from your $50,000 contract award – – – – – wascally rabbits ($5,000) squirrels ($5,000) tweetie birds ($20,000) road runners ($10,000) program management ($10,000) 42
- 43. Organize the work EVMS • Builda simple work breakdown structure Varmint Control 1.1 Small Animals 1.3 Program Mgt 1.2 Birds 1.1.1 wascally wabbits 1.2.1 tweetie 1.1.1 1.1.2 wascally squirrels wabbits 1.2.2 road runner 43
- 44. Organize the workers EVMS • Builda simple organization breakdown structure I.M. Taz Program Manager L. M. Fudd, small animals Sil Vester tweetie birds Wile E. Coyote road runners Daffie Duck Program Mgt 44
- 45. EVMS Build a RAMand allocate work Sil Vester L. M. Fudd Wile E. Coyote Daffie Duck 1.1.1 wascally wabbits 1.1.2 squirrels 1.2.1 tweetie birds 1.2.2 road runner RAM is a listing of the control RAM is a listing of the control accounts, the responsible accounts, the responsible manager (control account manager (control account managers), and assigned budget managers), and assigned budget 1.3 program management 45
- 46. EVMS Build a RAMand allocate work Sil Vester 1.1.1 wascally wabbits 1.1.2 squirrels 1.2.1 tweetie birds 1.2.2 road runner 1.3 program management L. M. Fudd Wile E. Coyote Daffie Duck $5,000 $5,000 $20,000 control account $10,000 $10,000 46
- 47. EV Techniques CONTROL ACCT.TITLE: Roadrunner 0/100, 50/50, Units Complete, % Complete, Milestones CONTROL ACCOUNT MANAGER: Wile E. Coyote BUDGET: $10,000 TIER I MILESTONE WP# WORK DESCRIPTION AWARD EV METHOD BCWS 1 Anvil END MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 MONTH 6 TOTAL BAC 1,500 1,500 0/100 v BCWP BCWS 2 Paint Fake Tunnel BCWP BCWS 3 Build Road units complete BCWP BCWS 4 Build Anvil Support Mechanism 500 50/50 500 v 600 v 1,000 v milestone v 600 v 600 600 5 600 3,000 v v v 1,000 1,000 v 3,000 v BCWP BCWS Install Anvil Support Mechanism 1,000 500 500 v 500 1,500 v % complete BCWP TOTAL CONTROL ACCOUNT PLAN BCWS BCWP Schedule Variance month cumulative Actual Costs Cost Variance month cumulative 600 1,600 2,100 2,600 2,600 500 10,000
- 48. EVMS Summary • Should nowunderstand – Basic EVM terms – Basic concepts of an integrated baseline • Work, phased over time, with time phased budget – Basics of planning – Control account concepts and example Please stay tuned for Part 2!! 48