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Evm   class 02  1to15 by upad
Evm   class 02  1to15 by upad
Evm   class 02  1to15 by upad
Evm   class 02  1to15 by upad
Evm   class 02  1to15 by upad
Evm   class 02  1to15 by upad
Evm   class 02  1to15 by upad
Evm   class 02  1to15 by upad
Evm   class 02  1to15 by upad
Evm   class 02  1to15 by upad
Evm   class 02  1to15 by upad
Evm   class 02  1to15 by upad
Evm   class 02  1to15 by upad
Evm   class 02  1to15 by upad
Evm   class 02  1to15 by upad
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Evm class 02 1to15 by upad

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Earned value

Earned value

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  • 1. Project Earned ValueManagement X 443.17Class 2The Basics of EarnedValue Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. Dilbert on progress reports… 2 1
  • 2. Class 1, Introduction Review QuestionsQ. What is the difference between projects and operations: a. Projects are ongoing activities b. Projects are performed by people, while operations are performed by machines c. Projects are temporary and create a unique product or service d. Projects and operations are the sameRauch &Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 3 Class 1, Introduction Review QuestionsQ. The triple constraint is: a. Scope, Cost, Time b. Resources, Cost, Budget c. Schedule, Duration, Time d. Scope, Requirements, QualityRauch &Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 4 2
  • 3. Class 1, Introduction Review QuestionsQ. Which phase-to-phase relationship in a Project Life Cycle can have decision gates that the project must pass through before proceeding? a. Sequential Relationship (Waterfall) b. Overlapping Relationship (Fast Tracking) c. Iterative Relationship (Iterative) d. Any of the aboveRauch &Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 5 Class 1, Introduction Review QuestionsQ. The Project Charter is used to do all the following except: a. Establish measurable project objectives and related success criteria for the project b. Communicate Project purpose or justification to project stakeholders c. Document high-level risks d. Provide a baseline for progress measurements and project controlRauch &Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 6 3
  • 4. Class 1, Introduction Review Questions Q. How does the Project Management Maturity Model OPM3 define process maturity for organizations? a. As soon as all processes have been formalized into documentation b. When projects are completed quickly (cost overruns are ok) c. When projects are complete cheaply (schedule overruns are ok) d. When they adopt Program & Portfolio process Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 7Earned Value Primitives, or Primary Metrics •  Planned Value (PV) has to be $$$ Ex: Task A 10 hrs, $10/ per hr PV=$100 –  Budgeted Cost of Work Scheduled –  How much work should be done? –  What is the budget for the work scheduled (according to the original estimate)? •  Earned Value (EV) –  Budgeted Cost of Work Performed –  How much work is done? –  What was the budget for work accomplished? –  Interpretation of EV: “Task A, which I was supposed to complete today, is scheduled to cost $1,000. I am only 85 percent done on this task. Thus I have done $850 worth of work—which is my earned value (EV).” –  EV = PV x % Complete •  Actual Cost (AC) –  Actual Cost of Work Performed –  How much did the “is done” work cost? –  What are the actual costs for the Earned Value Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 8 4
  • 5. Schedule Variance (SV) difference between Planned & spent•  SV = EV – PV•  Interpretation of SV: “As of today, I was supposed to have done $1,000 worth of work on Task A (PV). I have actually done $850 worth of work (EV). Thus, I am behind in my schedule by $150 worth of work (SV).”•  Note: Schedule variance is valued in dollars! Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 9 Cost Variance (CV)•  CV = EV – AC•  Interpretation of CV: “I have done $850 worth of work (EV), but it actually cost me $900 to do this (AC). It has cost me $50 more to do what I have done than I originally thought (CV).” Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 10 5
  • 6. SV= - bad, + good (under budget)SPI= <1 bad, >1 good (ahead of schedule)CV= $100000 (bad)CPI= .94 ok Ratio of planned and spent Schedule Performance Index (SPI) •  SPI = EV/PV •  Interpretation: “I have done $1,500 worth of work (EV). The value of work scheduled is $1,000. Each dollar of scheduled work generated $1.50 1.5 times worth of work (schedule performance index).” Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 11 CV CPI: 1.1 CV= $100000 SV CPI= .94 ok SPI: 1.1 under budget, ahead of schedule Cost Performance Index (CPI) •  CPI = EV/AC •  Interpretation: “I have done $850 worth of work (EV). It has cost me $900 to do so (AC). Each dollar I actually spent generated 94.4 cents worth of work (cost performance factor).” Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 12 6
  • 7. • The Project Baseline Plan • Thousands (000) • 3 months • Authorized • status Budget $1,000,000 • $1,000 • 750 • 500 • Planned Costs = $300K • Actual Costs = $300K • 250 • 12 months duration• Quentin W. Fleming 13 • Earned Value is three dimensional: • As we perform our projects, we need to determine: • The Planned Value • 1. What work has been scheduled? (from PMS) • 2. What is the budget for the work scheduled? • The Earned Value • 3. What work has been accomplished? (from PMS) • 4. What was the budget for work accomplished? • The Actual Costs • 5. What are the actual costs for the Earned Value?• Quentin W. Fleming 14 7
  • 8. • EVM Measures 3 Dimensions • Thousands (000) • Authorized • 3 months Budget • $1,000 • status $1,000,000 • 750 PV= $300K • 500 • Planned Value = $300 AC= $300K • Cost Actuals = $300K EV= $200K • 250 • Earned Value = $200K % = 200K/1000K(BAC)= 20% CV= EV - AC =200K-300K=-100K • 12 months duration CPI= 200/300= .67 SV= EV-PV= 200K-300K=-100K• Quentin W. Fleming SPI= EV/PV = 200K/300K= .6715 over-budget, behind schedule • The Fundamental Difference: • Traditional Project Cost Management • Planned costs = $300K • Variance from the expenditure plan • (everything is 0K) • Actual costs = $300K • Earned Value Project Management • Planned value = $300K • Variance from the planned schedule = (-$100K) • Earned value = $200K • The "true" cost variance = (-$100K) • Actual costs = $300K• Quentin W. Fleming 16 8
  • 9. EVM Metrics, or Reporting and Comparison Metrics •  Earned Value Formulas: – Schedule Variance: SV = EV - PV – Schedule Performance Index: SPI = EV / PV – Cost Variance: CV = EV - AC – Cost Performance Index: CPI = EV / AC Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 17 EVM Metrics, or Reporting and Comparison Metrics •  The way to remember this is to write down the first part of the four earned value calculations: •  CV=... •  CPI=... •  SPI=... •  SV=... Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 18 9
  • 10. EVM Metrics, or Reporting and Comparison Metrics•  In each case EV is the first variable:•  CV=EV...•  CPI=EV...•  SPI=EV...•  SV=EV... Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 19 EVM Metrics, or Reporting and Comparison Metrics•  Then add the operator:•  CV and SV (variance) use -•  CPI and SPI (Index) use /•  CV=EV-...•  CPI=EV/...•  SPI=EV/...•  SV=EV-... Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 20 10
  • 11. EVM Metrics, or Reporting and Comparison Metrics•  Then add the second variable:•  C(ost)V and C(ost)PI use AC(ost)•  S(hedule)PI and S(hedule)V use P(lan)V•  CV=EV-AC•  CPI=EV/AC•  SPI=EV/PV•  SV=EV-PV Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 21 Forecasting Metrics PMBOK Pg. 184-185 EAC Formula•  Three Estimate to Complete (ETC) Forecasting formulas mentioned in PMBOK•  EAC forecast for ETC work performed at budgeted rate: EAC = AC + BAC – EV Where: EAC = Estimate at Completion (forecast) BAC = Budget at Completion (original baseline)•  EAC forecast for ETC work performed at the present CPI: EAC = BAC / cumulative CPI•  EAC forecast for ETC work considering both SPI and CPI: AC + [(BAC – EV) / (cumulative CPI x cumulative SPI)] Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 22 11
  • 12. •  Cumulative CPI stabilizes at 20% point •  At 20% point variances only +/- 12% •  At 30% point variances only +/- 11% •  At 40% point variances only +/- 09% •  At 50%point variances only +/- 08%• Quentin W. Fleming 23• Estimate at Completion • $1,000,000 = Budget • BAC • At Completion • PV • $300,000 = Planned Value • Schedule Performance Index SPI = EV/PV = .67 • EV • $200,000 = Earned Value • Cost Performance Index CPI = EV/AC = .67 • AC • $300,000 = Actual Cost • EAC • ($500K projected overrun) • Estimate At Completion =(AC+(BAC-EV)/CPI) = $1,500,000• Quentin W. Fleming 24 BAC = original planned value EAC = PM project the project will cost 12
  • 13. Break•  10 minute break Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 25 Learning Team Project•  Each learning team can pick their own project.•  The project should be a medium scale: –  at least 50 tasks –  at least 5 resources•  The project must come from a business situation.•  Learning team members will contribute background details to define the project•  The team will work together to create a project deliverables for its execution.•  Make sure projects are appropriately sized. Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 26 13
  • 14. Learning Team Project Objectives•  Demonstrate a working knowledge of project earned value.•  The team can split up the work anyway they choose•  Final deliverable must be a single document for which the team will receive a single grade.•  This will count 30% towards your individual grade. Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 27 Learning Team Project Roadmap•  Using earned value tools, learning teams will create and present a project charter, WBS, schedule, EVM metrics, and EVM implementation to demonstrate that the group members have command of the project earned value.•  Draft deliverables will be required several times during the course, with a final presentation of the project due in the final week.•  Interim deliverables will receive feedback from the instructor as the work proceeds and modifications may be made before turning in the final paper. Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 28 14
  • 15. Learning Team Class Exercise, Project Charter•  Project Charter: –  Project purpose or justification –  Measurable project objectives and related success criteria –  High-level risks Rauch & Hackenberg Copyright © 2012 Bill Hackenberg. All rights reserved. 29 15

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