Setting Up & Integrating EVM Into A PMO
Upcoming SlideShare
Loading in...5
×
 

Like this? Share it with your network

Share

Setting Up & Integrating EVM Into A PMO

on

  • 875 views

I presented this presentation at the 6th Management Congress in Luxembourg On 1/12/2011. It describes what is earned value management and how it can be integrated into a PMO

I presented this presentation at the 6th Management Congress in Luxembourg On 1/12/2011. It describes what is earned value management and how it can be integrated into a PMO

Statistics

Views

Total Views
875
Views on SlideShare
870
Embed Views
5

Actions

Likes
0
Downloads
20
Comments
0

2 Embeds 5

https://www.linkedin.com 4
http://www.linkedin.com 1

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • Click For Next Slide
  • Read SlideMy topic of discussion today is Earned Value Management and how it can be implemented into a PMOEngage The Audience QuestionsHow many of you have a PMO within your organisation ?Do you use Prince 2? PMI? or Agile?Do you have a portfolio management tool for tracking projects?Do any of your projects not go over budget or schedule?Read At The End Of The SlideIt’s nearly the end of the day and the only thing between you’re hungry stomachs, is my presentation, so on a lighter note, I will be as informative as I can, and I will attempt to deliver my presentation within the respected timeframe, so I can save myself from the embarrassment of being escorted from the stage Click For Next Slide
  • Thank you for attending this historical PM event in Luxembourg.I’m excited to be part of a country that seems to maintain its economical growth even through these challenging times. I probably don’t need to remind you of the kind of constraints a PMO faces within organizations today where we are required to drive down costs and retain value. I hope what I present to you today gives you an insight to some of the most commonly used PPM tools available to derive Earned Value. Hopefully, it will provide you with an insight to how Earned Value can be used to successfully steer some of your organizations projects, to the direction of success.Click For Next Slide
  • Read:Projects seem to have more constraints & challenges these days and this is partially because of the recent economy fluctuation. Organizations are challenging its management teams, to be more innovative, in improving its client services, whilst striving for more ROI.A PMO always needs to adapt to these challenges because werenormally the first ones who need to justify our value within the business. In my experience current and future PMO’s need to be able to utilize the most from our day to day PPM tools and take advantage of there capabilities of integration & collaboration.My aim is to provide you with an:Click Slide & READClick For Next Slide
  • What is EVM? Click & ReadClick For Next Slide
  • READ: Why should you use EVM? READ SLIDE
  • READ:What tools are available to us in the market place, and what are there advantages and disadvantages:Click For Next Slide
  • READ BELOW (Just Talk Through The Slide Using The Below Points Of Reference)First of all we have a 2 standalone PPM tools:Excel, which has the advantage of a low initiation cost & running cost, but can be time consuming to design and maintain.MS Project: It’s a familiar business PMO project tool, its relatively stable, but if project plans are larger then 200 lines long it can be time consuming to maintain + as a standalone product there is no simple solution for retrieving actuals, automatically into MS project.Now we move on to the combined products.MS Sharepoint & MS project together: The advantages are again project tool familiarity, Low upfront cost, possibilities of automation and content integration because they are designed to work collaboratively together, but normally this requires an advanced level of SharePoint knowledge, so the cost of an integrator to setup is required, and it only includes partial integration out of the box.Clarity & Planview: Well these products have a rich feature set, and a lot of the features can be fully automated, however there is large investment needed to purchase these products and the ROI, is hard to justify.Click For Next Slide
  • Here is an example of what a standard EV graph/report looks like:READ BELOW (Just Talk Through The Slide Using The Below Points Of Reference)In conclusion: a combination of three KPI’s are used to derive a report like the one we have shown here, AC,PV,and EV. From one graph we can really see how well a project is performing.Typically projects have a planned value (budget) and an actual cost but seperately they have no reporting mechnism to anatically measure the value of the actual “work” being performed against it’s planned budget. EVM provides us with this, as we’ll intepreting applicable KPI’s that allow the viewer to dictate early signs of cost and schedule deviation.So how is, the formula EV calculated? EV is calculated using the “Actual % Complete” feature in MPP that multiplied by the planned value (budget) Without the use of EVM we cannot clearly see how good or bad a project is performing against it’s planned schedule, objectively and quantifiably.When reviewing an EVA graph, there is a rule of thumb for intepreting how a EVM report should be understood.1st you should identify the EV line, then compare it to your PV/AC line, if your EV line is above the PV/AC lines then your cost & schedule are stable and your work values in cost are being achieved.However, if your EV is below your PV line then you are probably behind schedule and overspending, meaning for every euro you are spending you are getting less value. This is normally not a good sign…and you may be saying to yourself, I have seen this scenario to often beforeClick For Next Slide
  • READ: How do we implement EVM?Click For Next Slide
  • We need to: READ SLIDE
  • READ:I’ll begin with a case study at KBL Bank, and we’ll start off with establishing some of the key drivers that KBL had in mind for wanting to adopt EVM Click Slide For Next Slide
  • At the time, the organization wanted to: READ SLIDERemember inflight magazine article point: “CLICK FOR ANIMATION”Click For Next Slide
  • Read The Question & Highlight Each Product.But whats the problem here?Click For The Blue Bar Animation “We have no integration, no automation, and most of these products can be labour intensive to maintain as part of a PMO”A lot of organizationsinvest in a single tool, that’s supposed to provide all of the services that a PMO provide on a daily basis, but in reality we still have to use other tools in combination with this single tool. So organisations still have to bare the additional cost burden of using a combination of tools as well as having the expense, of the one tool solution.Akey factor here, as PMO’s we already have the product knowledge & the PPM tool knowledge, its just a question of knowing, how to make the tools produce the products collaboratively and getting them to integrate togetherClick For Next Slide
  • Read:After an initial case study review, some of the PMO services revealed that: Click & READ SLIDEClick For Next Slide
  • Read:So what challenges did we face at the EVM implementation level? READ SLIDEClick For Next Slide
  • READ BELOW ONLY (Just Talk Through The Slide Using The Below Points Of Reference)At the advanced level of EVM usage, we have a 5 core KPI’s that intepret the reporting data. The first 3 fundamental driver KPI’s are: PV = Planned Value = which forms the planned scheduled spend over the span of the projectEV = Earned Value = this provides us with the monetary value of work performed against a set baselineAC = Represents the Actual Cost.The next 2 KPI’s are the overview KPI’s used by senior management to determine cost & schedule performance at a glance.CPI = Cost Performance Indicator SPI = Schedule Performance IndicatorSo what do these tell us?If your project has a CPI & SPI numerical value of one then your project is running to the planned cost and schedule.If your SPI & CPI are above a numerical value of one then you are ahead of schedule and underspendingIf your SPI & CPI are below a numerical value of one then your schedule is slipping and your project is unfortunately overspending.Click For Next Slide
  • Read : So what challenges do we face as PMO’s when using EVM? READ SLIDEClick For Next Slide
  • Before you think about READ SLIDEIn order to access the maturity level of a project plan, an initial analysis needed to be compiled at KBL
  • This table portrays differentlevels of a projects, plan maturity, this is something that was adopted as part of the planning improvement process. (PIP)The planning maturity at a poor state is equal to level 1 CLICK TO MOVE THE ARROW and it can be enhanced to level 6, with the implementation and usage of EV.What can a plan maturity model achieve? (only mention a few if time is limited)It can identify initialrisks that might not have been foreseen, due to poor planning.It will confirm whetherprojects performance is being measured against its cost or schedule correctly.It will verify whether a project plans deliverables,are being tracked against a baseline.It can show early indication of process deficiency i.e tolerance breaches, and change management deficiency It will identifies poor resource management due to poor planning ormonitoring & controlling….for example: Resource slack could be available within a given projectplan that isn’t being re-utilized.Identifies time management flaws, due to insufficient collaboration of resource absence being tracked to the specific deliverables within a project plan.Click For Next Slide
  • READ: So what combination of PPM tools are required to create an EVM architecture, and why should a PMO design and use one? Click For Animation “Flashing PPM Tool Content Collaboration & Integration: Because we want to achieve product & PPM tool integration and collaboration: CLICK FOR NEXT SLIDE
  • What PPM tools did KBL adopt?READ SLIDEI will now explain a typical planning process, where you can see how each PPM tool is used to enhance PPM tool content integration & colaboration.Click For Next Slide
  • This slide is fully animated so click the slide once and then begin reading through each pointAt the foundation level of a planning phase, a group of subject matter experts would create a Work Breakdown Structure using Mindjet Manager, this would derive the initialwork products & deliverables & time estimates. This also opens some insight to early found project risks & assumptions.The output of the Work Breakdown Structure initializes the need to produce a steering level project plan, this would typically be used by senior management or board level representatives to view progress at milestone level.This is closely followed by the development of the Microsoft Project plan. This is formed from the originating Work Breakdown Structure, and its here, where a 1st draft of project plan is born, without resource assignments. Later on, this plan becomes the key PPM product,for deriving EV and obtaining actuals from percent of work complete.Microsoft Excel is used to preliminarily define the resources and at this stage this answers the question,who do we have available from the resource pool? Or how many extra resources do we need to complete the tasks defined in the plan.Then we must compile a resource forecast across our project to understand the availability and its here where we would match resource skill sets to tasks and assign the resources to the individual tasks within Microsoft Project, making sure resource leveling is equal across the project before it is base-lined.At this point we can confirm our planned value and a snapshot of our project plan is ready for base-lining.Using SharePoint we can quickly create SharePoint lists, that form detailed Gantt charts, because we have developed some additional backward compatibility functions with Microsoft Project. So synchronization of the percent of actual work complete, can be achieved through a push and pull process, between both tools.Once we have synchronized the actuals in the project plan, we must set a status date in Microsoft project, to retrieve our EV reports from the built in EV function of MS project.Finally our built in dashboard is designed & created using SharePoint and we can convert & synchronize MS projects EV reports directly into the dashboard, providing CPI & SPI status at any reporting period.Reviewing the finished EVM architecture we can see that we have used a full range of PPM tools. Here we have described 3 levels of management reporting and we can interactively drill down from the high level known as the programme level, to the medium level used by project managers & PMO’s and finally the lower level, which is used by the project resources for task assignments & the sometimes this is used by the PMO for additional troubleshooting.Finally we have a complete EVM Architecture that makes use of our everyday common PMO PPM tools because of the tool integration and collaboration capabilities.Click For Next Slide
  • Here is an screen shot example of a purpose built, year on year working dashboard showing all of the relevant KPI’sClick For Next Slide
  • Here is an screen shot example of a working EV Report we produce. (Only bring up the below if you have enough time)In this EV graph we have included the cost information below the graph so the viewer can clearly identify any project variances.Click For Next Slide Or if you have time, it can be read?The red line represents thebaseline: This is the amount we said it was going to cost to deliver at project initiation.Theblue line represents the “EV” the amount of $$ worth of work value, the project has earned against the project budget baseline.The green line represents the accumalative cost of how much we have spent over time against our planned budget baseline, which can be measured against our PV to show if we are over or underspending.
  • Click For Next Slide
  • READ: After our initial case study, what have we gained from the use of EVM in KBL? From a tracking perspective the: Read slide 2nd Spot.Click For Next Slide
  • READ: Some of the PMO benefits are around the PMO’s ability to use other tools like: READ SLIDEClick For Next Slide
  • READ:So to finalize what do we gain from EVM and what are the key benefits to adopting EVM. It: Read SlideClick For Next Slide
  • A good source of EVM reading can be found on the internet, but I would recommend this book as a guide of excellence.Click For Next Slide
  • & Finally any questions?Click For Next Slide

Setting Up & Integrating EVM Into A PMO Presentation Transcript

  • 1. ux Earned ValueMichael ProjectGowlett Management 1
  • 2. IntroductionName Presentation By Michael GowlettPosition PMO Manager at Kredietbank Luxembourg 18 Years of Financial ExperienceExperienceExpertise PMO Implementations & Operational Management Virtualizing PMO’s Programme Office Automation Earned Value Management (EVM)Certifications PMP & Prince 2 PractitionerBased In Luxembourg for 2.5 years 2
  • 3. WWW.BANKING-ALLIANCE.COM 3
  • 4. AgendaInsight to Earned Value Management (EVM)?Explain why you should use EVM?I’ll describe some EVM tools that are available to usHow EVM can be implemented?I’ll walk you through a Luxembourg case studyWe’ll talk about a Plan Maturity Model & how its usedI’ll describe some of the core EV KPI’sHighlight some of the PMO EV implementation challengesI’ll walk you through the creation of an EVM architecture throughmultiple PPM tool integration and collaboration.Advantages & BenefitsFinally, some good sources for understanding EVM & a Q&A 4
  • 5. What Is Earned Value Management?EVM is a project management technique for measuring projectperformance and progress in an objective manner.EVM has the ability to combine measurements of scope,schedule, and cost in a single integrated system.EVM allows an organization to measure project time, cost &quality more effectively.First developed by the US Government in 1960sEVM is fast becoming the preferred technique for advancedcost & schedule tracking within organizations.Recognized by the PMI as an industry standard tool since thefirst PMBOK edition in 1987EVM is a mathematical analytical technique used to derivecritical delivery KPI’s to the reviewer at a glance. 5
  • 6. Why should you use EVM?Most projects have no mechanism to measure the value ofthe actual “work” being performed against plan & budget. Tracking the progress against the planned spend and actuals are separate processes but a relationship needs to exist between them, and EVM accomplishes this. Cost overruns or work schedule slippages are often not visible until a month end report is revealed EVM can eliminate the “Good News” reporting culture we often see in projects and allows for early detection and intervention of schedule and cost problems. 6
  • 7. EVM TOOL OPTIONS 7
  • 8. EVM Tool OptionsTools Advantages DisadvantagesExcel • Low cost • Time consuming • Suitable for small projectsMS Project • Familiar business • Detailed plans above 200 lines product. can be complex to manage. • Built-in EVM • Can be unreliable & time system. consuming • No collaboration & automationMS Project & • Familiarity + EVM • Requires an integrator to set-upMS Sharepoint • Collaboration a MOSS site to the right level • Low up front cost • Partial Integration • Automation Avail:PPM Tools • Rich feature set • High purchase price €1.5m+• Clarity • Fully automated excluding year on year running• Planview costs. • ROI can be hard to justify 8
  • 9. EVM Graph Standard 9
  • 10. HOW TO IMPLEMENT EVM 10
  • 11. How to Implement EVMEstablish the objectivesIdentify a suitable project (Typically start with a small project)Identify a suitable partner to mentor on your PMO teamArrange a planning workshopSelect the relevant PPM tools to fit your budgetTrainingKnowledge TransferSupport & Mentoring 11
  • 12. 12
  • 13. Case Study – Key DriversAdopt EVM without investing in a (€) 7 figure project &portfolio management system (PPM)To develop a solution, using off the shelf current PPM toolsthat minimized additional training & the learning curve.They wanted to automate 90% of the reporting processTo integrate desperate data sources, to derive meaningfulmanagement information and metricsTo provide early warning of project issuesTo provide the management team with an exception basedreporting tool
  • 14. Case Study –Before EVM - Typical ToolsWhat PPM products do we typically see on a given project? WBS (Work Breakdown Structure) High Level Plan (Steering level) No Integration MS Project Plan (Gantt Charts) Milestone List No Resource Plans Automation Budget Reports Labour Timesheet Management Actuals Intensive Financial Reports 14
  • 15. Case Study - Before Earned ValueCosts were captured in plans but spend to date was unclearResource actuals were tracked monthly by timesheets onlyPerformance of the actual work couldn’t be measuredEach department used its own processes & formsNo consistent measurements or KPI’s existed across multipleprojectsNo process of identifying early warning signs of cost over runsIssues went un-noticed due to the frequency of reportingNo formal project methodology existedNo consistency to the project lifecycle99% of the processes were manual. 15
  • 16. EVM Implementation ChallengesKnowledge of how to intepret an EV graphAt initiation choosing the right tools to consolidate the dataSet the appropriate tolerances to determine deviationStandardize the reporting expectationsKnow what measurements to monitor to indicate deviation orimprovement in performance.An EVM architecture is a key element to obtaining the mostout of the EVM technique (Explained later)For larger projects it can up to take 3 months to fully adopt 16
  • 17. Understanding Core EV KPI’sAcronym Algebraic Equation Explanation of Equation Explanation Plan % Comp x PV of work at a status Authorized budget assigned to thePV BAC date in time project or scheduled task Actual % EV<AC = Cost or effort Represents the cost of work valueEV Complete * overrun; EV>AC = Under performed at a given point in time i.e. Project budget budget/effort when a status date is selected in MPP Total costs actually incurred to date in AC>EV=Cost overrun;AC No Derivation AC<EV= Cost under budget accomplished work performed for a schedule or activity If CPI is = to 1 = Within Measures cost efficiency. A value >1 budget; If CPI <1 = Over indicates a favorable position. A valueCPI EV/AC budget; If CPI >1 = Project <1 and a negative value equals an costs are under budget unfavorable position If SPI is = to 1, On Schedule Efficiency of the time utilized on theSPI EV/PV ; SPI=<1 Schedule Delay; If project SPI >1 Ahead Of Schedule Acronyms Listed In RED Are Deemed The Most Useful For Reporting Purposes
  • 18. PMO Challenges Of EVMEVM data can be time consuming to maintain if you don’t utilisecollaborative content management databases to reduce the cost of datacollectionA lot of organizations don’t have the knowledge to exploit the functionalitybenefits in our everyday PPM tools.EVM is beyond the reach of most PMO teams, who have not been trainedto implement this relatively complex technique.It requires BI reporting skills to generate trend analysis, dashboards andad-hoc reportingFew training courses exist to acquire the skills to implement EVMWhile EVM increases the likelihood of success, it can add to the costRequires an understanding of the EV equations to calculate EVEVM can place a high demand on the PMO because the actual project planneeds to be at the advanced standard level of maturity 18
  • 19. Plan Maturity LevelAdopting Earned Value, you need to know that it requiresan good level of planning.A pre-requisite is that your project plans are matureenough.Organisations with immature plans need to increase theirplanning capabilities before implementing EVM Michael.Gowlett@Banking-Alliance.com
  • 20. Case Study - Plan Maturity Level Low High Level Level 2 Level 3 Level 4 Level 5 Level Level 1 Level 6Level Plan Maturity Level Planning Requirements EV technique is used & the EVA can be retrieved from the MPP to track, cost, time & quality and the reports are 6 MPP is being updated periodically? providing valuable information to senior management. Have the resources been Resource are fully allocated (not generic and the plans have been leveled to achieve an leveled across the plan? agreed resource utilization Is Work (effort) Vs Elapsed available? The plan will differentiate elapsed time (duration) from effort (work) to understand the 5 resource utilization between each of its deliverables Are the resource costs shown Billable resource costs are captured for each resource & are they being monitored? Has a contingency been included? The plans contain sufficient contingency for the phase and complexity of the project 4 Are holidays & sickness being tracked? The plans contain forecasted holidays and have contingency for sickness Has the MPP been base-lined? Has the plan been base-lined to measure efficiency & progress 3 Has a critical path been established? Has the critical path been established to understand the deliverables that closer monitoring Is the % Complete being maintained? Have the tasks % complete been updated & periodically are the they been tracked daily/weekly/monthly 2 Does the MPP contain dependencies? Have valid milestone been Does the plan have predecessors & successors (dependencies) captured? Does the plan contain an adequate number of achievable milestones? agreed & are they shown? Have tasks & elapsed times been At minimum are all the tasks and activities captured with resource assignment? captured? 1 Has the project plan been derived from How, or what has been used to derive the estimates? Have you used a specific an estimating model/tool or a WBS tool/technique? 20
  • 21. Michael.Gowlett@Banking-Alliance.com
  • 22. Tools Adopted by KBLMS ProjectMS SharepointReporting Tool (SQL Reporting Services)Mindjet Mind Manager (WBS Development)MS Visio 22
  • 23. PPM Tool Usage Through The Planning Phase To Create An EVM ArchitectureNow We Have Steering Level Plan DashboardIntegration &Collaboration Between All H PPM Tools WBS Project Plan EVM Reporting Export Our Assign Our Project Plan Into Baseline Our Resources To A Sharepoint Project Plan M Tasks In MPP List Define Our Plan Our Task Assignment Level Resources Resources Synchronize Our Triggering Work Actuals From Assignments To Sharepoint back L Resources Into Project
  • 24. Sharepoint Portfolio Dashboard
  • 25. Example Of An EVM Report 25
  • 26. ADVANTAGES & BENEFITS 26
  • 27. Case Study – Overall EV AdvantagesTracking Perspective: PMO has the ability to identify a slipping project schedule or cost deviation as periodically as when the actuals are synchronized.Reporting Perspective: We can track near real-time delivery against the plan (Schedule) Senior management can view a performance of a live dashboard that shows all EVM KPI’s allowing the viewer to drill down from Portfolio > Programme > Project & Task level. Historical databases of performance can be retrieved to tune future project estimates & assumptions.Trends Perspective: We can have more control over early detection of schedule & cost deviation because you can accurately see when & where deviation is trending against your baseline. 27
  • 28. Case Study – After – EV PMO BenefitsMS Access for automated reporting: When used with SharePoint It can replace large & unmanageable Excel spreadsheet DB’s The integration of SharePoint, Project & Access together can minimize financial reconciliation errorsWe also have further automation with Task & activity synchronization when using SharePoint & Project The PMO has less manual intervention for retrieving actuals because work assignments are delegated to owners via email, so trigger alerts can be setup, for task timing reminders
  • 29. Overall EVM BenefitsProvides advanced warning of cost and schedule overrunsEnables preventative measures and/or corrective actions to be undertaken atthe earliest signs of project deviation.Provides a mechanism to monitor the performance of suppliers and their staffin near real time.Provides a direct link between budgets, plans, resources and delivery.Provides statistics to stakeholders and steering groups showing past, currentand predicted performanceEnhances management visibility, allowing you to drill down into a portfolio ofprojects & tasks to retrieve statistics, that can be measured against abaselineProvides a management reporting methodology that encourages delegationand an exception based management style. Reduces Micro Management.Removes the “good news” reporting cultureThe PMO becomes more productive when it has the right PPM tools. 29
  • 30. Further Reading http://en.wikipedia.org/wiki/Ea Wikipedia rned_value_managementhttp://www.amazon.co.uk/Earned-Value-Management-Microsoft-Project/dp/1932159983 30
  • 31. QUESTIONS 31
  • 32. WWW.BANKING-ALLIANCE.COM 32