Work Package (WP). Detailed jobs, or material items, identified by the supplier for accomplishing work required. A work package has the following characteristics:(a) It represents units of work at levels where work is performed.(b) It is clearly distinguished from all other work packages.(c) It is assigned to a single organizational element.(d) It has scheduled start and completion dates and, as applicable, interim milestones, which are representative of physical accomplishment.(e) It has a budget or assigned value expressed in terms of dollars, man-hours, or other measurable units.(f) Its duration is limited to a relatively short span of time or it is subdivided by discrete value milestones to facilitate the objective measurement of work performed or it is level-of-effort. (g) It is integrated with detailed engineering, manufacturing, or other schedules.
Hazardous Gas Detection System – None, because this is a control accountFire & Leak Detector Bracket and Stand Fabrication – 0/100 since this task is Planned to start and complete in one monthDistribution Box Wiring –50/50 Terminal Distributor Fabrication – 0/100 because this task is planned to start and complete in one monthCable Fabrication - % Complete based on number of cables fabricated
Schedule Variance: I planned to get this much done (PV) but I really got this much done (EV)Cost Variance: For the work that I completed, I planned for it to cost this much (EV) but it really cost this much (AC).Lots of other indicators that can be calculated using EV:Cost Performance Index (CPI) = EV/ACSchedule Performance Index (SPI) = EV/PV
Every company or government agency uses some form of business planning and control systems for management purposesIt works with other company systems to meet all of an organization’s day-to-day management needs
Discuss the difference between the two based on the chart above.
Discuss how the chart shows the funding needs and how the three components on the left give you that baseline.
Sam Padgett presenting for Kristen Kehrer KSC Integration Office 321-867-3691Kristen.C.Kehrer@nasa.gov
What are the differences among EV, EVM, and an EVMS? EVM Budget vs. Funds Resources and current initiatives within NASA
Value of work accomplished expressed in terms of hours or dollars Calculated using an EV method assigned to a work package, e.g. Level Of Effort (LOE) - value is earned based on the plan; appropriate for work scope with no defined products % Complete – value is earned based on quantifiable measure of progress 0/100 – all value is earned upon completion; appropriate for tasks that start and complete within one month 50/50 – half of the value is earned when the task is started and the other half when complete; appropriate for tasks that span two months with equal work in each Milestones – value is earned when milestones are complete
Jan Feb Mar Apr EV MethodWBS # WBS Description 09 09 09 09 Budget292360.09.02.04.14.02 Hazardous Gas Detection 5,500 9,500 6,800 2,400 24,200 None System292360.09.02.04.14.02.A Fire & Leak Detector 3,300 3,300 0/100 Bracket and Stand Fabrication292360.09.02.04.14.02.B Distribution Box Wiring 2,200 2,200 4,400 50/50292360.09.02.04.14.02.C Terminal Distributor 7,300 7,300 0/100 Fabrication292360.09.02.04.14.02.D Cable Fabrication 6,800 2,400 9,200 % Comp
We are at the end of Jan-09, and this is where we are We started the Fire & Leak Detector Bracket and Stand Fabrication but didn’t finish We started the Distribution Box Wiring but didn’t finish We started and finished the Terminal Distributor Fabrication What is my EV? Jan Feb Mar Apr EVWBS Description 09 09 09 09 Jan-09 EV MethodHazardous Gas Detection System 5,500 9,500 6,800 2,400 9,500 NoneFire & Leak Detector Bracket and 3,300 0 0/100Stand FabricationDistribution Box Wiring 2,200 2,200 2,200 50/50Terminal Distributor Fabrication 7,300 7,300 0/100Cable Fabrication 6,800 2,400 0 % Comp
Utilizing this new measure (EV) in project management decision making to: Calculate cost and schedule variances Schedule Variance (SV) = EV – Plan (PV, BCWS, or S) Cost Variance = EV – Actuals (AC, ACWP, or A) Identify significant cost and schedule variances and their drivers Develop corrective action plans to get back on track Forecast future cost and schedule performance Summarize the data to support management needs EVM is both performance measurement (i.e., what is the program status) and performance management (i.e., what we can do about it)
Spend Plan vs. Actual OR Budget vs. Actuals 900 800 800 700 700 Project Budget 600Dollars 600 Actual Cost to Date 500 500 400 400 300 300 200 200 100 100 0 0 J F M A M J J A S O N D Time
Estimate At Completion (EAC) $K2,750 Reporting Cut-Off Date Total Budgeted Cost } Projected Overrun Budget At2,500 Completion (BAC)2,250 Actuals }2,000 Plan Projected1,750 } CV Slippage1,500 SV1,2501,000 750 EV 500 250 Time (Mos.) 9
We are at the end of Mar-09, and this is where we are We finished the Fire & Leak Detector Bracket and Stand Fabrication We are still not finished with Distribution Box Wiring We finished the Terminal Distributor Fab. We fabricated 6 of 10 cables* The actual costs are as follows: Jan-09 = $9,000 Feb-09 = $4,000 Mar-09 = $10,000 How am I doing and where will I end up?* Assume cables are of equal complexity
Our budget through Mar-09 for the Hazardous Gas Detection System was $21,800 We spent $23,000, so we are overrunning our plan by $1,200 $35,000 $30,000 Spending Variance = $-1,200 $25,000 $20,000 $15,000 PV $10,000 AC BAC $5,000 $- Jan-09 Feb-09 Mar-09 Apr-09
The project manager is anticipating that the most likely scenario is that the remaining work will be finished with the same efficiency as the past and is predicting to overrun cost by $6,182. In a best case scenario, the remaining work will be completed on cost, and the project will overrun by $4,680. The project manager evaluated the remaining work and thinks that the remaining 4 cables will be fabricated and the distribution box wiring will be completed in April- 09. The Haz Gas Detection System will finish on schedule.* Using traditional cost management, the cost variance is significantly understated and no assessment of schedule can be made.* SV goes to zero when work is completed
An organization’s internal management systems for planning and control, including processes for: Planning all authorized work scope to completion Assigning authority and responsibility at the work performance level Integrating cost, schedule, and technical aspects of the work into a detailed baseline plan Measuring progress objectively (earned value) at the work performance level Accumulating and assigning actual costs Analyzing variances from plans Summarizing and reporting performance data to higher levels of management for action Forecasting achievement of milestones and completion of contract events Forecasting final contract costs and Maintaining a baseline in a disciplined fashion and incorporating revisions in a timely manner
Every company or government agency uses some form of business planning and control systems for management purposes When a project is deemed critical, the customer requires more rigor in the supplier’s internal planning and control systems to ensure performance data and forecasts are valid, accurate, and timely. The EVMS guidelines have been published as an American National Standards Institute/Electronic Industries Alliance standard ANSI/EIA-748, Earned Value Management Systems The guidelines are broad enough to allow for common sense application Most of the basic principles of an EVMS are already inherent in good business practices and program management Suppliers required to produce EV data are required to be in compliance with, or validated against, ANSI EIA- 748
Define authorized work Record direct costs from the accounting system Identify the Project’s Organization Structure Summarize direct costs into the WBS Integrate cost and schedule systems Summarize direct costs into the Organizational structure Identify the organization responsible for Record indirect costs overhead costs Identify unit costs, equivalent unit costs or lot Integrate the WBS and Organizational structure costs to create control accounts Accurate material planning and control Sequentially schedule the work Generate monthly cost and schedule variance Identify interim measures of progress data at control accounts Explain significant variances Establish time-phased budgets Identify and explain indirect cost variances Identify significant cost elements in the budget Summarize data through the WBS and Identify discrete work packages Organization Sum work packages and planning packages to a Implement management actions as a result of control account EVM analysis Identify and control Level of Effort Revise Estimates based on data Establish overhead budgets Incorporate authorized changes in a timely manner Identify Management Reserve and Undistributed Reconcile budgets with prior budgets Budgets Control retroactive changes Reconcile target cost goal with the sum of all Prevent all but authorized budget changes internal budgets Document changes
The EVMS Process Overview Define the Work Performance Measurement Baseline (PMB) Plan the Work Quantify & Measure Earned Value Work the plan Collect Results Change Measure Work In Process Control Analyze Variances ImplementExternal Internal Corrective ChangesChanges Actions 18
What is Budget? What are Funds? Budget is created as an aid to the Funding is process of supplying management process money to the project Cannot be spent Known by many names such as • A number written on a piece of money, funding limits (obligations), paper (an objective) actuals • A representation of work Total costs for entire project • A planning vehicle • Experienced cost for work • A temporary element for performed – actuals or ACWP project control • Expenditures & estimates of future spending for remaining project elements Can be planned - BCWS Estimate To Complete (ETC) Can be earned - BCWP BAC Estimate At Complete (EAC) 20
Budget Budgeted Cost for Work Scheduled (BCWS) Time phased budget spread of required resources for the entire task Assigned (budgeted) value of the work (at any level; WP, CA, IPT, Project) Forms the Performance Measurement Baseline (PMB) Budget At Completion (BAC) Budgetary number representing ALL authorized work Cannot change without a change to scope/technical content, i.e. requirements change Funding Estimate To Complete (ETC) Funding required to complete remaining work When added to ACWP, it results in the EAC Estimate At Completion (EAC) Funding number representing ALL the money that will be spent Can (and will) change without a commensurate change to technical content 21
Project LCCE = Initial Project Budget Baseline1. Technical Baseline • Performance Initial Project Objectives or Funding Profile Parameters (e.g., (PPBE process) weight, thrust) • Project WBS (Commitment / • CARDe Obligation)2. Schedule Baseline • Schedule Objectives (e.g., IOC, FOC) $ • IMS Initial Project • Critical Path Budget Baseline • Risk The time phased expected costs based3. Cost Baseline • Cost estimating methods: on initial cost estimate • Parametric 100 • Historical 40 • Engineering (Bottom up) 60 • Considerations: 15 • TRLs • Learning curves 25 • Production rates 30 • Risk, etc. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 30 • Resources include: work TIME force (Govt/Support Contractor, Material, Travel, 22 ODC, Etc.
MANAGEMENT RESERVE FINANCIAL RESERVE Part of the PBB Held outside the PBB Budget set aside for Intended to cover management control project-level overruns purposes (i.e., for the known-unknowns) Typically held by Typically belongs to the controller or exec project manager management Ceases to exist at end of program 23
In EVM terminology, NASA Unallocated Future Expense (UFE) is considered a Financial Reserve (funding) and not Management Reserve (Budget) NASA EVM Project CONGRESS PROGRAM & OMB OFFICE Agency Baseline Management Commitment Baseline - PROGRAM UFE UFE AUW UFE Management Reserve AUTHORIZED Project AUTHORIZED Undistributed Budget Budget Base PMB Distributed BudgetKey: Held Back Funds/Funding Commitment Agreement Held Back Funds/Funding Management Agreement Chambers/Gibby 07/2010 Not Strictly “Budget,” but should be inviolate Budget 24
NASA EVMS Website at http://evm.nasa.gov/ EVM Focal Point at each Center, Headquarters Mission Directorates, and Headquarters Mission Support Offices Implementation Handbooks Integrated Baseline Review (IBR) Toolkit Schedule Management Handbook Work Breakdown Structure (WBS) Handbook
APPEL EVM Overview Understanding EVM Beyond EVM Basics: Baseline Control, Risk Considerations and Performance Indicators Advanced EVM Topics: Recognizing EVM and Scheduling Gaming, Abuse and Data Manipulation Integrating Cost and Schedule Online SATERN EVM Courses EVMS Overview Control Account Manager (CAM) Discussion IBR Scheduling Virtual Learning Lab Center-level resources DCMA Representative for EVMS
Agency EVM Capability Project Work scope entails developing a common Agency process that can be used by all NASA projects Data Requirements Document (DRD) Guide for contracts and projects with EVM requirements EVM Working Group Quarterly Meetings
“Management 101” “EVM 101”• Organize • Develop WBS • Assign responsibilities • Authorize work• Plan • Plan, schedule, and budget work• Coordinate • Integrate project management functions and scope, cost, and schedule• Direct • Analyze performance data and use for management decisions• Control • Maintain validity of integrated cost, schedule, and technical performance data 29
EVM Myth EVM Fact• Government Requirement • Standard Business Practice Management Tool• Burdensome process • Tailorable process based on project size, complexity, & risk• “Bean Counter” exercise • “Owned” by entire Management Team• Costly to implement • Can be costly NOT to implement – (Overruns, Project Cancellations)• Too Much Data • Data can be summarized for reporting 30