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Symposium 2016 : CONF. 401 Jonathan Shriqui EVM: Go Beyond the Numbers

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The purpose of Earned Value Management (EVM) is to integrate a common rigour of project performance management. Execution is everything with EVM. It requires nothing less than a complete commitment by senior management to fully ingrain a business wide culture of EVM. Do it right, and you will reap invaluable data from and for your project teams. Do it wrong, and it will send you into an abyss of disarray. Proper execution does not guarantee perfect program performance. Rather, it will give you invaluable insight into your schedule and budget. Being ahead of schedule and under budget may have the same negative impacts as the opposite unless you can effectively manage to answer the most daunting question of all: Why? Please join me as we Go Beyond the Numbers of EVM. We will briefly review the basic foundations of EVM (SPI, CPI, etc.) before we seek to not only understand what the data is telling us, but more importantly, how can we use it to our benefit.
BIOGRAPHY

Jonathan Shriqui has over a decade of financial management experience acquired from General Electric & Lockheed Martin on large scale programs. His Earned Value Management (EVM) acumen was refined when he joined Lockheed Martin, in 2007, as part of the successful capture team for the frigate modernization program (HCM/FELEX CSI) for the Canadian Navy. In 2012, he transitioned to the Navy’s arctic patrol program (AOPS) where the EVM reporting requirement demanded a weekly delivery cycle. Since 2015, as part of the BMT Clarity management consultancy, he provides insights and recommendations to the Department of National Defense for the AOPS and Canadian Surface Combatant (CSC) programs. Jonathan has earned his PMP and Six Sigma Black Belt credentials and is currently working towards completing his Canadian Risk Management (CRM) designation.

Published in: Data & Analytics
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Symposium 2016 : CONF. 401 Jonathan Shriqui EVM: Go Beyond the Numbers

  1. 1. 1 EVM: Go Beyond the Numbers Jonathan Shriqui, PMP
  2. 2. 2
  3. 3. WHAT IS THE PURPOSE OF EVM? To establish a common standard of project performance measurement & stakeholder management, regardless of program size or industry. To provide early warning signs of deviation from plan. 3
  4. 4. WHAT IS EVM? Not a single process Grouping of 32 guidelines (EIA-748-C) Management technique: • Establish a time phased budget of the SOW • Captures the progression of work • Provide reliable & timely information for project management analysis & actions 4
  5. 5. 3 Key components to EVM PMI Talent Triangle: Leadership Strategic and Business Management Technical Project Management 5
  6. 6. Role of Leadership with EVM 6 Leadership is the foundation of EVM: Set the organizational tone Fosters a culture of EVM Tailors business process to support EVM Utilizes EVM info to support leadership decisions
  7. 7. 7 EVM Challenges to Leadership Leadership must accept that EVM: May be lengthy to implement Requires tools & training May be process heavy Requires a business rhythm Acceptance that EVM requires TIME.
  8. 8. 8 EVM Benefits to Leadership Leadership should receive the following benefits: Provide early warning signs of potential project issues Integration of scope, schedule & cost Credibility of program control Stakeholder Communication Enhanced Risk Management
  9. 9. 9 Strategic and Business Management Business Maturity Business Operations Customer Relationship
  10. 10. Strategic & Business Management 10 Business Maturity • Capability Maturity Model Integration • CMMI Rating from 1 to 5 The CMMI principal is that “the quality of a system or product is highly influenced by the process used to develop and maintain it”*
  11. 11. Business Maturity 11 EVMS will most likely be effective in a org. that reflects a CMMI rating of 3 or above
  12. 12. Strategic & Business Management Business Operations 12 - Reporting - Cash Flow Forecasting - Resource Forecasting - Risk Management
  13. 13. Strategic & Business Management 13 Business Operations / Reporting • EVM Culture • EVM lingo & metrics in review meeting • EVM understood/used by senior management • EVM data should remain constant throughout the various level of reporting
  14. 14. Strategic & Business Management 14 • Business Operation - Cash Profiling - Resource Reqs. Your ETC is your Forecast. USE INPUT FROM YOUR CAMs.
  15. 15. Strategic & Business Management 15 • Business Operations / EVM &Risk Management – Both work cohesively, not in silos Mgmt Reserve > Risk Register + VAC If not, engage in stakeholder awareness
  16. 16. Customer / Stakeholder Relationship 16 The outputs of EVM process (variance reporting) should be the source of data for stakeholder mgmt The project is: Over/under cost because… Late/ahead of schedule because… The key risks are… Our mitigation/enhancement plan is… Program Control Instills Stakeholder Confidence
  17. 17. 17 Technical Project Management EVM Basics Small Project
  18. 18. 18 Business world: “Cash Is King” EVM world: “Schedule Is King” A realistic, achievable & logical schedule is key with EVM WHO IS KING?
  19. 19. EVM 101 Time Budget versus Actual 2D Project (Business) Management $’s Budget Actual Time Now Under spent ? Behind Schedule ? $’s 3D Project Management Time Plan Costs Time Now Budget versus Actual Earned Schedule Cost
  20. 20. 7. Reporting - CAM reports (e.g. one page reports, SWOT, SOFT) - Variance Reports (by exception) - Recovery Plans 2. Schedule - Work & Planning packages - Resource - Time-phased budget 1.Scope - Contract / SOW - WBS, OBS, RAM & WBS Dictionary - Control Accounts 5. Costs - Booking / charge numbers - Actual costs / bookings 6. Analysis - Trend analysis - Variance analysis - TCPI, IEAC - Other PM analysis (e.g. Critical Path Analysis) 8. Risk & Opportunity - Exposure (financial, schedule & performance) - Costed Mitigation / Realisation actions 9. Change - Change Requests - Change Log - Baseline maintenance - Re-planning - Formal control of scope & budget changes 4. Status Data (Progress) & Forecasts - Achievements (earned value) - Estimates to complete 3. EV “Engine” - PMB - Performance data - EVM reports (CPR1-5, trends & SPA graph)
  21. 21. 21 Bathroom Renovation
  22. 22. 22 Our Budget - BAC Item BAC Flooring $1,600 Vanity $1,900 Shower $2,000 Bathtub $1,500 Total $7,000
  23. 23. 23 BCWS Budgeted Cost of Work Scheduled 23 The BCWS is your time phased BAC ∑BCWS = BAC = YOUR DOLLARIZED PLAN Week 1 Week 2 Week 3 BAC Flooring $1,600 $1,600 Vanity $1,000 $900 $1,900 Shower $1,000 $1,000 $2,000 Bathtub $1,000 $500 $1,500 Period Total $2,600 $2,000 $2,400 $7,000
  24. 24. 24 BCWS Budgeted Cost of Work Scheduled – Week 1 Our PLAN is to perform $2,600 of defined scope in week 1. • Old Floor Removal = 6hrs @ 50$/h = $300 • Purchase materials (tiles, grout, etc) = $500 • Tile Installation = 16hrs @ 50$/h = $800 • Purchase & delivery of bathtub = $1,000 $2,600 BCWS Week1
  25. 25. 25 ACWP Actual Cost of Work Performed ACTUAL cost of the EARNED scope. BAC: • Planned Direct Cost • Planned Indirect Cost • Planned Material Cost ACWP: • Actual Direct Cost • Actual Indirect Cost • Actual Materials Cost
  26. 26. 26 Our Cost – ACWP – Week 1 BCWS W1 ACWP W1 Removal $300 VS $100 Material $500 VS $500 Installation $800 VS $700 Bathtub $1,000 VS $1,000 Period Total $2,600 VS $2,300 But what did we accomplish?
  27. 27. 27 BCWP Budgeted Cost of Work Performed What did we “earn” in relation to our plan? What did we accomplish? What did we start/finish? What is the status of the scope?
  28. 28. 28 What was accomplished in week 1? Earned / Planned – Removal 100% completed – we earned $300/$300 – Purchased 100% of materials – we earned $500/$500 – Installed 25% of the tile – we earned $200/$800 – Purchased & installed bathtub - we earned $1,500/ $1,000 $2,500/$2,600 BCWP Budgeted Cost of Work Performed – Week 1
  29. 29. 29 The key to good EV is proper “statusing” A realistic and achievable schedule Selecting appropriate EV Technique: • LOE, % complete, 50/50, Milestone, units complete, apportioned (0-100, 50-50, 20-80, etc) Be honest and objective! BCWP Budgeted Cost of Work Performed
  30. 30. 30 SV P - S SPI P / S CV P - A CPI P / A $0 1.0 +$200 3.0 $0 1.0 $0 1.0 ($600) 0.25 ($500) 0.28 +$500 1.5 +$500 1.5 ($100) 0.96 +$200 1.09 BCWS W1 BCWP W1 ACWP W1 Removal $300 $300 $100 Material $500 $500 $500 Installation $800 $200 $700 Bathtub $1,000 $1,500 $1000 Period Total $2,600 $2,500 $2,300 EV Metrics – Week 1 SV = BCWP – BCWS SPI = BCWP/BCWS CV = BCWP – ACWP CPI = BCWP/ACWP
  31. 31. Time Now BCWS 100 100 100 100 100 100 100 100 BCWS 400 BCWP 0 400 0 0 0 0 0 0 BCWP 400 SPI 1.0 BCWS 100 100 100 100 100 100 100 100 BCWS 400 BCWP 0 200 0 200 0 0 0 0 BCWP 400 SPI 1.0 BCWS 100 100 100 100 100 100 100 100 BCWS 400 BCWP 100 100 100 100 0 0 0 0 BCWP 400 SPI 1.0 “My SPI is 1.0, but my project is late!?”
  32. 32. 32 SPI, CPI, EAC, TCPI, iEAC, BEI, VAC, BAC, BCWR, UB, MR, PMB, etc. So What? I need information, not data!
  33. 33. 33 BCWS W1 BCWP W1 ACWP W1 Installation $800 $200 $700 SV P - S SPI P / S CV P - A CPI P / A ($600) 0.25 ($500) 0.28 Why SV? Inspection determined that the grading of the existing subfloor was out of tolerance. Leveling of the subfloor was required for proper tile installation. Why CV? Due to the unleveled subfloor, the purchase of self- leveling cement and extra labour was required to level subfloor. Variance Analysis Why SV? Why CV? Contracts Management
  34. 34. 34 BCWS W1 BCWP W1 ACWP W1 Installation $800 $200 $700 Impact Analysis SV P - S SPI P / S CV P - A CPI P / A ($600) 0.25 ($500) 0.28 Schedule Impact: Delays due to releveling the subfloor may affect the start date of the vanity installation. Tile installation is now on the critical path. Cost Impact: Extra material and extra labour effort will increase the estimate at complete (EAC). Will incur storage costs for the vanity (offsite) if floor is not finished on time. Schedule Management Supply Chain Management Risk Management
  35. 35. 35 BCWS W1 BCWP W1 ACWP W1 Installation $800 $200 $700 SV P - S SPI P / S CV P - A CPI P / A ($600) 0.25 ($500) 0.28 Schedule : Consider diverting resources to minimize schedule delays and getting off the critical path. Cost: Recommend absorbing the cost of additional resources to avoid paying storage and transportation costs Schedule Management Cost Growth Mitigation Plan
  36. 36. Importance of CAM training 36 CAM training & experience will affect the quality of: • Performance Assessment • Variance Analysis • Impact Analysis • Mitigation plans • Ultimately the data used influence the outcome.
  37. 37. 37 Lets go 15 years into the future…
  38. 38. 38 Vertical EV 38 $’000 BCWS BCWP ACWP Foundation $300 $300 $100 Framing $500 $500 $800 Electrical $800 $200 $700 Plumbing $1,000 $1,500 $1000 Period Total $2,600 $2,500 $2,600 SV SPI CV CPI $0 1.0 +$200 3.0 $0 1.0 $(300) 0.6 ($600) 0.25 $(500) 0.28 +$500 1.5 +$500 1.5 ($100) 0.96 $(100) 0.96 Labour $800 $400 $600 Material $600 $500 $400 Subcontract $1,200 $1,600 $1,600 Period Total $2,600 $2,500 $2,600 $(400) 0.5 $(200) 0.7 ($100) 0.8 +$100 1.25 +$400 1.3 $0 1.0 ($100) 0.96 $(100) 0.96 But my schedule is late!
  39. 39. 39 3939 Resources BCWS BCWP ACWP Labour $800 $400 $600 Material $600 $500 $400 Subcontract $1,200 $1,600 $1,600 Period Total $2,600 $2,500 $2,600 SV SPI CV CPI $(400) 0.5 $(200) 0.7 ($100) 0.8 +$100 1.25 +$400 1.3 $0 1.0 ($100) 0.96 $(100) 0.96 Vertical EV LOE $400 $400 $500 Discrete $400 $0 $100 Period Total $800 $400 $600 $0 1.0 $(100) 0.7 ($400) 0.0 $(100) 0.0 ($100) 0.5 $(200) 0.7
  40. 40. 40 Horizontal EV Date SPI CUR - SPI 0.90 CUM - SPI 0.94 3 Month 0.85 6 Month 0.86 9 Month 0.89 • Trends without graph • Shifts in program momentum • Labour vs Material • Discrete Labour Only 𝟗 𝒎𝒐𝒏𝒕𝒉 𝑺𝑷𝑰 = 𝑩𝑪𝑾𝑺 𝒄𝒖𝒎 − 𝑩𝑪𝑾𝑺 𝒄𝒖𝒎 𝟗 𝒎𝒐𝒏𝒕𝒉𝒔 𝒂𝒈𝒐 𝑩𝑪𝑾𝑷 𝒄𝒖𝒎 − 𝑩𝑪𝑾𝑷 𝒄𝒖𝒎 𝟗 𝒎𝒐𝒏𝒕𝒉𝒔 𝒂𝒈𝒐
  41. 41. 41 EVM Outputs Program Control • Quantitative Data • SPI, CPI • Qualitative Information • We were late because… • We spent more because… • Our mitigation plan is…
  42. 42. 42 EVM is NOT a quality tool! You must PLAN for quality WITHIN your project.
  43. 43. 43 Another 15 years later…
  44. 44. 44 EVMS: Contractual Requirement Customer Contractor Expectation of Program Control Common Knowledge & Lingo
  45. 45. 45 • Customer: • Ability to understand & assess EVM data • Ability to conduct audit • Define your reporting reqs (CDRL/SDRL) EVMS: Contractual Requirement • Contractor: – Ability to produce EVM data (CDRL/SDRL) – Ready to be audited – Adhere to an EVM culture / processes
  46. 46. 46 EVM SOW An improper or too vague EVM SOW may result in an EVMS that is: - Contractually compliant - But has little or zero value added - May cause more “pain” than gain
  47. 47. 47 Refine your EVM SOW • EVMS that complies with a standard (EIA 748-C) • % of LOE labour shall not be greater then X% • EVM as a SDRL to subcontractors • A task shall not have a duration longer then X days • Reporting shall be at the X level of the WBS or CA. • Expectation EVM analysis and recovery.
  48. 48. 48 Always remember… Good decisions are based on knowledge and not on numbers. - Plato
  49. 49. 49 For more information… •Thank you for your participation today! •For more information on the contents of this presentation, please feel free to contact me as follows: o Jonathan Shriqui, PMP o jshriqui@fleetech.com o 613-255-6520 o www.fleetech.com
  50. 50. Time Permitting… 50
  51. 51. EVM Practical Uses

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