Want to start using EVM principles for your project based business? This is a great primer to get you started. Brought to you by the team at Unanet.com. Learn more at: https://www.unanet.com/news/demand-webinars

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Introduction to Earned Value Management
10 Minute “Get Started” Tutorial
Kim Koster
Project Management Evangelist, Unanet

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Why Organizations Need Earned Value
“9.9% of every dollar is wasted due to
poor project performance—that’s $99
million for every $1 billion invested”.
(Source: 2018 Pulse of the Profession®)
“Scaled to encompass total global capital
investment, around $1 million is wasted
every 20 seconds—or $2 trillion every year”.
(Source: Brightline Initiative™)

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Project Reality
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120
Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19
%Complete
Time Line
Plan Reality
4) Result - late and over budget project
1 – It all starts with a plan
2 – A surprise occurs
3 – Recovery Impossible

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EVM For Project Success
• EVM encourages detailed realistic plans to be used from the start of a project.
• EVM requires disciplined and integrated planning that will help achieve early
detection of issues to course correct.
• Provides a common set of guidelines for measuring technical, schedule, and cost
performance throughout the life of a project.
• EV provides objective indicators as to performance during the life of a project.

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EVM For Project Success
• EVM implementation can be tailored based on complexity of the project.
• EVM and project management aims to have an achievable program plan.
• EV provides an accurate forecast (EAC) of the total funds required for project
completion.
• EVM provides metrics based on actual performance data.
• Provides a signal in time for the project manager to take corrective action.

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Benefits of EVM
• All project sizes will benefit
• Measure accomplishments
• Accurately forecast project completion and final cost
• Early warning to delays or overruns

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• Provide schedule and cost variances
• Minimize scope creep that can result in overruns
• Improve the control of project performance
• Provides a competitive advantage and delights customers
Benefits of EVM

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1 2 3
Tasks “earn”
value as work
is completed.
Earned Value (EV) can then
be compared to actuals and
budget for current status and
to predict the future.
Progress is measured in
dollars and hours, so schedule
and cost performance can be
analyzed in the same units.
EVM is the Answer
Earned Value Management (EVM) is a project management methodology that combines schedule
and cost performance to answer the question, What work was done for the money spent?

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The Big 3 – Common for All Types of Projects
Cost
Scope – What is the product (Goods or Services)?
Schedule – When will the products be delivered?
Cost – How much will it cost to deliver the product?
EVM provides a structured process to manage all 3!

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Organize
the Work
Define Control
Accounts
Plan
Resources
Scope
Comprehension
Establish an
Org Structure
Schedule
Tasks
Establish a Baseline
(cost and schedule)
EVM Roadmap
It all starts with a
great proposal

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It all Starts with a GREAT Proposal
Steps for completing the proposal estimate:
▪ Understand the scope, scope comprehension is the key to accurate estimating
▪ Utilize the project template to clone or populate the project information, the past estimates, and the timelines for the tasks
▪ Establish a work breakdown structure (WBS)
▪ Estimate the resources needed to complete the work
▪ Understand the timing of needed resources
▪ Include all materials, services, and travel required
▪ Time phase the estimates
▪ Ensure that the right skill set is available when you need them
▪ Use To Be Determined (TBDs) if the name of the resource is not yet available
▪ Gain buy-in from the proposal team and the functional departments before submission to the customer
At contract award the proposal is the starting point for the project plans!

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Scope Comprehension
IMP
PWS
SOW
The
Project
• Statement of Work (SOW) – description
of what is to be delivered to the
customer.
• Performance Work Statements (PWS) –
summary of the work that needs to be
done for a contract
• Integrated Master Plan – event driven
plan that documents the
accomplishments needed to complete
the scope of work and relates each
accomplishment to a project event.

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Establish a Work Breakdown Structure (WBS)
Definition
A WBS is a hierarchical
decomposition of the work to be
accomplished on a project. It is
typically outcome or product based
and should make the management
of scope, schedule, and cost much
easier.

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Organizational (Department) Breakdown Structure
Enterprise
Quality Project MgmtEngineering
Mechanical Electrical Inspection Reliability PMO Proj Controls
Responsible Organizations - A functional organization is a common type of
organizational structure in which the organization is divided into smaller groups
based on specialized functional areas, such as Engineering, Quality, or Project
Management.

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Engineering
Control
Account
Control
Account
Quality
Control
Account
Control
Account
Control
Account
Control
Account
Project
Management
Control
Account
System
Integration
Control
Account
Management
Casing
Electronics
Monitor
Final
Assembly
Super
Computer
Control
Account
Define Control Accounts
Responsibility Assignment Matrix (RAM) - a graphic representation that reflects the integration of project participants such
as work teams, subcontractors, and internal organizations with individual project Work Breakdown Structure elements to
form Control Accounts (CA).

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Schedule Tasks
Task 1
Task 4
Task 3
Task 5
Task 6
Task 7
Task 8
Task 9
Task 10
Task 2
Plan your tasks with start and stop dates

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Plan and Manage Your Resources
Look for availability and skills to complete your project

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Plan and Manage Your Resources
Resource Management:
1) Skills library
2) Enterprise availability
3) Planning grid
4) Visual notification
5) Available to all
stakeholders

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Create a Cost Plan (Budget)
Characteristics of a good budget:
1. All scope is included
2. Time-phased
3. Meets the contract cost and
schedule
4. Includes all the resources
needed
5. Aligns with the WBS
6. Basis for comparison to
actuals and EV
https://www.unanet.com/blog/8-tips-budgeting-project-based-organizations

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Execute the Project
Execution:
1. Time charged to tasks
2. Status % complete on
each task
3. Explain schedule and
cost variances
4. Update to go forecast
5. Look at metrics for
current issues and
potential future issues

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GET S.M.A.R.T.
Specific - Target a specific area for improvement
Measure - quantify or at least suggest an indicator of progress
Attainable - specify who will do it
Realistic - state the results that can be achieved realistically,
given available resources.
Time-frame – when can the results be achieved?
Are Your KPIs SMART?

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Additional Tips for Picking the Right KPIs
• Very clear purpose (what matters most)
• Common business language
• Align with your current processes if possible
• Holistic approach (think through the unintended consequences)
• Drive the desired behavior (Encourage and reward)
• Define tolerances (red, yellow, green, blue)
• Have a mechanism to display the KPIs to all stakeholders
(dashboards)
I – Important
P – Potential Improvement
A – Authority
IPA Rule

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Define the KPIs That Help Drive Your Strategy
Project Enterprise/Portfolio
- On Schedule and Budget - Compounded Annual Growth
(CAGR)
- Profitability - Profitability
- Revenue - Revenue
- Labor Utilization - Booking
- Skillset Usage - Backlog
- Spend Variance - Bid to Win
- % Spent - Pipeline Snapshot
- Estimate to Complete (ETC) - Annual Billable Utilization
- Cost per Person - Rate Analysis
- Bill rate - Targets by Region, Customer,
Portfolio, etc.

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EV Metrics –
help manage
current
status and
gives you a
window into
the future!

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Myth Reality
EVM is only for huge government
projects
EVM is a basic project mgmt discipline –
scope, schedule, and cost regardless of
project size
EVM is expensive to implement
All of the base data is in the system
already…merely status % complete
EVM is looking only in the rearview
mirror
EVM provides metrics based on current
performance to predict the future
EVM is old and outdated
Good project management practices
never go out of date
EVM Myths

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If you are ready to jump
into the Earned Value Pond
and take control of your
projects please contact us
at:
Unanet.com