The simple problem of schedule performance indices
Knowing how our project is performing means knowing how our Cost, Schedule, and Technical Performance is performing according to Plan.
p If the performance of our project is like cycling, then we plan to ride at a planned pace – say 20 mph say 20 mph. If our group maintains the target pace of 20 mph they can look at their watches to l k t th i t h t determine if we’re on pace to complete our 40 mile ride in 2 hours. 30 minutes into the ride we’re still all riding as a group. Nice sustainable pace, we ll make the 40 miles in our planned sustainable pace we’ll make the 40 miles in our planned time – no problems so far.
But some of us are starting to get tired. We’re falling to the back of pace line. Instead of our planned 20 mph, we’ve dropped to 19 mph, still moving along pretty well, but a gap is starting to open up. As time passes this gap is opening more – we’re falling off the back of pace line – and we’re gonna get dropped if we don’t do something soon. something soon We’re Underperforming to our Plan For the invested effort (ACWP) we’re under delivering value (BCWP) against our planned value (BCWS). against our planned value (BCWS)
If we keep riding at our 19 mph pace, the gap will continue to open and we’ll soon be all alone. Our planned performance (BCWS) has fallen off the actual pace (BCWP) and we need to do something about it, and we need to do it fast. If we can get back on pace (BCWP) – go back to our planned 20 mph – this will be good, but the gap that opened up will remain (SPI 1.0). remain (SPI < 1.0). We’ll still have the gape between us and the peloton. Our riding group is now far ahead. We re not falling further behind, but we re still behind. We’re not falling further behind, but we’re still behind. We’ll need to pick up the pace (SPI > 1.0).
In order to close the gap, In order to close the gap riding at our planned 20 mph pace is not enough. We have to ride faster – say a 22 mph to close the gap to rejoin the peloton. Let’s assume we have the strength, skills, stamina, and L t’ h th t th kill t i d mental fortitude needed to pick up the pace and ride a 22 mph pace to try to regain contact with the group. Exactly how to do this will require some thought: E tl h t d thi ill i th ht Simply peddle faster – steady increase in effort. Sprint to close the gap on an uphill section. Ride faster down hill. Find someone to pull us to the Peloton in a draft.
In order to close the gap, we need to find the needed actions to close the gap that put us back on pace put us back on pace – 20 mph. But no matter how we need to ride faster – at 22mph. to ride faster at 22mph Two things are actually needed: Close the gap ride at 22 mph to regain contact Close the gap – ride at 22 mph to regain contact. Once reconnected with the group, keep on planned pace – maintain 20 mph. Easy in concept – hard in the execution. Easy in concept hard in the execution
The planned pace is BCWS.The actual pace is BCWP. pThe work effort needed to ride at the planed pace is ACWP.The effort need to close the gap is TCPI.
Budgeted Cost for Work Scheduled (BCWS) d d f k h d l d The planned cost in hours and / or dollars. Budget Cost of Work Performed (BCWP) B d t C t f W k P f d (BCWP) The planned value of the work delivered. Wh BCWS BCWP ’ When BCWS = BCWP we’re staying with the Peloton. i i h h P l This is the “Earned Value” over the period of performance. performance Actual Cost of Work Performed (ACWP) The cost in dollars or hours to “earn” the Earned Value The cost in dollars or hours to earn the Earned Value (BCWP).
BCWS BCWP ACWP The same work component is in all three Earned Value variables p† CPM–300: Principles of Earned Value Implementation, Lesson E: Developing the Performance Measurement Baseline, Dennis W. White, IPMC 2002 Fall Conference, Professional Education Program.
Time NowCOST Planned Cost Actual CostsC Measuring budget p performance is useful for the financial staff. But program managers need TIME insight into the delivery of g y techncial value
Time NowCOST Planned Costs Actual CostsC Earned Value It’s the Earned Value measurement we’re after. ’ f The EV represents the TIME delivered value to the customer, not just the t t j t th consumption of resources
EAC: Estimate at Complete TAB: Total Allocated Budget Management Reserve BAC: Budget at Complete PMB The Performance Measurement Baseline Schedule Variance (PMB) represents of the Cost$ Variance program “ b “on baseline” li ” ACWP C S BCWS BCWP time Time Completion Now Date
Schedule Variance BC WS: Of the work scheduled to have done, how much was it budget for it to cost? BC WP: Of the work ac ua y performed, O e o actually pe o ed, how much was it budget for it to cost? SCHEDULE VARIANCE is the difference between work scheduled SCHEDULE VARIANCE is the difference between work scheduled and work performed ((expressedin terms of budget dollars) and workpperformed(expressed in terms of budget dollars) p g ) formula: formula: SV$ = BCWP – BCWS SV$ = BCWP – BCWS example: example: SV = BCWP – BCWS = $1,800 – $2,000 SV = BCWP – BCWS = $1,800 – $2,000 SV= –$200 (negative = behind schedule)) SV= –$200 (negative = behind schedule) ( g Convert SCHEDULE VARIANCE to a percentage Convert SCHEDULE VARIANCE to a percentage formula: formula: SV% = BCWP – BCWS = SV$ SV% = BCWP – BCWS = SV$ BCWS BCWS BCWS BCWS example: example: SV% = – $200 = –10% SV% = – $200 = –10% $2,000 $2,000
Cost Variance BC WP: Of the work actually performed, how much was it budgeted to cost? AC WP: Of the work actually performed, how much did it actually cost? COST VARIANCE is the difference between the budgeted cost and COST VARIANCE is the difference between the budgeted cost and the actual cost the actual cost act al formula: formula: CV$ = BCWP – ACWP CV$ = BCWP – ACWP example: example: CV = BCWP – ACWP = $1,800 – $1,900 CV = BCWP – ACWP = $1,800 – $1,900 SV= –$100 (negative = cost overrun) SV= –$100 (negative = cost overrun) SV $100 Convert COST VARIANCE to a percentage: Convert COST VARIANCE to a percentage: formula: formula: CV% = BCWP – ACWP = CV $ CV% = BCWP – ACWP = CV $ BCWP BCWP BCWP BCWP example: example: CV% = –$100 = –6% CV% = –$100 = –6% $1,800 $1,800
When a gap opens in cost or schedule, it Wh i h d l i needs to be closed. Knowing the CPI and SPI is necessary but not sufficient. We need to know how much better we must perform to close the gap: Have much faster do we need to ride to get back g to the Peloton? How much more efficient do we need to be for each dollar spent to get back on schedule? h d ll b k h d l
The To Complete Performance Index (TCPI) Th T C l P f I d (TCPI) index states how much better we need to perform to close the gap: BAC BCWP TCPI EAC ACWP The TCPI is an indicator of how our performance needs to improve to close the g p gap between the planned performance and p p the actual performance.
If the TCPI is > 1.0 something has to change f to stay on schedule and budget: Reduce scope – do less work (BCWP) for the same effort. Reduce rework – reduce breakage Increase efficiency – do more work (BCWP) with the same (ACWP). h
When a gap opens … Getting back on the original plan (pace) is necessary but not sufficient. sufficient We have to perform better (faster than plan) in order to close any gaps that opened while we were falling behind. Knowing the level to which we need to perform to close the gap is the To Complete Performance Index (TCPI) … Being able to perform at this level requires we understand what went wrong and how to fix it.