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The simple problem of schedule performance indices


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The simple problem of schedule performance indices

  1. 1. Knowing how our project is performing means knowing how our Cost,Schedule, and Technical Performance is performing according to Plan.Performance measurement is one of 5 Immutable Principles of Project Success
  2. 2. 5 Process Areas of any Successful Project   Identify Capabilities Elicit Technical & needed to achieve the Operational Requirements project objectives or the particular end state for a needed for the system specific scenario. capabilities to be fulfilled. Apply Continuous Risk Management to each  Performance Based Management process area Execute Performance Establish Performance Measurement Baseline Measurement Baseline time– activities while assuring phased network of work technical performance is activities describing the met work to be performed  
  3. 3. All Successful Projects Are Based On5 Immutable Principles † … 1. What Does DONE Look Like? 2. What is the path to DONE? 3. Do We Have Enough Time, Resources, And Money To Get To DONE? 4. What Impediments Will We Encounter Along The Way To DONE? 5. How Do We Know We Are Making Progress5 Immutable Principles of Project Management, Glen B. Alleman, CarnegieMellon Silicon Valley, January 31st and February 1st, 2011 Toward DONE? 3/22
  4. 4. We Need To Address All Aspects of Project Success†  By their very nature, Programs are risky. The  Successful program management is risk management. Situation  Program management must be about avoiding surprises.  Traditional program management assumes technical and The program processes drive outcomes. Problem  Focusing on process alone has failed in the past.  Program management is about avoiding surprises. The Need  Measures of physical percent complete are mandatory.  Organizations execute projects. The  Adapting the organization culture to the project paradigm Context increases the probability of success.  Look to the final and intermediate outcomes as measures The of increasing the probability of success. Solution  Earned Value Management reveals surprises.† Project Management Case Study, Pierre Bonnal, CNAM IIM MBA Program, June 2004 4/22
  5. 5.  We need a plan to make progress against, without a planned measure of progress we’re passing time and spending money. We need to know what are the units of measure toward this plan Agile uses working software, which is fine. But money is universal unit of measure. Measuring progress by earning value of the product is a really good measure.Earned Value is not business Value, that is different measure
  6. 6.  If the performance of our project is like cycling, then we plan to ride at a planned pace – say 20 mph. If our group maintains the target pace of 20 mph they can look at their watches to 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 time – no problems so far.
  7. 7.  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. We’re Underperforming to our Plan  For the invested effort (ACWP) we’re under delivering value (BCWP) against our planned value (BCWS).
  8. 8.  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). 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’ll need to pick up the pace (SPI > 1.0).
  9. 9.  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 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:  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.
  10. 10.  In order to close the gap, we need to find the needed actions that put us back on pace – 20 mph. But no matter how we need to ride faster – at 22mph. Two things are actually needed:  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.
  11. 11. Lots of concurrent activitiesThe planned pace is BCWS for the group and for individual “packages of work”The actual pace is BCWP for the group and for the individual “packages of work”The work effort needed to ride at the planed pace is ACWP.The effort need to close the gap for the group and the individual TCPI.
  12. 12.  Budgeted Cost for Work Scheduled (BCWS)  The planned cost in hours and / or dollars. Budget Cost of Work Performed (BCWP)  The planned value of the work delivered.  When BCWS = BCWP we’re staying with the Peloton.  This is the “Earned Value” over the period of performance. Actual Cost of Work Performed (ACWP)  The cost in dollars or hours to “earn” the Earned Value (BCWP).
  13. 13. BCWS BCWP ACWP The same work component is in all three Earned Value variables† CPM–300: Principles of Earned Value Implementation, Lesson E: Developing the Performance Measurement Baseline, Dennis W. White, IPMC 2002 Fall Conference, Professional Education Program.
  14. 14. Time NowWe’ve spent Planned Costmore than planned Actual Costs Measuring budget performance is useful for theCOST Spending Gap financial staff.$ But program managers need insight into the delivery of technical value. So measuring cost variance is not that useful without know technical progress. TIME Time Now
  15. 15. Time Now Planned Costs We’ve made less progress than Actual Costs planned Earned Value It’s the Earned ValueCOST measurement we’re after.$ We need to earn our budgeted Progress Gap cost. The EV represents the delivered value to the customer, not just the consumption of resources. TIME But the technical performance is still missing Time Now
  16. 16. 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 program “on baseline”$ ACWP Variance BCWS BCWP time Time Completion Now Date
  17. 17. TPM Upper Limit Planned Profile Current Estimate Planned ValueMean To Between Failure Threshold Variance Lower Limit Achieved to Date Milestones Time = Program Maturity
  18. 18.  When a gap opens in cost or schedule, it 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 to the Peloton?  How much more efficient do we need to be for each dollar spent to get back on schedule?
  19. 19.  The To Complete Performance Index (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 gap between the planned performance and the actual performance.
  20. 20.  If the TCPI is > 1.0 something has to change 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).
  21. 21.  When a gap opens …  Getting back on the original plan (pace) is necessary but not 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.
  22. 22. Performance Based Management Puts You On the Road to Success …What does done look like?How do we get there?Are there enough resources?What are impediments to progress?How do we measure progress?