We Have a PlanFrom 128/I93 to I90-I93 is 7.7 miles.Plan: 0.77 miles each monthSchedule: 10 months.Cost: $1,470,000.
What Actually Happened?Month 1:Contractor: We’re a little behind, but it’s not a problem. We’ll make it up.
What Actually Happened?Month 2:Contractor: We’re a little behind, but it’s not a problem. We’ll make it up.
What Actually Happened?Month 3: We’re a little behind, but it’s not a problem. We’ll make it up. Enough Already!
Here’s the bill! Month 11 Budget Actual$1,470,000 $1,869,000There is a better way!
How Do We Measure “Progress?”Against the plan ….. Planned 0.77 miles Actual 0.66 miles You can always measure something!
What Was Accomplished? Miles of Roadway Lines of code designed, written, tested Drawings completed WBS: Reports delivered Deliverable Units delivered Oriented Square Meters of Paint Hierarchy Feet of Steel Erected Cubic Yards of Tunnel Dug Out
You Already Have The DataYou are the PM.The Mayor wants to know thestatus of the project. Monthly Reports: What was planned? What was accomplished? What did it cost?
End of Month 21) Measure Progress: Planned 1.54 miles Actual 1.49 miles2) Report Costs: Planned $294,000 Actual $329,000
The “Value” of a MilePlan: 7.7 milesCost: $1,470,000Planned Cost / Mile = $190,909Complete ½ mile: “Value” = $190,909 ÷ 2 = $95,455
The “Value” of a MilePlan: 7.7 milesCost: $1,470,000Planned Cost / Mile = $190,909Complete ½ mile: “Value” = $190,909 / 2 Earned = $95,455 Value
Glossary Planned Value, PV The sum of the value of the work planned Earned Value, EV The sum of the value of work performed Actual Cost, AC The sum of the costs incurred
Glossary Budget At Completion, BAC Estimated At Completion, EAC Estimate To Complete, ETC EAC Time Now Budget, BAC Estimate To Complete ETC $ Actual Costs To Date
Earned Value Management (EVM) Provides early warning of trouble EAC reliable ~ 20% into a project Christensen & Heise, 1992 DOD experience >400 programs since 1977 Without exception: The cumulative CPI does not significantly improve during the period of 15% through 85% of the contract In fact it tends to decline!
“I did not use EVM because …” “Not needed on small projects” “Hard to apply” (Kim, 2000) “The implementation requirements, terminology, and the countless Contractor rules and interpretations, are perceived as Excuses overly restrictive” (Fleming & Koppelman, 2005) It is difficult to find a balance between the utility of the EV technique . . . versus the effort it takes to implement (Quentin & Koppelman, 2005)
PMBOK 4th EditionThe to-complete performance index(TCPI) is the calculated projection ofcost performance that must beachieved on the remaining work tomeet a specified management goal,such as the BAC or the EAC.
TCPIA simple formula to change the world! “Once our customers start calculating TCPI, we will nolonger be able to fudge project cost!”