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Roger H. Mandel
San Diego, California 92128
RMandel@PramsCo.com
Using Earned Value
Management data to manage
ongoing projects with the
development of the project’s
projected completion dates and
final costs
Project Management and Analysis
Developed by: Roger H. Mandel
If you cannot measure it you cannot manage it
What matters gets measured
You cannot manage what you cannot measure
What is measured gets managed
What gets measured can get improved
Failing to plan is planning to fail
Earned Value Management measures the
efforts so you can manage the efforts
Concept of Earned Value Management
(EVM)
• A tool for the Customer and Supplier to have visibility into
technical, cost and planned progress
http://www.acq.osd.mil/evm
• Integrates the cost, planned (schedule) and technical aspects
into programmatic report synopses
• Insight into progress that provided information on cost and
planned (schedule) performance data
• Visually depicts budget efficiencies for both time and cost
• Time-phased budgets to specific tasks and/or statements of
work
Management Needs
• Indicates work progress that properly relates cost, schedule
and technical accomplishments
• Data presented are valid, timely, and can be audited
 Supplies management with information at a practical level of
summarization
• Data presented to the customer are from the same internal EVM
system used by the supplier to manage the project
Guideline Concepts
• The guideline approach established the framework of an
integrated cost, schedule, and technical management system
• EVM Guidelines provides rules for a system that is acceptable
and that provides valid, timely data that can be audited
• The guidelines can be used for Research and Development,
construction, modification, and production projects
Industry Standards
• Industry recognizes the importance of earned value in
managing both supplies and services
• There are thirty two (32) Guidelines from industry standard
that should become your baseline in determining the validity
of any earned value management system
Management System
• In designing, implementing and improving the EVM system,
the objective should be to do what makes sense
• The management system that meets the letter of the criteria
but not their intent will not support management’s needs
Compliance will facilitate:
• Timely baseline development and control will provide
information break down by product as well as by organizational
function
• Objective measurement of accomplishment against the plan
that summarized reporting to higher management for use in
decision-making
• With reporting discipline and in objective analysis of variances,
will direct management actions to manage cost and schedule
performance
Earned Value Management
• TO BE EFFECTIVE:
 ESTABLISH MEASURABLE EFFORTS - You cannot manage
what you cannot measure
 DEVELOP A PLAN THAT IS MEASURABLE - That becomes
your budget
 DECIDE WHAT WORK IS TO BE ACCOMPLISHED OVER TIME
- That becomes your baseline plan
 ESTABLISH WHAT WORK HAS BEEN ACCOMPLISHED - That
is your work earned or earned value
 VERIFY THE COST TO ACCOMPLISH THAT WORK - That is
what has been expended
Earned Value Management
• TAKE ACTION DUE TO SCHEDULE VARIANCES:
 What was to be accomplished at this point in time?
 What has been accomplished at this point in time?
– The difference is the Schedule Variance
– Determine cause, effect and mitigation
• TAKE ACTION DUE TO COST VARIANCES:
 What has been accomplished at this point in time?
 What was the cost to accomplish the efforts at this point in time?
– The difference is the Cost Variance
– Determine cause, effect and mitigation
Earned Value Management
Master
Planning
Selected
Reporting
Elements
ADA
Products
Software
Tools
Standards
ADA
Study
ADA
Controls
ADA
Interface
CPCO #1
MOS
CPCO #2
MOL
CPCO #3
MAC
Marketing
Functional
Manager
ADA
Applications
Control
Account
Control
Account
Control
Account
Program
Manager
Engineering
Functional
Manager
Software
Engineering
Security
Systems
Control
Account
Operations
Functional
Manager
Hardware
Engineering
LAN
Applications
Control
Account
Control
Account
Planning
Packages
Contract Work Breakdown Structure &
Organization Breakdown Structure
Product
Development
Software Instigation Program
Selected
PSWBS
Elements
OBS DATA SUMMARIZATION
W
B
S
D
A
T
A
S
U
M
M
I
Z
A
T
I
O
N
Functional
Organization
Work
Packages
Planned
Earned
Expended
BAC
EAC
CWBS
Extension
Cumulative Project Trends
Cumulative Project Trends
TREND STATUS REPORT
0
50
100
150
200
250
300
350
400
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
TIME RELATED
LABORHOURSorDOLLARS
Earned
Progress
Expended
Scheduled
Planned
Cumulative Project Trends
TREND STATUS REPORT
0
20
40
60
80
100
120
140
160
180
200
1 2 3 4 5 6 7
TIME RELATED
LABORHOURSorDOLLARS
Earned
Progress
Expended
Scheduled
Planned
COST
VARIANCE
SCHEDULE
VARIANCE
Status and Trends
Red indicates at least 3 weeks negative Schedule Variance
AS OF DATE
23-Nov-03
Task
No. Tasking
Status
SV
Status
CV
Percent
Earned
2110 Task Lead Degrading 71.5%
2220 Modeling Degrading 82.2%
2230 Integration Degrading Degrading 76.6%
2310 Docs Degrading 77.1%
3110 Software Degrading 72.6%
3210 SW Devel Improving Degrading 91.0%
3215 KG-84 WF Improving Degrading 80.6%
3224 KWR-46 W/F Improving Degrading 96.1%
3330 Gen Infras Improving Degrading 83.5%
3410 HMI Desg Holding Degrading 87.3%
3624 Algor Holding Degrading 96.0%
5120 Envir. Test Improving Holding 98.1%
OVER ALL Improving Degrading 82.4%
About 2 weeks behind schedule
About 2 weeks behind schedule
About 7 weeks behind schedule
About 1 week behind schedule
About 3 weeks behind schedule
About 2 weeks behind schedule
About 1 week behind schedule
About 2 weeks behind schedule
About 6 weeks behind schedule
About 3 weeks behind schedule
About 5 weeks behind schedule
Schedule
Position
Green Block
WAVEFORMS
Task Status due to change in Cumulative Schedule & Cost Variances.
Positive Performance
SV is Schedule Variance. The difference between Earned and Planned
CV is Cost Variance. The difference between Earned and Expended.
Estimate at Completion (EAC)
Development
MCS S/W
MCS 15855 Form: 28-Feb-02 To: 23-Nov-03
EAC 6 3 FUTURE Dollars or Hours EFF.
PRODUCT CUM. Periods Periods EST. TCPI %of % @
CATEGORY EFF. EFF. EFF. EFF. BAC LRE TO LRE EAC BAC Prog EAC
Project Mgmt 94.1% 76.1% 56.0% 50.0% $3,243,748 $3,720,714 67.6% $4,063,375 12.0% 79.7% 79.8%
MCS Systems 96.3% 89.3% 57.9% 50.0% 5,554,948 6,005,669 80.9% 6,924,546 20.5% 78.3% 80.2%
MCS S/W Dev. 76.2% 47.5% 39.7% 35.0% 7,460,475 11,038,572 43.2% 11,713,646 27.6% 83.4% 63.7%
Hardware 102.2% 62.6% 58.3% 58.3% 954,518 1,008,655 0.0% 934,044 3.5% 100.0% 102.2%
Testing 75.4% 59.7% 40.7% 35.0% 801,306 1,070,940 72.0% 1,267,302 3.0% 83.3% 63.2%
MFG 90.4% 43.8% 14.9% 10.0% 2,275,732 2,607,016 54.5% 3,599,423 8.4% 94.7% 63.2%
ILS 95.3% 50.6% 62.4% 50.0% 1,192,135 1,255,701 94.0% 1,537,874 4.4% 74.7% 77.5%
Closeout N/A N/A N/A 80.0% 152,364 151,142 100.8% 190,455 0.6% 0.0% 80.0%
CAS 414 104.4% 150.3% -283.8% 75.0% 149,154 147,209 88.9% 152,584 0.6% 82.7% 97.8%
G & A 88.5% 65.7% 57.1% 50.0% 5,255,485 6,430,939 59.7% 6,727,024 19.4% 82.7% 78.1%
PMB 87.1% 60.8% 47.3% 72.9% $27,039,865 $33,436,557 60.5% $37,110,272 100% 82.4% 72.9%
WR BAC/EAC
Developed by: Roger H. Mandel LRE Remain
S/W for Chris Newborn
Budget at Completion (BAC) is the authorized budget. Latest Revised Estimate (LRE) is latest
revised estimate. Progress (Prog.). Cost efficiency (EFF)
Formula Card
PERFORMANCE INDICES Developed by: RMandel @PramsCo.Com
Less than 1.0 is unfavorable
Cost Efficiencies (Expended)
Earned
Expended
Schedule Efficiencies (Planned)
Dollars
Earned
Planned Percent
OVERALL STATUS Items
Budget at Completion (BAC)
Earned
BAC
Expended
BAC
TO COMPLETE PERFORMANCE INDEX
Work Remaining
Unexpended Budget Time Line
BAC - Earned Cost Variance (CV) = Earned - Expended
BAC - Expended
Earned
Latest Revised Estimate by the supplier (LRE) Expended
Estimate at Completion is your projection (EAC)
Schedule Variance (SV) = Earned - Planned
You can substitute LRE or EAC for BAC in the Denominator
Earned
ESTIMATE at COMPLETION (EAC) Planned
BAC - Earned Variance at Completion (VAC) = BAC - LRE
Projected Efficiencies
Note: Negatives are unfavorable
x 100
x 100
Cost Variance % (CV%) =
Schedule Variance % (SV%) =
EAC = EXPENDED +
Cost Performance Index (CPI) =
Schedule Performance Index (SPI) =
Percent Complete =
Percent Spent =
TCPI BAC =
TCPI BAC =
1 2 3 4 5 6 7 8 9 10 11 12 13
EXPENDED or
CONSUMED
EARNED or
ACCOMPLISHED
SCHEDULED
or PLANNED
BUDGETED
Cost
Variance
Schedule
Variance
Time Now
BAC
Purpose of Earned Value Management
• What does Earned Value Management do for Management?
 Measurement of accomplished efforts against the plan so
management can effectively make risk management decisions
 In designing, implementing and improving the EVM system, the
objective is to do what makes sense
 Directs management’s decisions for cost and schedules
performance
Conclusion
• EVM is a proven value over many years
 Integrates cost, schedule and technical performance
 Provides planning and control discipline on projects
• Reports summarize objective data from the internal system
 The program achieves improvements where accountability
derives systems effectiveness
• American National Standards Institute (ANSI)
 It is now part of the International Standards Organization’s
requirement to become certified as a ISO 9000 organization
• Electronics Industries Alliance (EIS)
• ANSI/EIS-748-C
 The new ANSI standard on Earned Value Management System
guidelines has been approved
Definition
Definitions and Acronyms
Variance at Completion (VAC): The difference between the total budgets assigned to a contract, WBS element, organizational entity
ACRONYMS
ACE: Actual Cost Expended
ACWP: Actual Cost of Work Performed (Expended Resources in $)
BAC: Budget at Completion in $
BCWP: Budgeted Cost for Work Performed in $
BCWS: Budgeted Cost for Work Scheduled in $
CPI: Cost Performance Index
CV: Cost Variance
CV%: Cost Variance as a percent
ETC: Estimate to Complete
EV: Earned Value
PMB: Performance Measurement Baseline
SPI: Schedule Performance Index
SV: Schedule Variance
SV%: Schedule Variance as a percent
TCPI: To Complete Performance Indices
VAC: Variance at Completion
RMandel@PramsCo.com
r cost account and the estimate at completion. Variance at Completion equals Budget at Completion less Estimate at Completion. It represents the amount o
expected overrun or under run.

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Evm intro. slide deck 13 may 2018

  • 1. Roger H. Mandel San Diego, California 92128 RMandel@PramsCo.com Using Earned Value Management data to manage ongoing projects with the development of the project’s projected completion dates and final costs Project Management and Analysis
  • 2. Developed by: Roger H. Mandel If you cannot measure it you cannot manage it What matters gets measured You cannot manage what you cannot measure What is measured gets managed What gets measured can get improved Failing to plan is planning to fail Earned Value Management measures the efforts so you can manage the efforts
  • 3. Concept of Earned Value Management (EVM) • A tool for the Customer and Supplier to have visibility into technical, cost and planned progress http://www.acq.osd.mil/evm • Integrates the cost, planned (schedule) and technical aspects into programmatic report synopses • Insight into progress that provided information on cost and planned (schedule) performance data • Visually depicts budget efficiencies for both time and cost • Time-phased budgets to specific tasks and/or statements of work
  • 4. Management Needs • Indicates work progress that properly relates cost, schedule and technical accomplishments • Data presented are valid, timely, and can be audited  Supplies management with information at a practical level of summarization • Data presented to the customer are from the same internal EVM system used by the supplier to manage the project
  • 5. Guideline Concepts • The guideline approach established the framework of an integrated cost, schedule, and technical management system • EVM Guidelines provides rules for a system that is acceptable and that provides valid, timely data that can be audited • The guidelines can be used for Research and Development, construction, modification, and production projects
  • 6. Industry Standards • Industry recognizes the importance of earned value in managing both supplies and services • There are thirty two (32) Guidelines from industry standard that should become your baseline in determining the validity of any earned value management system
  • 7. Management System • In designing, implementing and improving the EVM system, the objective should be to do what makes sense • The management system that meets the letter of the criteria but not their intent will not support management’s needs
  • 8. Compliance will facilitate: • Timely baseline development and control will provide information break down by product as well as by organizational function • Objective measurement of accomplishment against the plan that summarized reporting to higher management for use in decision-making • With reporting discipline and in objective analysis of variances, will direct management actions to manage cost and schedule performance
  • 9. Earned Value Management • TO BE EFFECTIVE:  ESTABLISH MEASURABLE EFFORTS - You cannot manage what you cannot measure  DEVELOP A PLAN THAT IS MEASURABLE - That becomes your budget  DECIDE WHAT WORK IS TO BE ACCOMPLISHED OVER TIME - That becomes your baseline plan  ESTABLISH WHAT WORK HAS BEEN ACCOMPLISHED - That is your work earned or earned value  VERIFY THE COST TO ACCOMPLISH THAT WORK - That is what has been expended
  • 10. Earned Value Management • TAKE ACTION DUE TO SCHEDULE VARIANCES:  What was to be accomplished at this point in time?  What has been accomplished at this point in time? – The difference is the Schedule Variance – Determine cause, effect and mitigation • TAKE ACTION DUE TO COST VARIANCES:  What has been accomplished at this point in time?  What was the cost to accomplish the efforts at this point in time? – The difference is the Cost Variance – Determine cause, effect and mitigation
  • 11. Earned Value Management Master Planning Selected Reporting Elements ADA Products Software Tools Standards ADA Study ADA Controls ADA Interface CPCO #1 MOS CPCO #2 MOL CPCO #3 MAC Marketing Functional Manager ADA Applications Control Account Control Account Control Account Program Manager Engineering Functional Manager Software Engineering Security Systems Control Account Operations Functional Manager Hardware Engineering LAN Applications Control Account Control Account Planning Packages Contract Work Breakdown Structure & Organization Breakdown Structure Product Development Software Instigation Program Selected PSWBS Elements OBS DATA SUMMARIZATION W B S D A T A S U M M I Z A T I O N Functional Organization Work Packages Planned Earned Expended BAC EAC CWBS Extension
  • 13. Cumulative Project Trends TREND STATUS REPORT 0 50 100 150 200 250 300 350 400 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 TIME RELATED LABORHOURSorDOLLARS Earned Progress Expended Scheduled Planned
  • 14. Cumulative Project Trends TREND STATUS REPORT 0 20 40 60 80 100 120 140 160 180 200 1 2 3 4 5 6 7 TIME RELATED LABORHOURSorDOLLARS Earned Progress Expended Scheduled Planned COST VARIANCE SCHEDULE VARIANCE
  • 15. Status and Trends Red indicates at least 3 weeks negative Schedule Variance AS OF DATE 23-Nov-03 Task No. Tasking Status SV Status CV Percent Earned 2110 Task Lead Degrading 71.5% 2220 Modeling Degrading 82.2% 2230 Integration Degrading Degrading 76.6% 2310 Docs Degrading 77.1% 3110 Software Degrading 72.6% 3210 SW Devel Improving Degrading 91.0% 3215 KG-84 WF Improving Degrading 80.6% 3224 KWR-46 W/F Improving Degrading 96.1% 3330 Gen Infras Improving Degrading 83.5% 3410 HMI Desg Holding Degrading 87.3% 3624 Algor Holding Degrading 96.0% 5120 Envir. Test Improving Holding 98.1% OVER ALL Improving Degrading 82.4% About 2 weeks behind schedule About 2 weeks behind schedule About 7 weeks behind schedule About 1 week behind schedule About 3 weeks behind schedule About 2 weeks behind schedule About 1 week behind schedule About 2 weeks behind schedule About 6 weeks behind schedule About 3 weeks behind schedule About 5 weeks behind schedule Schedule Position Green Block WAVEFORMS Task Status due to change in Cumulative Schedule & Cost Variances. Positive Performance SV is Schedule Variance. The difference between Earned and Planned CV is Cost Variance. The difference between Earned and Expended.
  • 16. Estimate at Completion (EAC) Development MCS S/W MCS 15855 Form: 28-Feb-02 To: 23-Nov-03 EAC 6 3 FUTURE Dollars or Hours EFF. PRODUCT CUM. Periods Periods EST. TCPI %of % @ CATEGORY EFF. EFF. EFF. EFF. BAC LRE TO LRE EAC BAC Prog EAC Project Mgmt 94.1% 76.1% 56.0% 50.0% $3,243,748 $3,720,714 67.6% $4,063,375 12.0% 79.7% 79.8% MCS Systems 96.3% 89.3% 57.9% 50.0% 5,554,948 6,005,669 80.9% 6,924,546 20.5% 78.3% 80.2% MCS S/W Dev. 76.2% 47.5% 39.7% 35.0% 7,460,475 11,038,572 43.2% 11,713,646 27.6% 83.4% 63.7% Hardware 102.2% 62.6% 58.3% 58.3% 954,518 1,008,655 0.0% 934,044 3.5% 100.0% 102.2% Testing 75.4% 59.7% 40.7% 35.0% 801,306 1,070,940 72.0% 1,267,302 3.0% 83.3% 63.2% MFG 90.4% 43.8% 14.9% 10.0% 2,275,732 2,607,016 54.5% 3,599,423 8.4% 94.7% 63.2% ILS 95.3% 50.6% 62.4% 50.0% 1,192,135 1,255,701 94.0% 1,537,874 4.4% 74.7% 77.5% Closeout N/A N/A N/A 80.0% 152,364 151,142 100.8% 190,455 0.6% 0.0% 80.0% CAS 414 104.4% 150.3% -283.8% 75.0% 149,154 147,209 88.9% 152,584 0.6% 82.7% 97.8% G & A 88.5% 65.7% 57.1% 50.0% 5,255,485 6,430,939 59.7% 6,727,024 19.4% 82.7% 78.1% PMB 87.1% 60.8% 47.3% 72.9% $27,039,865 $33,436,557 60.5% $37,110,272 100% 82.4% 72.9% WR BAC/EAC Developed by: Roger H. Mandel LRE Remain S/W for Chris Newborn Budget at Completion (BAC) is the authorized budget. Latest Revised Estimate (LRE) is latest revised estimate. Progress (Prog.). Cost efficiency (EFF)
  • 17. Formula Card PERFORMANCE INDICES Developed by: RMandel @PramsCo.Com Less than 1.0 is unfavorable Cost Efficiencies (Expended) Earned Expended Schedule Efficiencies (Planned) Dollars Earned Planned Percent OVERALL STATUS Items Budget at Completion (BAC) Earned BAC Expended BAC TO COMPLETE PERFORMANCE INDEX Work Remaining Unexpended Budget Time Line BAC - Earned Cost Variance (CV) = Earned - Expended BAC - Expended Earned Latest Revised Estimate by the supplier (LRE) Expended Estimate at Completion is your projection (EAC) Schedule Variance (SV) = Earned - Planned You can substitute LRE or EAC for BAC in the Denominator Earned ESTIMATE at COMPLETION (EAC) Planned BAC - Earned Variance at Completion (VAC) = BAC - LRE Projected Efficiencies Note: Negatives are unfavorable x 100 x 100 Cost Variance % (CV%) = Schedule Variance % (SV%) = EAC = EXPENDED + Cost Performance Index (CPI) = Schedule Performance Index (SPI) = Percent Complete = Percent Spent = TCPI BAC = TCPI BAC = 1 2 3 4 5 6 7 8 9 10 11 12 13 EXPENDED or CONSUMED EARNED or ACCOMPLISHED SCHEDULED or PLANNED BUDGETED Cost Variance Schedule Variance Time Now BAC
  • 18. Purpose of Earned Value Management • What does Earned Value Management do for Management?  Measurement of accomplished efforts against the plan so management can effectively make risk management decisions  In designing, implementing and improving the EVM system, the objective is to do what makes sense  Directs management’s decisions for cost and schedules performance
  • 19. Conclusion • EVM is a proven value over many years  Integrates cost, schedule and technical performance  Provides planning and control discipline on projects • Reports summarize objective data from the internal system  The program achieves improvements where accountability derives systems effectiveness • American National Standards Institute (ANSI)  It is now part of the International Standards Organization’s requirement to become certified as a ISO 9000 organization • Electronics Industries Alliance (EIS) • ANSI/EIS-748-C  The new ANSI standard on Earned Value Management System guidelines has been approved
  • 21. Definitions and Acronyms Variance at Completion (VAC): The difference between the total budgets assigned to a contract, WBS element, organizational entity ACRONYMS ACE: Actual Cost Expended ACWP: Actual Cost of Work Performed (Expended Resources in $) BAC: Budget at Completion in $ BCWP: Budgeted Cost for Work Performed in $ BCWS: Budgeted Cost for Work Scheduled in $ CPI: Cost Performance Index CV: Cost Variance CV%: Cost Variance as a percent ETC: Estimate to Complete EV: Earned Value PMB: Performance Measurement Baseline SPI: Schedule Performance Index SV: Schedule Variance SV%: Schedule Variance as a percent TCPI: To Complete Performance Indices VAC: Variance at Completion RMandel@PramsCo.com r cost account and the estimate at completion. Variance at Completion equals Budget at Completion less Estimate at Completion. It represents the amount o expected overrun or under run.

Editor's Notes

  1. Roger H. Mandel 13 May 2018 Mother’s Day
  2. Only one data base used by the vendor and compiled to present to the customer. Cost Performance Report changed from Contract Performance Report and now Integrated Program Management Report that contains 7 formats. Generally all budgets are in dollars. Cost is consumed budget or as an obligation such as an account payable. Costs can exceed budgets. Work packages that are budgeted and time phased in when (date) to start and schedule (date) to complete. Work package is such as IKEA purchased furniture. Inside is your work package to assumable the furniture. That work package has tools needed and all the needed supplies.
  3. What was planned to be accomplished in dollars over a specific period of time. Valid being true. Timely such a weeks or monthly per the Vendors accounting system. Auditable can be verified. Objective verse subjective. Objective could be a brick wall. Subjective is what you are thinking. Subjective a like developing software and the results are not well defined.
  4. Well defined well written guidelines. Rule to be used. Polices, Procedures and Methods. Some Federal agencies developed their own shortened (abbreviated) guidelines such as HHS.
  5. First saw EVM used outside the DoD for the Sewage Outflow Treatment Plant in south bay, San Diego, Ca. Major corporations used EVM with their internal R&D projects.
  6. If you cannot measure it you cannot manage it What matters gets measured You cannot manage what you cannot measure What is measured gets managed What gets measured can get improved Failing to plan is planning to fail Earned Value Management measures the efforts so you can manage the efforts
  7. Schedule Variance of greater than 1.05 and less than 0.95 is a triggering point to determine cause, effect and the development of a mitigation plan. Cost Variance of greater than 1.05 and less than 0.95 is a triggering point to determine cause, effect and the development of a mitigation plan. Develop a trend and do not use only one data point. I was once told that to develop trend you should have 8 data points. In project management and the use of EVM data you should start with no less than 3 data points.
  8. To manage a project you must know who is responsible and the WBS to OBS does that for you.
  9. How are we doing? As of period 5 are we on schedule and on cost? Should the trends continue when will the budget be consumed and when will the project be 100% complete?
  10. Visual
  11. Just made larger
  12. How are we doing? Senior Engineer requested the chart and requested status and trends. This customer support.
  13. Where should we concentrate? The above is available in a spreadsheet format. Just ask.
  14. Formula sheet available. Just ask.