For credible decisions to be made, we need confidence intervals on all the numbers we use to make decisions. These confidence intervals come from the underlying statistics and the related probabilities. Statistical forecasting, using time series analysis of past performance, is mandatory for any credible discussion of project performance in the future.

1. FORECASTING COST AND
SCHEDULE PERFORMANCE
IN THE PRESENCE OF
UNCERTAINTY
Probabilistic forecasting of program performance
1

2. Complexity, Risk,
and Uncertainty
drive all projects
2
Our project management
methods must deal with this
uncertainty

3. Top Level Theme
3
 Earned Value metrics are lagging and linear
representations of project performance
 SPI/CPI are Cumm to date with this underlying
variances washed out
 Current period is a one period extension of a
linearized accumulation
 No information about the dynamics of the past is
available
 Forecasts of the future are linear projects from the
current base point measurement
 No statistical inference or probabilistic projects are
provided

4. Top Level Theme (Continued)
4
 “All models are wrong, some are useful”
 Time series analysis: Forecasting and
Control, George E. P. Box and Gwilym
M. Jenkins, Holden-Day, 1976
 Box actually said …

5. Top Level Themes (Concluded)
5
 For credible decisions to be made, we need
confidence intervals on all the numbers we use to
make decisions.
 These confidence intervals come from the underlying
statistics and the related probabilities.
 Statistical forecasting, using time series analysis of
past performance, is mandatory for any credible
discussion of project performance in the future.

6. |
6
Uncertainties are
things we can not
be certain about.
Uncertainty is
created by
Incomplete
knowledge; not
Ignorance
Risk

7. All Program Activities have Naturally
Occurring Uncertainty
7
 Naturally occurring uncertainty
and its resulting risk, impacts the
probability of a successful
outcome
What is the probability of making
a desired completion date or cost
target?
 The statistical behavior of these activities, their
arrangement in a network of activities, and correlation
between their behaviors creates risk
 Adding margin protects the outcome from the impact of
this naturally occurring uncertainty
Risk

8. 8
Raw Material For Forecasting
Cost And Schedule

9. Earned Value Numbers
9
 CPI / SPI
 That’s it, that’s all we got
 Cumulative to date
 Current period
 Cumulative values wipe out the underlying variance
 Current period performance not adjusted for past
variance
 Both cumulative and current period not adjusted for
risk

10. Technical Performance Numbers
10
 Technical Performance Measures
 Measures of Performance
 Measures of Effectiveness
 Key Performance Parameters
 JROC
 Program specific

11. 11
Our goal in forecasting the future is to …
… Produce a forecast with a range of
confidence intervals

12. 12 Performance-Based Project Management®, Copyright © Glen B. Alleman, 2012, 2013Performance-Based Project Management®, Copyright © Glen B. Alleman, 2012, 2013

13. Forecasts Produce Patterns Of Possible
Future Outcomes
13

14. Some Principles
 Reliable forecasting is a critical component of
project planning, controlling, and risk management.
 At-Completion forecast made before the project
starts is the basis of credible project management
 Execution phase forecasting serves as a leading
indicator of project success
14

15. Some Important Terms
 The term confidence interval is applied to interval
estimates for fixed but unknown parameters
 The term prediction interval is an interval estimate
for an (unknown) future value.
 A prediction interval consists of an upper and a lower
limit at a prescribed probability, which are referred to
as prediction bounds
15

16. A core limitation of the current
approach to performance forecasting
 Standard EVM technique for forecasting the final
cost at completion is not applicable to forecasting
the project duration at completion†
 This leads to inconsistent assumptions about the
relationships between past performance and future
performance
 Using CPI creates a future forecast will be the same as
past performance
† Short 1993, Vandevoorde and Vanhoucke 2006, Leach 2005, and Lipke 2003.
16

17. Forecasting Methods
 Probabilistic Forecasting – explicit uncertainties in
project performance and errors in measurement
provide prediction bounds on the predicted values
 Integrative Forecasting Methodologies – collect all
relevant information from different sources in a
mathematically correct manner
 Consistent Forecasting Methodologies – methods
that can be applied to both cost and schedule
performance forecasts
17

18. Elements of a good forecast
 Timely
 Reliable
 Accurate
 Meaningful
 Easy to use
 Actionable
18

19. Three types of forecasts
 Judgmental – Subjective analysis of subjective
inputs
 The Management EAC is a judgmental forecast
 Associative Models – Analyzes historical data to
reveal relationships between (easily or in advance)
observable quantities and forecast quantities. Uses
this relationship to make predictions.
 Time Series – Objective analysis historical data
assuming the future will be like the past
19

20. Forecasting Techniques
 Moving average – taking the
value of a chosen number of
previous periods to use as an
estimate for the next period
 Weighted average – same as
moving average except giving
greater weight to more recent
periods
 Linear regression – a
mathematical algorithm is using
past data to create a line
showing the direction. The line
can then be carried forward to
create a forecast
 Exponential smoothing –
combines most recent actual
figure with the previous period’s
forecast in order forecast an
upcoming period
 Regression analysis – equations
that are used to analyze the
relationship between a
dependent variable and one or
more independent variables.
 Time series – uses recent history
is a good predictor of the near
future
 Trend analysis – finds trends in
historic data that can be used to
make forecasts.
20

21. 21
Capturing and processing data requires work.
Making forecasts are essentially Free

22. 22
 We’ve got the start of the data capture process
 UN/CEFACT is a place not the name of an XML
protocol
 Cost and schedule information available at the
Control Account level on a monthly basis
 In order to build the Control Account data stream,
the Work Package are used
 Use the Work Package information as well

23. 23

24. An Example of Additional Insight Gained By Comparing
Schedules Against Planned Program Deliverables
24
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13
1
25
20
15
10
5
MilestoneCount
3/05 Plan (Rev. A)
Preliminary Rev. H
5/07 Plan (Rev. E)
0
0
6
1
1
9
2
6
4
2
8
6
9
7
0
5
3
0
6
0
0
(actual from
5/07 plan)
(1 actual from
5/07 plan)
3/05 Plan
12/08 Prel. Rev H
5/07 Plan
0
0
6
1
1
15
3
7
19
5
15
25
14
22
0
19
25
0
25
0
0M/S Count
Cum
3/05 Plan
12/08 Prel. Rev H
5/07 Plan
M/S Count
Rate
Actual Plans of
the James Web
Space
Telescope
(JWST)

25. JWST Schedules and Deliverables by
Subsystems
25
Spacecraft
Sunshield
PDR
CDR
Test Compl
I&T Compl
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
OTE
3/05 Plan (Rev. A)
Preliminary Rev. H
5/07 Plan (Rev. E)
3/05 Plan
5/07 Plan
0
0
6
1
1
9
2
6
4
2
8
6
9
7
0
5
3
0
6
0
0
(actual from
5/07 plan)
(1 actual from
5/07 plan)
ISIM
0
0
6
1
1
15
3
7
19
5
15
25
14
22
0
19
25
0
25
0
0
M/S Count
Rate
M/S Count
Cum
STR - PDR
STR - CDR
ETU - NIRSpec
ETU - MIRI
ETU - NIRCam
ETU - FGS
ETU - I&T
FM - NIRCam
FM - FGS
FM - I&T
FM - MIRI
FM - NIRSpec
OTE PDR
Start Polish
OTE CDR
1st Mirror Delivery
Final Mirror Delivery
PDR
CDR
Struct Compl
Prop I&T
3/05 Plan
Prel. Rev H
5/07 Plan
Prel. Rev H
Exhibit 30: Deliverables Planned vs Actuals

26. Probabilities of Success Results
26
Case 2: Baseline with Uncertainty, Discrete Risks @ 25 probability
34.8%
50.8%
57.4%
30 Sept2022
Probability of meeting both
cost and schedule targets
Probability of meeting
targeted schedule
Probability of
meeting targeted cost
Exhibit 31: Probability of Meeting Cost and Schedule Targets

27. Current Execution Index (CEI)
• CEI is a forecast schedule
execution metric for a specific near
term window
• The goal of this metric is to
determine or measure how well
the near term schedule represents
what actually takes place through
execution
• The calculation is made through
capturing a forward-looking
snapshot of what is forecasted to
finish in the near term window.
Then a comparison is made to the
original snapshot after that window
has been executed
• CEI is NOT an actual to baseline
comparison. CEI is an actual to
forecast comparison.
27

28. Baseline Execution (BE) Chart
• Incomplete tasks, as well as
tasks completed late, instill risk to
executing program milestones and
events
• Used with CEI and VI measures,
these indicators can help the team
determine the level of confidence
in Prime’s ability to build a
realistic/ executable schedule
28

29. Heat Matrix
COST
TAB
%Complete
%Spent
BCWR
ETC(LRE)
VAC%
Cum.CV%
Cum.CPI
TCPI(LRE)
BEStarts
BEFinishes
DurG
Cum.SPI
CEIFinishes
VolatilityFinish
1.1.1 Airframe 218,237 86.22% 86.15% 30,075 47,943 -8.12% 0.08% 1.001 0.627 0.863 0.841 1.182 0.977 0.390 0.680
1.1.2 Propulsion 15,708 87.37% 79.84% 1,983 5,058 -12.03% 8.63% 1.094 0.392 0.981 0.961 0.977 0.955 0.650 0.350
1.1.3 Communications/ 109,508 69.23% 69.77% 33,691 35,708 -2.38% -0.78% 0.992 0.943 0.887 0.873 1.204 0.998 0.420 0.680
1.1.4 Guidance NAV & 186,665 56.77% 68.32% 80,703 92,740 -18.01% -20.36% 0.831 0.870 0.828 0.806 1.279 0.943 0.170 0.870
1.1.7 AV Application 209,584 47.59% 48.76% 109,849 110,629 -1.54% -2.46% 0.976 0.993 0.817 0.775 0.968 0.824 0.220 0.930
1.1.9 AV Integ., Assy 630,622 57.98% 66.93% 264,986 334,479 -19.97% -15.44% 0.866 0.792 0.923 0.907 1.283 0.950 0.400 0.740
1.11.1 Sys Assy Instal 5,982 54.16% 52.23% 2,742 2,858 0.00% 3.56% 1.037 0.960 0.932 0.919 1.129 0.995 0.490 0.590
1.13.1 Spares 25,603 46.49% 45.25% 13,700 13,933 0.33% 2.68% 1.027 0.983 0.963 0.962 1.092 0.994 0.620 0.380
1.13.2 Spares Inventor 6,399 0.00% 0.00% 6,399 6,399 Future Future Future Future Future Future Future Future Future Future
1.13.3 Spares Distribu 5,435 23.44% 23.76% 4,161 4,143 0.00% -1.39% 0.986 1.004 0.973 0.972 1.002 0.982 0.090 1.310
1.2.1 Reconnaissance 97,545 57.32% 54.52% 41,628 44,529 -0.17% 4.89% 1.051 0.935 0.955 0.954 1.055 0.998 0.510 0.620
1.2.3 Electronic Supp 17,251 62.97% 57.07% 6,388 7,405 0.00% 9.36% 1.103 0.863 0.000 0.000 0.000 1.000 0.000 0.000
1.2.6 Payload Applica 347,372 52.68% 54.10% 164,389 173,543 -4.06% -2.70% 0.974 0.947 0.914 0.884 1.149 0.969 0.780 0.410
1.3.5 Misson Control 210,520 63.89% 71.75% 76,024 84,565 -11.92% -12.31% 0.890 0.899 0.918
1.3.6 MCS System SW 16,829 8.83% 8.70% 15,343 16,063 -4.15% 1.43% 1.014 0.955 0.891 0.899 1.195 1.000 0.150 0.880
1.3.7 MCS IAT & C/O 107,163 59.55% 69.65% 43,347 69,151 -34.18% -16.96% 0.855 0.627 0.929 0.925 1.278 0.974 0.440 0.780
SCHEDULEWork RemainingTAB
• Provides a singular integrated view of multiple measures for
performance
• Organizes critical program performance data to drive corrective
action and risk mitigation
• Teams should focus on ‘Red’ and ‘Yellow’ areas
29

30. Navy PoPS
30

31. KPP Current Status Indicators
31

32. Margin Management
32

33. Late Finish by Status Date
33

34. Late Finish Aging Metrics
34

35. Late Start Aging Metrics
35

36. Schedule Margin Analysis
36

37. Total Program Starts
0
50
100
150
200
250
300
TotalWeeklyStarts
0
500
1000
1500
2000
2500
3000
3500
4000
CUMStarts
Planned 0 0 0 0 0 111 103 140 140 82 128 82 176 59 87 76 180 107 78 59
Actual 0 0 0 0 0 56 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Forecast 0 0 0 0 0 56 276 154 194 119 138 123 195 83 138 102 232 107 81 86
CUM Planned 1554 1554 1554 1554 1554 1665 1768 1908 2048 2130 2258 2340 2516 2575 2662 2738 2918 3025 3103 3162
CUM Actual 1473 1473 1473 1473 1473 1529
CUM Forecast 1473 1473 1473 1473 1473 1529 1805 1959 2153 2272 2410 2533 2728 2811 2949 3051 3283 3390 3471 3557
6/11 6/18 6/25 7/2 7/9 7/16 7/23 7/30 8/6 8/13 8/20 8/27 9/3 9/10 9/17 9/24 10/1 10/8 10/15 10/22
37
Schedule Starts

38. Total Program Finishes
0
50
100
150
200
250
TotalWeeklyFinishes
0
500
1000
1500
2000
2500
3000
3500
CUMFinishes
Planned 0 0 0 0 0 129 154 194 128 120 126 151 151 83 95 151 195 92 106 87
Actual 0 0 0 0 0 96 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Forecast 0 0 0 0 0 106 223 206 155 166 123 191 175 101 142 144 206 90 92 120
CUM Planned 943 943 943 943 943 1072 1226 1420 1548 1668 1794 1945 2096 2179 2274 2425 2620 2712 2818 2905
CUM Actual 793 793 793 793 793 889
CUM Forecast 793 793 793 793 793 899 1122 1328 1483 1649 1772 1963 2138 2239 2381 2525 2731 2821 2913 3033
6/11 6/18 6/25 7/2 7/9 7/16 7/23 7/30 8/6 8/13 8/20 8/27 9/3 9/10 9/17 9/24 10/1 10/8
10/1
5
10/2
2
38
Schedule Finishes

39. 39
Program Start Metrics Bow-Wave
Trend

40. 40
Program Finish Metrics Bow-Wave
Trend

41.  Each status period counts the number of finishes moved to
forward periods and adds them to the planned finishes
 This increase is the debt of work added to that period
41
Late Finish derived directly from the
IMS

42. Leading Indicators come from
integrating EVM and SE†
42
† Systems Engineering Applied Leading Indicators: Enabling Assessment of Acquisition Technical Performance, 24 September 2010, Paul
Montgomery and Ron Carlson, Graduate School of Engineering & Applied Sciences Naval Postgraduate School, NPS-AM-10-175

43. Leading Indicators must also connect
MoE, MoP, and TPMs
43

44. In the end, leading indicators
must tell us how to take
corrective actions before we
end up in the ditch
44

45. 45 Performance-Based Project Management®, Copyright © Glen B. Alleman, 2012, 2013Performance-Based Project Management®, Copyright © Glen B. Alleman, 2012, 2013