PM using P6

HAKEEM–UR–REHMAN
Global Technology with Innovation & Creativity
Training
on
Project Management Using Primavera (P6)
1

Outlines
 Project, Operations, Program & Portfolio
 Project Management & Its Processes
 A Story of a Project Manager (How to Plan?)
 Primavera (P6): An Overview
o Project Planning without Resources
• Starting Up & Navigation
• Create a Project
• Calendars & WBS
• Adding Activities
• Format Displaying
• Adding Relationships & Scheduling
• Project Scheduling: CPM
• Constraints
• Group, Sort, Layouts, Filter and Printing
o Project Planning with Resources
 Project Monitoring & Control 2

Project Vs Operation
PROJECT
 Take place outside the process
world
 Unique and separate from
normal organization work
OPERATION
 Ongoing, day-to-day activities
 Use existing systems, properties,
and capabilities
A complex, non-routine, one-time effort limited by time, budget, resources, and
performance specifications designed to meet customer needs.
Routine, Repetitive Work: Examples
1. Taking class notes
2. Responding to a supply-chain request
3. Routine manufacture of an Apple iPod
Projects: Examples
1. Writing a term paper
2. Developing a supply-chain
information system
3. Designing an iPod that is
approximately 2 X 4 inches,
interfaces with PC, and stores 10,000
songs 3

Is It a Project or Operation?
Consider the following scenario:
You work for a wireless phone provider, and the VP of marketing
approaches you with a fabulous idea – “fabulous” because he’s the
big boss and because he thought it up. He wants to set up Stalls in
local grocery and big–box stores as mini–offices. These offices will
offer customers the ability to sign up for new wireless phone
services, make their wireless phone bill payments, and purchase
equipment and accessories. He believes that the exposure in grocery
stores will increase awareness of the company’s offerings. After all,
everyone has to eat, right? He told you that the board of directors has
already cleared the project, and he will dedicate as many resources to
this as he can. He wants the new Stalls in place in 12 stores by the
end of this year. The best news is he has assigned you to head up this
project.

Program Vs Portfolio
A program is basically a group of
related projects managed in a
coordinated way to obtain benefits
and control not available from
managing them individually
 A collection of projects or programs
and other work that are grouped
togather to facilitate effective
managmement of that work to meet
strategic business objecives.
 The projects or program of the
portfolio may not necessarily be
interdependent or directly related.
Schools
Constuction
Facilities
Maintenance
Private
schools asst
Elementry
Education
Teachers
Hiring
Teachers
training
Special
Initiatives
5

PROJECT MANAGEMENT
A method and a set of techniques based on the accepted principles
of management used for planning, estimating and controlling work
activities to reach a desired end result on time , within budget and
according to specification. (Robert K. Wysocki / Robert Beck Jr. / David B. Crane, Effective
Project Management, 2. ed., John Wiley & Sons, 2002, p. 79)
Initiation Planning
Execution
& Control
Close
Out
6

A STORY OF A PROJECT
MANAGER
7

START …
 SMEDA has just developed a Project Management Office (PMO) at
its Islamabad HQs.
 You are appointed as Project Manager at this PMO, working
directly under CEO SMEDA
 Your responsibility is to plan every SMEDA Project in term of time,
schedule, resources and Budget.
 Also to develop a tool to monitor the project during implementation
phase and provide reports about project progress whenever required
by CEO.
8

FIRST DAY IN OFFICE…
 Its first day in your office and your CEO Handover a file to you to work on it.
 You open and study the file. It is about a project feasibility in Panjgur
Balochistan.
 According to this file contents, SMEDA carried out project feasibility on Dates
Processing Centre (DPC) at Panjgur Balochistan in July 2015.
 The report was then submitted to the ministry of industries and production for
further action.
 Approval is now given and funds are allocated for the project in March 2016.
 The CEO in his comments asked you as PMO Manager to Plan, Schedule and
Monitor the project from day onward.
9

THE PROJECT DETAILS
The Project details are as Under:
Project Name: Dates Processing Centre
Location: Panjgur, Balochistan
Start Date: July 27, 2016
Must Finish By: May 20, 2017
Budget: Rs( millions). 80.300
10

OBS & EPS
 SMEDA is doing a lot of Projects in different fields like Agriculture, Gems, and
Fisheries etc all over the country.
 SMEDA have specific budget for every field.
 Now where to place this new project among these fields so that it become easier for
future assessment.
 Also make whom responsible for it in the top hierarchy so that CEO can inquire
progress from him.
 The PMO is totally new and you are doing the entire thing for the first time.
 Go to SMEDA Organ-gram. In other words, Organizational Breakdown Structure
(OBS)
 Also Develop the chart of the fields in which SMEDA is authorized or mandated to
work. It is called Enterprises Project structure (EPS)
11

OBS & EPS…CEO
Out-Reach
GM Punjab
GM Sindh
GM KPK
GM
Balochistan
GM AJK
GM
Business Support & Services
GM
Central Support
GM
Policy &
Planning
CEO
Secretariat
SMEDA
Support Services
Development of
Industry
Textile
Horticulture
Fisheries
Gems
Agriculture
Business
Development
Services
 For the Current Dates Processing Centre
Project it is the Agriculture field in EPS to be
select.
 Because this project is in Balochistan, so make
GM Balochistan responsible for it.
12

PROJECT PLANNING: How to start?
 Divide the work (Project) into sections which is called Works Break Down
(WBS) in Project management terminology.
“A deliverable- oriented grouping of project elements that organizes and defines
the total work scope of the project. Each descending level represents an
increasingly detailed definition of the project” (PMBoK-4th Edition)
Dates
Processing Centre
Finalize
Requirements
Implementation
Acquire
Buildings
Purchasing Plant and
Machinery
Install
Machinery
Testing &
Commissioning
Level – 0
Level – 1
Level – 2
13

PROJECT PLANNING:
What Next …
 Divide the Project WBS further into deliverable called
activities. This process is called decomposition.
 An activity is simply a portion of work
 An element of work with expected duration, cost and
resources.
 Make a table of activities with duration and relationship
sequencing ( dependency)
14

Dependencies Orientation
 Predecessor: An activity that control the start or finish of another activity
 Successor : An activity whose start or finish depends on another activity.
Concept Design Develop
Dependencies Relationships:
Activity Lag: Delay of an activity from its successor is known as lag
B(5)
+ 2day
A(4)
15

Project Activities
 Make a table for it along with duration and predecessor
16

Project Resources
 To carry out these activities how many and what type of people (resources) are
available or required by the project
 Develop a table for it.
Role Name Resource Name
Manager Rashid Aman
Mechanical Engineer Shahid
Office Assistant Gul Badin
Electrician Sher Khan
Fabricators Gul Wali, Kumar doni
Mason Zahid fahim
Labor Ali, Hussain, Qasim
Lifter -
17

Assigning Resources to Activities
 List and quantity of resources against each and every activity
 Make a table as under:
18

Primavera (P6): An Overview
 P6: Key Steps
• EPS
• OBS
FOR THE FIRST
TIME ONLY
• New Project
• Calendars
• WBS
• Adding Activity
• Relationships
• Scheduling
FOR EVERY
NEW PROJECT
• Resources or roles
• Expenses
• Budgeting
• Cost accounts
RESOURCES
• Tracking Progress
• Reports
MONITORING
19

Starting Up & Navigation
 Logging In
 Projects Window
 WBS Window
 Activities Window
 EPS
 OBS
20

Starting Up & Navigation…
 View Menu
o Expand All,
o Collapse All
o Collapse To…
o Show on Bottom, Details
(Customized Details by Right click)
o Show on Top, …
o Layout
o Hint Help
o Status Bar
 Edit Menu
o User Preferences…,
o Time Units tab
o Date tab
o Application tab
 Admin Menu
o Admin Preferences…,
o General tab
o Time periods tab
o Admin Categories…,
o Notebook Topics tab
o Units of Measure tab
o Currencies…
21

 P6: Key Steps
• EPS
• OBS
FOR THE FIRST
TIME ONLY
• Creating a Project
• Calendars
• WBS
• Adding Activity
• Relationships
• Scheduling
FOR EVERY
NEW PROJECT
• Expenses
• Budgeting
• Cost accounts
RESOURCES
• Reports
MONITORING
22

Creating a Project
 File  New…
 Import & Export a Project
o File  Import…
o File  Export…
 Saving Additional Project & EPS Information: Notebook Topics
o In Projects Window: project Details form Notebook tab
 Project Copy & Paste
o Edit Menu  Copy & Paste
 Project Codes
o Enterprise  Project Codes 23

Calendars & WBS
 Primavera has three categories for
calendars:
o Global
o Project
o Resource
 Enterprise Menu  Calendars…
Calculating leads and lags in the Tools Menu Schedule Options form
 Project  WBS
24

Adding Activities & Organizing Under the WBS
 Edit  Add…
 Right click (Activity Window)  Add
 Press ‘Insert’ Key
 Activity Codes
o Enterprise  Activity Codes…
Default Activity Duration
(Admin Admin Preferences…General tab “Activity Duration cell”)
Setting Auto-numbering Defaults:
Select the Defaults tab from the Bottom pane in the Project Window.
Re-Numbering Activity IDs:
In the Activities Window; “Edit  Renumber Activity IDs”
25

 An activity that spans over a segment of a project
 Duration of hammock activities is determined after
the network plan is drawn.
 The major use of a hammock activity is to identify
the use of fixed resources or costs over a segment
of the project.
Hammock Activities (Level of Efforts)
26

Adding Activities & Organizing Under the WBS…
 Percent Complete Type
o Physical % Complete (Progress is manually entered by the User): This field enables the
user to enter the percent complete of an activity and this value is independent of the
activity durations.
• Provides a better historical record of the schedule’s progress
o Duration % Complete = �
{𝑂𝑂𝑂𝑂𝑂𝑂 𝑂𝑂𝑂𝑂 𝑂𝑂 𝑂𝑂𝑂𝑂 𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷 𝐷𝐷 𝑂𝑂𝑂𝑂 −𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅 𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷 𝐷𝐷 𝑅𝑅𝑅𝑅 }
𝑂𝑂𝑂𝑂𝑂𝑂 𝑂𝑂𝑂𝑂 𝑂𝑂 𝑂𝑂𝑂𝑂 𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷𝐷 𝐷𝐷 (𝑂𝑂𝑂𝑂)
, 𝑂𝑂𝑂𝑂 > 𝑅𝑅𝑅𝑅
0, 𝑅𝑅𝑅𝑅 > 𝑂𝑂𝑂𝑂
o Units % Complete = �
𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈
𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈 + 𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅𝑅 𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈
𝑋𝑋 100
• For example: if an activity has a resource assigned 40 Hours, and the resource has
actually completed 30 Hours, the activity is 75% complete
Activity % Complete is always linked to the % Complete displayed on the Gantt Chart bars 27

Activity Duration Types
P6 provides 4 types of
Activity Durations
Fixed Duration Types Fixed Resource Types
1. Fixed Duration & Units/Time 3. Fixed Units
2. Fixed Duration & Units 4. Fixed Units/time
 The Duration type only matters when the activity is assigned to resources.
 The following equation must hold true regardless of which variable is updated.
Resource Units = Units / Time x Duration
If the activity is not started, the names of the values are :
o Budgeted Units = Original Duration x Budgeted Units/Time
If the activity has started, the names of the values are :
o Remaining Units = Remaining Duration x Remaining Units/Time
The Duration Type enables you to control which variables of this equation are calculated
when you change a value. 28

Activity Duration Types…
1. Fixed Duration & Units /Time
Resource Units = Resource Units/Time x Duration
Fixed Resource Types (Resources drive Duration)
2. Fixed Duration & Units
3. Fixed Units /Time
4.Fixed Units
 Task DependentActivities.
 Duration Drives Resources.
 Duration dominates Resources
(Units/Time or Units).
 Resource DependentActivities.
 Resources Drive Duration.
 Resources (Units / Time or
Units) dominates Duration.
ConstantChanges
Fixed Duration Types (Duration drives Resources)
29

40 Hrs = 8 Hrs/Day x 5 Days
Units
Input
80 Hrs
Units/Time
Input
16 Hrs/Day
Duration
Input
10 Days
Units (Hrs) 80 80 80
Units/Time (Hrs/Day) 16 16 8
Duration (Day) 5 5 10
When Units were Changed, Units / time were changed to maintain the
equation, Duration is never recalculated with this type
Organizations which have the project deadline fixed and is also concerned with leveling
resources used this activity duration type
Duration
Type
When You
Change Duration,
What Changes?
When You
Change units / time,
What Changes?
When You
Change units,
What Changes?
When you
add a resource,
what changes?
Fixed Duration &
Units / time
Units Units Units / Time Units
30

Duration
Type
When You
Change Duration,
What Changes?
When You
What Changes?
When You
Change units,
What Changes?
When you
add a resource,
what changes?
Fixed Duration &
Units
Units / time Units Units / Time Units / time
40 Hrs = 8 Hrs/Day x 5 DaysResource Units = Units / Time x Duration
Units
Input
80 Hrs
Units/Time
Input
16 Hrs/Day
Duration
Input
10 Days
When Units / Time were Changed, Units were changed to maintain the
equation, Duration is never recalculated with this type
 Mostly used when time period and the total amount of work are fixed.
 Rate at which a resource can work on the activity can be changed.
 Can use this; if your organization is more concerned about coming in on the schedule date and within
the costs. 31

Duration
Type
When You
Change Duration,
What Changes?
When You
What Changes?
When You
Change units,
What Changes?
When you
add a resource,
what changes?
Fixed Units Units / time Duration Duration Duration
Units
Input
80 Hrs
Units/Time
Input
16 Hrs/Day
Duration
Input
10 Days
When Units were Changed, Duration changed to maintain the equation,
Units / Time remained Constant. Resource variables take precedence over
Duration.
Generally used when you have resource under contract basis and you have ‘X’ units of work to
get to be done from that particular resource. 32

Duration
Type
When You
Change Duration,
What Changes?
When You
What Changes?
When You
Change units,
What Changes?
When you
add a resource,
what changes?
Fixed Units / time Units Duration Duration Duration
Units
Input
80 Hrs
Units/Time
Input
16 Hrs/Day
Duration
Input
10 Days
When Units / Time were Changed, Duration changed to maintain the equation,
Units remained Constant. Resource variables take precedence over Duration.
 Used when resources with productivity output per time period is fixed.
 Mostly used when Activity type is Resource Dependent.
 This option is selected if your organization is concerned with leveling resources and you
assign resources specific hours per day on activities. 33

Typically Used:
Activity Type: Task Dependent
&
Activity Duration type: Fixed Duration & Units/Time
34

Formatting the Display
 Formatting Columns
o View  Columns
o Click on
 Formatting Activity Bars
o View  Bars
o Click on
 Format Gridlines (Bar Chart Gridlines) & Data Date
o View  Bars  Options… Sightlines tab
o View  Bars  Options… Data Date tab
 Format Row Height, Font & Colors
o View  Table Font and Row
o View  Group and Sort
 Format Timescale
o View  Timescale
o Click on
35

Adding Relationships & Scheduling the Project
 By opening the Activity Details form
o Predecessor and Successors may be added and deleted from the
Relationships, Predecessor or Successor tabs.
 Graphically in the Bar Chart
o Click on
 Scheduling the Project
o Select Tools, Schedule…, or
o Press F9 key to open the Schedule form
36

PROJECT SCHEDULING:
SCHEDULING
 The process of calculating start and finish dates of activities according to its
relationship is called scheduling
 RELATIONSHIPS PRESENTATION:
o Gantt Chart: Graph or bar chart with a bar for each project activity that
shows passage of time; Provides visual display of project schedule
o Network diagram is the preferred technique for showing activity
sequencing. It is a schematic display of the logical relationship among
project activities
37

PROJECT
MANAGEMENT
TOOLS:
GANTT
CHART
 Developed by Harry Gantt in 1916
 Graph or bar chart with a bar for each project activity that shows passage of time
 Provides visual display of project schedule
| | | | |
Activity
Design house
and obtain
financing
Lay foundation
Order and
receive
materials
Build house
Select paint
Select carpet
Finish work
0 2 4 6 8 10
Month
Month
1 3 5 7 9
38

NETWORK EXERCISE
Information
ABC Department
ACTIVITY DESCRIPTION PROCEDING
ACTIVITY
ACTIVITY TIME
(Duration)
A Application Approval None 5
B Construction Plans A 15
C Traffic Study A 10
D Service Availability Check A 5
E Staff Report B,C 15
F Commission Approval B,C,D 10
G Wait for Construction F 170
H Occupancy E,G 35
39

CRITICAL PATH METHOD (CPM)
KOLL BUSINESS CENTER
County Engineers Design Department
B
15
Construction
plans
C
10
Traffic
study
D
5
Service
check
A
5
Application
approval
ES ID EF
SL
LS Dur LF
Description
F
10
Commission
approval
G
170
Wait for
construction
H
35
Occupancy
E
15
Staff report
EF
AON NETWORK:
40

 is a procedure for using network analysis to identify those tasks
which are on the critical path;
 where any delay in the completion of these tasks will lengthen the
project timescale, unless action is taken.
 Critical path is based on two factors:
Longest path
Path with zero float
 How long will the entire project take to complete?
 Which activities determine total project time?
 Which activity times should be shortened, if possible, or in other
words, how many resources should be allocated to each activity?
41

 Forward Pass – Earliest Times; remember three things when computing early activity times:
1. Add activity time along each path in the network (ES + Dur. = EF)
2. Carry the early finish (EF) to the next activity where it becomes its early start (ES),
unless
3. Next succeeding activity is a merge activity; select the largest early finish number (EF)
of all its predecessor activities
 Backward Pass – Latest Times; similar to Forward Pass; remember three things:
1. Subtract activity times along each path starting with the project end activity (LF – Dur. =
LS)
2. Carry the LS to the next preceding activity to establish its LF, unless
3. Next preceding activity is a burst activity; select the smallest LS of all its immediate
successor activities to establish its LF
 Slack or Float – SL
 Forward & Backward Passes Computed
 Possible to determine which activities can be delayed by computing “Slack” or “Float”
LS – ES = SL (or) LF – EF = SL
 Total Slack: tells us the amount of time an activity can be delayed; not delay project
42

B
15
Construction
plans
C
10
Traffic
study
D
5
Service
check
A
5
Application
approval
ES ID EF
SL
LS Dur LF
Description
F
10
Commission
approval
G
170
Wait for
construction
H
35
Occupancy
E
15
Staff report
EF
50
205
5 15
5 10
20
20 30
35
30 200
200 235
20
15
10
20
15
35
200
235
43

B
5 15 20
Construction
plans
C
10 10 20
Traffic
study
D
15 5 20
Service
check
A
0 5 5
Application
approval
ES ID EF
SL
LS Dur LF
Description
F
20 10 30
Commission
approval
G
30 170 200
Wait for
construction
H
200 35 235
Occupancy
E
185 15 200
Staff report
LS
20
20
185
185
10
15
5
20
44

5 B 20
0
5 15 20
Construction
plans
5 C 15
5
10 10 20
Traffic
study
5 D 10
10
15 5 20
Service
check
0 A 5
0
0 5 5
Application
approval
ES ID EF
SL
LS Dur LF
Description
20 F 30
0
20 10 30
Commission
approval
30 G 200
0
30 170 200
Wait for
construction
200 H 235
0
200 35 235
Occupancy
20 E 35
165
185 15 200
Staff report
LS EF
20
15
185
185
10
15
5
20
20
20
10
20
15
45

PRACTICE QUESTION
Activities Predecessors
Duration
(Days)
A - 4
B - 12
C A 9
D A 15
E A 7.5
F B, C 9
G D 3.5
H E, F, G 5
Develop AON Network and find the Critical Path. 46

Constraints
 List of constraints available in Primavera (Activity detail pane  Status tab)
o <None>: An activity by default is scheduled to occur As Soon As Possible and
does not have a Constraint.
o Start On (i.e. Must Start On): Sets a date on which the activity will start.
Therefore, the activity has no float. The early start and the late start dates are set
to be the same as the Constraint Date.
o Start On or Before: Also known as Start No Later Than or Late Start, this
constraint sets the late date after which the activity will not start.
o Start On or After: Also known as Start No Earlier Than or Early Start, this
constraint sets the early date before which the activity will not start.
o As Late As Possible (Zero Free Float): An activity will be scheduled to occur
as late as possible. It consumes Free Float only and does not have any particular
Constraint Date. The Early and Late dates have the same date.
o Mandatory Start: This constraint prevents float being calculated through this
activity and effectively breaks a schedule into two parts. This is also sometimes
called a Hard Constraint
o … 47

Group, Sort, Layouts, Filter and Printing
 View Menu  Group and Sort …
 View  Layout  Save as… (To create user defined Layout)
 View  Filters…
 File  Print Preview
 File  Page Setup…
48

Scheduling Options and Setting A Baseline
 MAIN STEPS FOR MONITORING PROGRESS:
o Saving a Baseline schedule, also known as a Target. This schedule
holds the dates against which progress is compared.
“The current project may be copied and used as a baseline or an existing
project may be assigned as a baseline”
o Recording or marking-up progress as of a specific date, titled the Data
Date. Also known as the Status Date, Update Date, Current Date,
Report Date, and As-Of-Date.
o Updating or Progressing the schedule.
o Scheduling the project and at the same time moving the Data Date to
the new Data Date and recalculating all the activities dates.
o Comparing and Reporting actual progress against planned progress and
revising the plan and schedule, if required.
49

Scheduling Options and Setting A Baseline
 Tools  Schedule…  Options (Compute Total Float as)
 Saving and Deleting and Setting a Baseline:
o Project  Maintain Baselines…
 Setting a Baseline Project:
o Project  Assign Baselines…
 Updating a Baseline:
o Project  Maintain Baselines… Update tab
The Planned Dates from a Baseline schedule will be displayed as the Baseline Bars when the
Admin, Admin Preferences…, Earned Value tab is set to Budget values with planned dates.
Thus the Baseline Bars from an in progress schedule will be incorrect.
Never Select
this Option
50

 P6: Key Steps
• EPS
• OBS
FOR THE FIRST
TIME ONLY
• Creating a Project
• Calendars
• WBS
• Adding Activity
• Relationships
• Scheduling
FOR EVERY
NEW PROJECT
• Expenses
• Budgeting
• Cost accounts
RESOURCES
• Reports
MONITORING
51

What is a ‘S’ Curve?
A ‘S’ Curve is defined as "a display of cumulative costs, labour hours or other
quantities plotted against time.
S-Curve using Primavera P6:
o In Activity Window, View  show on bottom  Activity usage Profile
o Right click on the Activity usage profile window and choose  activity usage
profile options
52

‘S’ Curve: Activity Usage
 To show the Cumulative
cost S curves select the 1.
 Cost Radio button and
enable the check box from
18. To 22.
 To show the cumulative
of all the defined
variables. Selecting check
box from 23. to 25. Shows
the Earned value cost
curves.
 To show the Cumulative labor hours S curves select the 2.
 Units Radio button and enable the check box from 18. To 22.
 To show the cumulative of all the defined variables. Selecting check boxes from 23. to 25
shows the Earned value curves in terms of labor units.
53

‘S’ Curve: Resource Usage
Select and open the project you want to do the S Curve analysis on.
 In Activity Window; View  show on bottom  Resource usage Profile.
 Right click on the Resource usage profile window and choose  Resource usage
profile options
By checking radio
button 1. Or 2. (for
units or Cost)
Cumulative curves
for resources in terms
of cost and labor units
, tick the checkbox
from 8. through 11.
54

Project Monitoring and Control
Budget Variance
Schedule
VarianceAhead
Under
Over
Behind
E
A
D B
C
Good Shape
Slow the efforts
to save money
Spend more to
catch up
Rescope
On Critical Path
EARNED VALUE ANALYSIS
“COST / SCHEDULE SYSTEM”
55

 “Earned Value Analysis” is:
 an industry standard way to:
 measure a project’s progress,
 forecast its completion date and final cost, and
 provide schedule and budget variances along
the way.
 By integrating three measurements, it provides
consistent, numerical indicators with which you can
evaluate and compare projects.
56

WHAT’S MORE IMPORTANT?
 Knowing where you are
on schedule?
on budget?
on work accomplished?
57

 PV: “Planned Value”
 It answers the question “how much did we plan to spend as of this date?” A
variant of this question is “how much work should have been completed by
this date?”
 AC: “Actual Cost”
 It answers the question “how much have we actually spent?”. This is usually
determined from the organization’s accounting system, or can often be
approximated by multiplying the number of people by the number of hours or
days or weeks worked.
 EV: “EARNED VALUE”
 It answers the question “how much work has actually been completed?”
58

Some Derived Metrics
SV: Schedule Variance = (EV – PV) = �
0, 𝑅𝑅𝑅𝑅 𝑅𝑅 𝑅𝑅𝑅 𝑜𝑜𝑜𝑜 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆
𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁, 𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵 𝑡𝑡𝑡𝑡𝑡 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆
𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃, 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 𝑜𝑜𝑜𝑜 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆
SPI: Schedule Performance Index = EV/PV = �
1, 𝑅𝑅𝑅𝑅 𝑅𝑅 𝑅𝑅𝑅 𝑜𝑜𝑜𝑜 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆
𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿 𝑡𝑡𝑡𝑡𝑡𝑡𝑡 1, 𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵 𝑡𝑡𝑡𝑡𝑡 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆
𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺 𝑡𝑡𝑡𝑡𝑡𝑡𝑡 1 𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴𝐴 𝑜𝑜𝑜𝑜 𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆𝑆
CPI: Cost Performance Index = EV/AC = �
1, 𝑅𝑅𝑅𝑅 𝑅𝑅 𝑅𝑅𝑅 𝑜𝑜𝑜𝑜 𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏
𝐿𝐿𝐿𝐿𝐿𝐿𝐿𝐿 𝑡𝑡𝑡𝑡𝑡𝑡𝑡 1, 𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂 𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵
𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺𝐺 𝑡𝑡𝑡𝑡𝑡𝑡𝑡 1, 𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈 𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵
CV: Cost Variance = (EV – AC) = �
0, 𝑅𝑅𝑅𝑅 𝑅𝑅 𝑅𝑅𝑅 𝑜𝑜𝑜𝑜 𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏
𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁𝑁, 𝑂𝑂𝑂𝑂𝑂𝑂𝑂𝑂 𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵
𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃, 𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈𝑈 𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵𝐵
59

EXAMPLE–1:
Earned Value Analysis
 Suppose you are making cookies for a large party to be held tomorrow.
 Suppose the following are your plans:
 Plans:
 40 cookies per batch
 5 batches per hour (200 cookies)
 Schedule: 5 hours to make a total of 1000 cookies
 Budgeted cost per cookie is $0.05
 Total budget is $50.00 for cookie ingredients, or $10 per hour
 We'll use earned value to examine our progress.
 PROGRESS REPORT AT END OF HOUR 1:
 150 edible cookies have been made (some were burnt and had to be thrown
away)
 Total actual cost of ingredients used so far is $9.00 (AC)
60

Example (Cont…):
Earned Value Analysis
ANALYSIS:
 PV= $10.00
 EV= $7.50(Earned Value)[150 cookiesx0.05 per cookie]
 AC = $9.00 [from above]
Therefore:
 SV = EV – PV = -$2.50 (you are behind schedule)
 SPI = EV / PV = 0.75 (you are running at 75% of the planned schedule)
 CV = EV – AC = $7.50 - $9.00 = -$1.50 (you are $1.50 over budget)
 CPI = EV / AC = 0.833 (you are running over budget by about 17%)
61

EVM cost forecasting–final cost
Estimate At Completion (EAC): “The expected TOTAL cost required to
finish complete work”
o EAC = AC + ETC (or)
o EAC = BAC / CPI Where: BAC = Sum of all PV (Planned Value)
Estimate to complete (ETC): “The expected cost required to finish all the
REMAINING work”
o ETC = (BAC – EV) / CPI (or)
o ETC = EAC – AC
Time to complete (TC) = (BAC – EV) / SPI
Variance At Completion (VAC): “Estimated cost overrun at the end of
project”
o VAC = BAC – EAC
62

EXAMPLE–2: Earned Value Analysis
A project has a budget of £10M and schedule for 10 months. It is assumed that the
total budget will be spent equally each month until the 10th month is reached. After
2 months the project manager finds that only 5% of the work is finished and a total
of £1M spent.
 Find the following:
o Variances: CV, SV
o Indices: CPI, SPI
o Forecasting: EAC, ETC, Time to completion
PV = £2M
EV = £10M * 0.05 = £0.5M
AC = £1M
 CV = EV-AC = 0.5-1 = -0.5M
 SV = EV-PV = 0.5-2 = -1.5 months
 CPI = EV/AC = 0.5/1 = 0.5
 SPI = EV/PV = 0.5/2 = 0.25
 EAC = BAC/CPI = 10/0.5 = £20M
 ETC = (BAC-EV) / CPI = (10-0.5)/0.5 = £19M
 Time to compete = (BAC – EV)/SPI
= (10-0.5)/0.25 = 38 Months
 This project will take TOTAL £20M (19+1) and
40 (38+2) Months to complete.
63

Exercise: EVA
You have a project that is scheduled to be completed in 10 days at a
budgeted cost of $100,000. At the end of day 6 you do an analysis and
you determine the job is 70% complete and you have spent $65,000.
Questions:
1. What is the project’s earned value?
2. What is the project’s budget at completion?
3. Is the project ahead, behind schedule or on time?
4. Is the project expected to complete on budget, under or over
budget?
5. What is the project’s SPI?
6. What is the project’s CPI?
1. At Day 6th, EV = $70,000
2. BAC = $100,000
3. Ahead of schedule.
4. Under budget.
5. At Day 6th, SPI = 1.17
6. At Day 6th, CPI = 1.08 64

Steps for EV Analysis Using P6
STEP – 1: Add Activities & Relationships, Set % Complete to Physical
65

Steps for EV Analysis Using P6…
STEP – 2: Add & Assign Resources
66

STEP – 3: Maintain Baseline and Assign to Project
STEP – 4: Customize Columns for analysis
STEP – 5: Update Physical % Complete
67

STEP – 6: Update Resource Actual Units (Or Expenses)
STEP – 7: Schedule Project, Advance Data Date
68

We can now analyze our “Earned Value”
Conclusions Based on Earned Value Analysis
 Schedule Performance
o The baseline indicates that 50% of the work should be complete. With only 30%
Performance % Complete (Actual Labor Units). This shows the project is behind
schedule.
 Cost Performance
o The baseline indicates that $500 worth of work should be complete (Planned Value Cost)
As of the Data Date, (Actual cost) is $600 to achieve $300 worth of work (Earned Value
Cost). This shows the project is over budget 69

Using CPI & SPI to analyze project efficiency
 Cost Performance Index relates the amount of Physical Work completed vs. the $
spent to accomplish the work.
o CPI = (EV) / (AC)
 Schedule Performance Index relates to the Physical Work completed vs. the amount
of work planned
o SPI = (EV) / (PV)
70

Using CPI/SPI to calculate your “Estimate to Complete”
Open WBS Window; Detail Pane
What is it going to cost to complete this project?
 ETC uses one of two formulas
o ETC = Remaining Cost of the activity
o ETC = Performance Factor *
(Budget at Completion – Earned
Value Cost)
71

Using CPI/SPI to calculate your “Estimate to Complete”
Using Remaining Costs for Activities to Calculate (ETC)
Using CPI to Calculate (ETC) – Yields an Optimistic Result
Using CPI/SPI to calculate ETC – Worst Case Scenario
ETC = [1/(CPI * SPI)] * Budget at Completion – Earned Value Cost
PF = 1/CPI *Most likely Result ETC = (1/CPI)* Budget at Completion – Earned Value Cost
PF = 1/CPI*SPI *Pessimistic Result
72

PM using P6

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