(Technical paper) Cis utilization of earned value management for monitoring production facilities

Dmitriy Skorobogatov
Elena Rybina
PMSOFT
Sean T Regan, Ph.D. CCP, CEP, MRICS
LGM International, LLC
Julie Owen
Metro
Member number: 78880
CIS "Utilization of Earned Value
Management for Monitoring Production
Facilities"
February 27, 2015

Developed by PMSOFT, CJSC Page 2 of 23
1 List of tables .................................................................................................................................... 3
2 Table terms...................................................................................................................................... 4
3 Abstract........................................................................................................................................... 5
4 Introduction .................................................................................................................................... 6
5 Applying EVM for Equipment.......................................................................................................... 7
6 Evaluation of project progress in context of manipulation by the Contractor............................. 11
7 Forecasting project execution dates............................................................................................. 17
8 Conclusion..................................................................................................................................... 22
9 Sources.......................................................................................................................................... 23

1 List of tables
Table 1 «Terms»...................................................................................................................................... 4
Table 2 Major steps in equipment delivery ............................................................................................ 8
Table 3 Overall dates of activities ......................................................................................................... 12
Table 4 Actual earned value indices by activities.................................................................................. 12

2 Table terms
Table 1 «Terms»
Term Definition In Accordance CIS Definitions
EVM Earned value method
EV Earned value
VOWD Value of work done
CD Current date
pFD Planned finish date
SPI Schedule performance index
pSPI Pessimistic schedule performance index
rSPI Realistic schedule performance index
mEV Modified earned value
BCWS Budgeted Cost of Work Scheduled
PV Planned Value
AC Actual cost
ACWP Actual cost of work performed
eFD Estimated finish date
PV(t) planned earned value curve;
EV(t) Actual earned value curve (optimistic
mEV (t) Actual modernized earned value curve (pessimistic);
ceEV (t) Forecasted earned value curve for current plan, not taking SPI indices
into account
eEV (t) Forecasted modernized earned value curve, taking into account
extrapolation of arSPIx index to the remaining scope of project work
arSPIx Schedule performance index averaged for all reporting time periods
from the project start
apSPIx Time-averaged pSPI for the whole duration of activities performance
by ‘x’ Contractor

3 Abstract
The Earned Value Management System (EVMS) is one of the most effective and commonly used tools
for project control and forecasting project execution. EVMS was proven based upon sound
methodological principles and is relatively unchanged for the many decades. However, many variable
factors appear related such as the specific type of project, contractors, and a range of external
conditions. These factors require fine-tuning of EVMS tools for correct implementation. This paper
addresses the following aspects of EVM application:
1. Measuring project progress in the context of contractor data manipulation
2. Calculating EVM indices in technology intensive projects where major equipment represents
a substantial part of the project budget
3. Forecasting project execution dates and utilizing EMV indices.
The paper describes both methodological and practical aspects of EVM application considering the
factors above. Practical implementation of EVM will be demonstrated based upon a Russian
company case study. The Russian company is involved in technology intensive production and
utilized for the practical framework discussion purposes.

4 Introduction
Execution of technology intensive production facilities construction projects has certain features.
This article identifies major features, which have significant impact on using the Earned Value
Management in these projects.
 Technology intensive equipment. From the viewpoint of managing project cost it means
first of all high cost of such equipment both as unit cost (cost of a perspective facility is
determined mainly by equipment cost) and absolute cost, secondly – duration of
fabrication-delivery-installation cycles. High requirements to the cycles monitoring
processes in managing a project are associated with long duration of those equipment-
related cycles.
 Plenty of utility networks. Activities on design and installation of utility networks play
critical role in execution of technology intensive production facilities construction projects.
Very often, these activities are associated with high level of installation efforts, low ultimate
intensity and relatively low cost of use equipment and materials.
 Technology intensive nature of a schedule. It means on the one hand, there are high
demands to strict adherence of the activities process flow and on the other hand, the
requirement is to maintain a detailed schedule where detailed activities are interrelated in
terms of process flow.
 Severe constraints on commissioning dates. Since production capacities are meant, the
dates of these facilities commissioning are directly associated with financial indicators of the
whole company having a new facility to be included in the production cycle of that
company. In some cases only quick start of the production process will ensure the company
business success in the market.
The last item requires a special attention since almost all projects of this kind are aimed either at
growth of performance indicators of an industrial enterprise (to be integrated into the production
process) or at setting up output of new products. In both cases, the time factor is critical. Therefore,
the solutions below are first of all aimed at ensuring correct reflection of current status of the project
execution progress and at forecasting the execution dates considering current dynamics of the
project execution. It is also important that this task was set when there were no processes and the
risk management system at place.
The article contains three substantial parts:
 Applying EVM for planning and monitoring of activities on equipment delivery in technology
intensive production facilities construction projects.
 Upgrading earned value indices for measuring project progress in context of manipulation
by the Contractor.
 Forecasting project execution dates.
The proposed solutions were developed for a series of large industrial holding companies in the
Commonwealth of Independent States.

5 Applying EVM for Equipment
As mentioned above, one of the features in execution of technology intensive production facilities
construction projects is using expensive equipment. At technology intensive production facilities,
equipment cost is the decisive component in the budget of projects on construction and expansion of
the company industrial facilities. This part explains how equipment delivery progress is measured
from the viewpoint of planning and control. In EVM traditional approaches, the essential part of
earned value occurs on the date of equipment delivery. Significant ‘surges’ were observed on earned
value S-curves on the dates of equipment delivery due to high unit cost. General view of S-curve for
these conditions is given in the Figure 1.
Figure 1 EVM curve taking into account equipment delivery
This is not acceptable from the viewpoint of measuring the overall project progress for the following
reasons:
 Project progress is mainly determined by progress of the complete cycle: design –
fabrication – delivery – installation – commissioning of equipment due to high cost and
technology intensive nature of equipment. However, the delivery date only does not
measure the project overall progress correctly.
 Delivery of equipment to the stock does not weigh much in terms of the project overall
progress. Installation and commissioning activities are much more important for this
equipment.
 Current situation allows the Contractor to manipulate with earned value indices. To
demonstrate greater earned value and project progress the Contractor will try to deliver
equipment as soon as possible to ensure higher EVM indicators but at the same time,
equipment can remain in the stock, uninstalled for a long time waiting for completion of
early works. Finally, the Customer incurs financial losses, wastes time and does not have
objective reporting data on the project progress execution.

Therefore, equipment planning and control technique was developed, which takes into account
approaches of VOWD technique. For this purpose, a modified PV index was introduced. The following
two principles are applied to calculate this index for every activity associated with equipment:
 Planned cost of equipment is split into two parts: 20% of the overall cost of equipment is
split into activities on design-fabrication-delivery and 80% - into installation and
commissioning activities.
 Cost of design-fabrication-delivery cycle is distributed through standard series of steps in
accordance with their ‘unit weight’. A list of standard steps [3,4] is given in Table 2. Quantity
of steps may vary depending on the type of equipment and materials and on other
conditions (availability in the stock of the Fabrication Company, etc.). Overall cost of steps
for delivery of one item of equipment or materials shall equal 20% of the equipment cost.
Cost of one-step is calculated by multiplying the step weight by 20% of the equipment cost,
with which this activity is associated.
Table 2 Major steps in equipment delivery
Activity Name Activity Type in Primavera Step Weight
Procurement request Milestone 0%
Execution of a vendor contract Task dependent activity 10%
Development of equipment drawings Task dependent activity 25%
Approval of equipment drawings Milestone 0%
Equipment fabrication Task dependent activity 45%
Acceptance of equipment by the Customer
at the fabrication company premises
Milestone 0%
Ex-works shipment Task dependent activity 5%
Delivery to the site Task dependent activity 10%
Equipment is delivered Milestone 0%
Spare part delivery Task dependent activity 2%
Documents delivery Task dependent activity 3%
In this approach, earned value with respect to major equipment is tracked for all activities associated
with various cycles of equipment delivery. Finally, the earned value S-curve gets ‘smoothened’ (with
respect to equipment), and shifts to later dates (to installation dates). Equipment overall progress
schedule presented in terms of weighting is given in Figure 2.

Figure 2. Equipment overall progress schedule is given in terms of percentage points
Overall S-curve given in Figure 1, which reflects project overall progress is given in Figure 3.
Figure 3. ‘Smoothened’ earned value S-curve (with respect to equipment)
During project execution, the EV index for activities mainly associated with equipment shall be also
determined taking into account the PV modification described above.
Having applied the solutions described above, the following results can be gained:
 A ‘smooth’ S-curve is generated to reflect the project overall progress and to demonstrate
progress for the whole cycle: design – fabrication – delivery – installation – commissioning.
 Project progress is calculated taking into account ‘weight’ of every activity associated with
equipment. Including the fact that from the viewpoint of overall progress it is more critical
to execute installation and commissioning cycle than simply deliver equipment to the stock.

 It is no longer possible to manipulate with EVM indices by the Contractor and this form of
reporting stimulates the Contractor to complete installation and commissioning activities
instead of delivering to the stock as soon as possible.
The approaches above are appropriate for long lead equipment and high unit cost in the project
budget.

6 Evaluation of project progress in context of manipulation by the Contractor
If the technique above allows eliminating manipulation by the Contractor with respect to major
equipment then with respect to the rest of the project – manipulations are still possible. The main
way of manipulation is early implementation of expensive or simple activities contrary to the
previously agreed schedule and work processes. In this case, the Contractor demonstrates higher
earned values at earlier periods, and as a result, performance index is significantly higher, but later
the earned value rates decrease considerably since the activities with lowest cost values and
significant restrictions on the ultimate intensity of work performance were deferred to the end. At
the same time, the Customer was sidetracked at the beginning of the project by high values and did
not forecast significant schedule deviations to the end of the project. Such manipulation is used
especially with respect to activities on installation of utility networks as these activities last for a long
time but cost very little, and the Contractor attempts to defer them to the end (sometimes contrary
to work processes) but to perform the most expensive and quickest activities at the beginning. This
situation gets even worse due to the reason described in introduction to this article and due to the
fact that a great deal of utility networks need to be installed at technology intensive production
facilities construction projects. It is also important that project financing is affected on an annual
basis and can be adjusted quarterly, thus earned value for the previous periods is one of the major
indices taken into account when determining the scope of finance for the next year. The Contractor
is aware and is always interested in demonstrating higher earned values at earlier time periods. This
is required not only for consolidation of positions as a Contractor with respect to the assigned scope
of work but for the purpose of ‘booking’ higher project budget of the Customer for the next planned
period, and escaping the situation of underfinancing for the reason of under-budgeting.
A general view of planned earned value S-curve and actual earned value S-curve, which was
generated as a result of manipulations by the Contractor, is given in Figure 4.
Figure 4. Curves EV (t) and PV (t) taking into account data date actuals
Figure 4 explains that there was a high rate of works performance (SPI>1) in the first half of the
project, and from these data the Customer expected that the project would be finished on time or
earlier than the planned date, but then there happened a dramatic drop in earned value rates, which
did not change significantly later. Finally, this project was executed with considerable schedule

delays though the Customer could not foresee that and timely take administrative measures
(including the decision to replace the Contractor).
Earned Value Management was modified to avoid such situations. As a result of modification, a new
index mEV was introduced – modified earned value.
This index is different from traditional earned value since it takes into account only earned value,
which occurred within the planned dates or later. An example to explain the essence of this index
and its calculation method is provided in Table 3. There are three activities with the following
parameters:
Table 3 Overall dates of activities
Activity Planned start
(number of the time period)
Planned finish
(number of the time period)
Planned total cost
Activity 1 2 3 130
Activity 2 1 1 60
Activity 3 2 2 90
These initial data are given taking into account the timeline in Figure 5.
Figure 5. Planned data
Table 4 contains actual earned value indices for every activity.
Table 4 Actual earned value indices by activities
A modified earned value index (mEV) is introduced here. This index is calculated by the following
algorithm:

Rule 1
If for the selected activity in the given ‘t’ period there was no planned earned value, that is:
𝑃𝑉𝑡 = 0 (Eq 1)
then:
𝑀𝐸𝑉𝑡 = 0 (Eq 2)
Rule 2
If for the selected activity in the given ‘t’ period the planned earned value is other than zero, that is:
𝑃𝑉𝑡 ≠ 0 (Eq 3)
And the earned value for the previous periods (when activities were performed) equals zero:
∑ 𝐸𝑉𝑖
𝑡
𝑖=0 = 0 (Eq 4)
EVi – the earned value for the selected activity in the given ‘i’ period
Then:
𝑀𝐸𝑉𝑡 = 𝐸𝑉𝑡 (Eq 5)
Rule 3
If for the selected activity in the given ‘t’ period the planned earned value is other than zero, that is:
PVt ≠ 01 (Eq 6)
And the earned value for the previous periods (when activities were performed) is other than zero:
∑ 𝐸𝑉𝑖
𝑡
𝑖=0 ≠ 0 (Eq 7)
Then:
𝑚𝐸𝑉𝑡 = ∑ 𝐸𝑉𝑖
𝑡
𝑖=0 (Eq 8)
Figure 6 contains a summary table of calculated mEV index and taking into account the timeline.
1 At the same time in all previous time periods the planned earned value equaled zero. That
means this activity was initially planned to be performed in the ‘t’ time period.

Figure 6. Actual data
Figure 6 shows that mEV is the index, which prevents manipulation with EVM indices and motivates
the Contractor to perform activities in accordance with the previously approved schedule.
However, there is a significant condition of using mEVt index and respective derived indices. If the
activity is critical or near critical (i.e. its positive float is =<5 days) then for such activities:
𝑀𝐸𝑉𝑡 = 𝐸𝑉𝑡 (Eq 9)
This is because for critical or near critical activities early earned value means that preceding activities
in this chain were performed and a real increase above the planned rates of construction is seen. This
also motives the Contractor for performing critical activities, which directly impact the project
completion date. Thus, earned value schedule, given in Figure 7 will have one more curve added.

Figure 7. Curves EV (t), PV (t) and mEV (t) taking into account data date actuals
Further forecasting and extrapolation of curves EV (t) and mEV (t) for the whole project in the
situations above in context of manipulation by the Contractor, generates a new estimate-to-
complete date (efD) in Figure 8.
Figure 8. Curves EV (t), PV (t) and mEV (t) taking into account forecast to the project end
A new mEV index allows gaining the following effects:
 Develop real reporting on the project execution progress. This index takes into account only
the activities performed according to the plan or earlier. This allows avoiding the situations
when the Contractor intentionally tries to perform the most expensive and quickest
activities at earlier stages and deferred activities at later stages of the project and
significantly decrease the earned value rates.
 Minimize the attempts of changing the previously approved processes of activities
performance. If changing the processes of activities performance is a coercive measure then
planned earned value indices shall be repeatedly agreed with the Customer taking into
account a new schedule.
 Motivate the Contractor for real instead of falsified reduction of project execution dates.

The overall situation of earned value taking into account mEV index is given in Figure 8 and presents
two curves as follows:
 Optimistic forecast, which is based on EV index and demonstrates optimistic situation on
earned value rates at earlier stages of the project execution.
 Pessimistic forecast, which is based on mEV index and demonstrates pessimistic situation on
earned value rates at earlier stages of the project execution.
The indicators derived from mEV indices are calculated below. Two methods of SPI index calculation
are given below since forecasting the project completion dates (by applying EVM) is the most
important factor:
Optimistic:
𝑆𝑃𝐼 = 𝐸𝑉/𝑃𝑉 (Eq 10)
Pessimistic:
𝑝𝑆𝑃𝐼 = 𝑚𝐸𝑉/𝑃𝑉 (Eq 11)
The realistic index is calculated by means of plain averaging:
𝑟𝑆𝑃𝐼 = (𝑆𝑃𝐼 + 𝑝𝑆𝑃𝐼)/2 (Eq 12)
This index is used for forecasting the project completion dates.

7 Forecasting project execution dates
Application of EVM to forecast project cost at completion is described in details in many books,
articles and best practices [1, 2]. Tools and techniques of applying EVM to forecast project dates are
described poorly. This part explains a detailed technique and the way it is practically applied.
The main index, SPI, for forecasting the dates in a few ways was calculated in the previous part. This
index can be calculated at any level of aggregation: both for an individual activity and for work
packages combined on the ground of various analytical attributes [1, 2]. Moreover, this index can be
calculated at any required level of details along the timeline, provided that the interval to determine
this index is not less than the frequency of gathering EV actuals. The next step is proper extrapolation
of this index to the remaining scope of work.
First of all, the analytical work packages are identified for further calculation of the averaged SPI in
order to apply this SPI to the remaining scope of work in terms of the same analytical work packages.
Two major approaches were discussed in the process of developing the technique:
 Calculating SPI for each Contractor. In this case, the proposal is to calculate the averaged SPI
for all activities of the selected Contractor, based on the actuals. Then during forecasting
this calculated index is applied to the remaining scope of work of the Contractor by
multiplying the duration of the remaining scope of work of the Contractor by SPI.
 Calculating SPI for main types of activities. In this case, the proposal is calculate the
averaged SPI for all activities within certain type of activities, based on the actuals. Then
during forecasting this calculated index is applied to the remaining scope of work of this
certain type by multiplying the duration of the remaining scope of work of this certain type
by SPI. In such case, the two-level in-house dictionary describes types of activities. The first
level is represented by main types of activities: receipt of Initial permissive documentation,
performance of Design and survey activities, performance of Construction and installation
activities, performance of Procurement activities, performance of Field supervision
activities, performance of Commissioning activities. At the second level, each activity is
broken down into more detailed types of activities, such as early works, installation of
drainage facilities, ventilation [3].
Both approaches described above have their advantages and disadvantages. The advantages and
disadvantages of the first approach are given below:
Advantages:
 Often a Contractor performs a series of activities (i.e. various types of activities) in a project
for a long period of time, that is why to calculate SPI index, a vast scope of data can be used
and forecasts can be built for a long time ahead (for the whole remaining scope of work of
this Contractor).
 The calculated SPI index allows evaluation of a Contractor from the viewpoint of meeting
the construction dates. Then management decisions are made with respect to certain
Contractors, even replace the Contractor, if required.
 This technique allows maintaining a Dictionary of involved Contractors and their respective
SPI indices. This information can be taken into account when selecting a Contractor for
future projects.
Disadvantages:

 In practice, the accuracy of planning and the degree of meeting the planned dates mainly
depends on the type of activity and project type, not on the Contractor.
 If a major Contractor needs to be selected then this technique means only averaging SPI
index for all project activities, which negatively affects the accuracy of forecasting.
 Business in Russia and Commonwealth of Independent States countries requires that many
similar projects are executed in remote areas. Moreover, large territory of countries makes
it impossible to mobilize a lot of the Contractor’s full-time staff and equipment to the site.
Therefore, the main resources for any of the selected Contractors will be the resources,
which are localized in the areas adjacent to the construction site. It means that labor
resources and equipment will be mainly the same regardless of the selected Contractor. This
somehow eliminates the effect of the contractor-related SPI.
The advantages and disadvantages of the second approach are given below:
Advantages:
 In practice, the accuracy of planning and the degree of meeting the planned dates mainly
depends on the type of activity and project type, not on the Contractor. Therefore, use of
activity-related SPI index gives more accuracy during forecasting.
 This technique allows maintaining one in-house dictionary of activity types and apply it at all
project stages for forecasting real dates of activities performance, which are not contractor-
related. It can be applied at the earliest project stages when the Contractor is not selected
yet.
 This technique is efficiently applied when one major Contractor is involved.
Disadvantages:
 Many efforts need to be invested to develop and update one dictionary of activity types
with respective SPI indices.
 Types of activities in a project are very tightly localized in one time period, therefore
accuracy of forecasting decreases, since forecast for a specific type of activities can be built
correctly only before activities of this type are completed.
 It is more difficult to make management decisions with respect to certain Contractors based
on activity-related SPI indices. Additional reports need to be generated to evaluate
performance of each Contractor. This is because often a Contractor performs a few types of
activities.
Any of the above approaches on calculation and use of SPI index can be applied depending on the
project type and conditions of the project execution. However, an important advantage of
contractor-related SPI approach is simplicity, which is extremely important at early stages of
implementing the technique of forecasting project execution dates into the practice of project
management in a Company. Therefore, it is the contractor-related SPI approach, which is currently
mainly applied.
The technique of SPI time-averaging is determined after defining the approach to itemize analytical
groups to calculate averaged SPI.
To implement time-averaging, the previously introduced SPI and pSPI indices were calculated for
every time period, for which earned value actuals were calculated and then arithmetic mean values
were calculated from the activities start to the data date:
𝑎𝑆𝑃𝐼 𝑥 =
1
𝑐𝑇
∗ ∑ 𝑎𝑆𝑃𝐼 𝑥𝑡
𝑐𝑇
𝑡=1 (Eq 13)

aSPIx – time-averaged SPI for the whole duration of activities performance by ‘x’ Contractor
cT – number of time periods from the start of activities performance to the data date
aSPIxt – contractor-averaged SPI for the ‘t’ time period.
For pSPI index accordingly:
𝑎𝑝𝑆𝑃𝐼 𝑥 =
1
𝑐𝑇
∗ ∑ 𝑎𝑝𝑆𝑃𝐼 𝑥𝑡
𝑐𝑇
𝑡=1 (Eq 14)
apSPIx – time-averaged pSPI for the whole duration of activities performance by ‘x’ Contractor
cT – number of time periods from the start of activities performance to the data date
apSPIxt - contractor-averaged pSPI for the ‘t’ time period.
The approach described above allows the most accurate calculation of the aSPIx and apSPIx indices.
Finally, for each ‘x’ Contractor the schedule performance index, averaged for all reporting time
periods from the project start, is obtained.
arSPI 𝑥 =
aSPI 𝑥+apSPI 𝑥
2
(Eq 15)
Now this index needs to be applied to each remaining activity, which ‘x’ Contractor will perform in
the project. The planned duration of the remaining activities is multiplied by arSPIx index and the
project schedule is calculated. Practical application of this approach reveals that averaging arSPIx
index equally along the whole timeline is not a very good decision, since significant correlation occurs
between arSPIx index and a season if activities are performed in a region with severe climatic
conditions. To develop this approach further arSPIx index is averaged for the following major seasons:
winter, summer and autumn/spring.
Software package, which includes Oracle Primavera P6®and PM.BI2
solutions, is used to forecast the
project execution dates.
Oracle Primavera P6® is used to develop the initial project schedule, to enter the activities planned
dates and cost, to update schedules, and to calculate EVM traditional indices. Oracle Primavera P6®
defines the following parameters for each activity of the schedule [3]:
 Planned dates of performance
 Planned cost of activity
 Contractor for activity performance
 Type of activity (in accordance with in-house dictionary of activity types)
 If project activity is critical or near critical.
2 This solution is a BI-system based on Microsoft SharePoint® and Microsoft SQL® integrated
with Primavera P6®. Microsoft®, Microsoft SharePoint®, and Microsoft SQL Server® are either
registered trademarks or trademarks of Microsoft Corporation in the United States and/or other
countries.

EV value is determined during the schedule update. All these values are imported to the PM.BI
system broken down into the time periods, and the system calculates the following derived values:
 mEV for all activities and for all time periods to the data date
 arSPIx value for each ‘x’ Contractor
If the Contractor for performance of the future activities is either not selected yet or selected but no
actuals were available to calculate its arSPI index, then PM.BI calculates contractor-averaged arSPI
index by means of plain averaging:
𝑎𝑟𝑆𝑃𝐼 =
1
𝑋
∗ ∑ 𝑎𝑟𝑆𝑃𝐼 𝑥
𝑋
𝑥=1 (Eq 16)
arSPI –arSPIx index averaged for all Contractors
X – overall quantity of project Contractors, for which actuals are sufficient to calculate arSPIx index.
As soon as PM.BI calculates all arSPIx values, they need to be exported to Oracle Primavera P6® for
each future activity performed by ‘x’ Contractor. Thus, a new user field ‘arSPIx’ is created for
activities in Oracle Primavera P6®. After this user field is filled by current arSPIx values, then a project
with ‘What-If’ status is created in the system, and forecasted duration of each activity is estimated by
means of global replacement:
eDix=pDix* arSPIx (Eq 17)
eDix – forecasted duration of future ‘i’ activity, performed by ‘x’ Contractor
pDix - planned duration of future ‘i’ activity, performed by ‘x’ Contractor
After forecasted duration of all future activities is estimated, then project schedule needs to be
recalculated and the forecasted schedule needs to be analyzed.
Figure 9 gives a general view of one possible report to analyze the obtained results. The report
contains the following curves:
PV (t) – planned earned value curve;
EV (t) – actual earned value curve (optimistic);
mEV (t) – actual modernized earned value curve (pessimistic);
ceEV (t) – forecasted earned value curve for current plan, not taking SPI indices into account
eEV (t) – forecasted modernized earned value curve, taking into account extrapolation of arSPIx index
to the remaining scope of project work.

Figure 9. Resulted curves
The presented report depicts the actual current project status in the context of manipulation by the
Contractor and also allows project completion date forecasting. These reports provide unbiased
project information and urge the Contractor to adhere to the schedule and not game the EVM
system through falsified reduction of project execution dates.

8 Conclusion
This article discusses the approaches to apply EVM indices to technology intensive production
facilities construction projects. Since the major and the most stringent constraint in implementing
such projects is schedule restriction, it means that the main objective of the solutions above is to
ensure project implementation in accordance with scheduled dates. The described methodology
contains three key parts:
 Planning and monitoring of the whole design-fabrication-delivery cycle of major equipment,
where certain approaches are applied to motivate the Contractor for reduction of execution
dates for the whole cycle, not parts of it. This technique provides a ‘smoothened’ earned
value progress S-curve, which makes it possible to calculate SPI index broken down into the
time periods.
 Use of modified earned value index – mEV. This index provides the manager an objective
picture on project progress, excluding possible attempts of manipulation with traditional
EVM indices by the Contractor. Moreover, this index calculates realistic SPI index.
 Forecasting project execution dates taking into account current dynamics of project
execution. Forecasting is based on calculating SPI index of performed activities with respect
to Contractors or activity types and further extrapolation of this index to the remaining
scope of work.
The following positive effects were obtained after practical application of this methodology:
 Project stakeholders receive unbiased information on project progress.
 Contractor is motivated to adhere to the agreed approach of activities performance and to
the agreed plans.
 Contractor is motivated to gain real reduction of project execution dates instead of
reduction falsified at early project stages.
In practice of project management the described approaches can be applied as a whole and
independently, depending on the Company current needs and its maturity level.
The article describes techniques and approaches with respect to technology intensive production
facilities construction projects, however the presented approaches can be used in other types of
projects. In particular, mEV index and respective project execution dates forecasting can be applied
in IT project. In those projects, arSPIx index can be associated with a certain developer, tester,
consultant, etc.
Further development of the presented methods will be aimed at increase of forecasting accuracy, in
particular, at increase of arSPIx index estimation accuracy and combination of approaches to
calculate SPI indices with respect to Contractors and types of activities, and aimed at other important
conditions to be taken into account during project execution.

9 Sources
1. Kolosova E.V, Novikov A.V.,Tsvetkov A.V.
2000
Earned Value Method in the Operational Management of the Projects
First Edition
2. Joel M. Koppelman, Quentin W. Fleming
Earned Value Project Management, 3rd Edition
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2012
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2009
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6. AACE Tech Board
2013
Recommended Practice 10S-90—AACE Glossary and Terms
Oct 23, 2013 AACE Recommended Practices
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