1. Knowing how our project is performing means knowing how our Cost,
Schedule, and Technical Performance is performing according to Plan.
Performance measurement is one of 5 Immutable Principles of Project Success

2. 5 Process Areas of any Successful Project
 
Identify Capabilities Elicit Technical &
needed to achieve the Operational Requirements
project objectives or the
particular end state for a needed for the system
specific scenario. capabilities to be fulfilled.
Apply Continuous Risk
Management to each
 Performance Based Management
process area
Execute Performance Establish Performance
Measurement Baseline Measurement Baseline time–
activities while assuring phased network of work
technical performance is activities describing the
met work to be performed
 

3. All Successful Projects Are Based On
5 Immutable Principles † …
1. What Does DONE Look
Like?
2. What is the path to
DONE?
3. Do We Have Enough
Time, Resources, And
Money To Get To DONE?
4. What Impediments Will
We Encounter Along The
Way To DONE?
5. How Do We Know We
Are Making Progress
5 Immutable Principles of Project Management, Glen B. Alleman, Carnegie
Mellon Silicon Valley, January 31st and February 1st, 2011 Toward DONE? 3/22

4. We Need To Address All Aspects of Project
Success†
 By their very nature, Programs are risky.
The
 Successful program management is risk management.
Situation
 Program management must be about avoiding surprises.
 Traditional program management assumes technical and
The
program processes drive outcomes.
Problem
 Focusing on process alone has failed in the past.
 Program management is about avoiding surprises.
The Need
 Measures of physical percent complete are mandatory.
 Organizations execute projects.
The
 Adapting the organization culture to the project paradigm
Context
increases the probability of success.
 Look to the final and intermediate outcomes as measures
The
of increasing the probability of success.
Solution
 Earned Value Management reveals surprises.
† Project Management Case Study, Pierre Bonnal, CNAM IIM MBA Program, June 2004
4/22

5.  We need a plan to make progress against,
without a planned measure of progress we’re
passing time and spending money.
 We need to know what are the units of
measure toward this plan
 Agile uses working software, which is fine.
 But money is universal unit of measure.
 Measuring progress by earning value of the
product is a really good measure.
Earned Value is not business Value, that is different measure

6.  If the performance of our
project is like cycling, then
we plan to ride at a planned
pace – say 20 mph.
 If our group maintains the
target pace of 20 mph they
can look at their watches to
determine if we’re on pace
to complete our 40 mile ride
in 2 hours.
 30 minutes into the ride we’re still all riding as a group. Nice
sustainable pace, we’ll make the 40 miles in our planned
time – no problems so far.

7.  But some of us are starting to get
tired. We’re falling to the back of
pace line.
 Instead of our planned 20 mph,
we’ve dropped to 19 mph, still
moving along pretty well, but a gap
is starting to open up.
 As time passes this gap is opening more – we’re falling off the
back of pace line – and we’re gonna get dropped if we don’t do
something soon.
 We’re Underperforming to our Plan
 For the invested effort (ACWP) we’re under delivering value (BCWP)
against our planned value (BCWS).

8.  If we keep riding at our 19 mph pace,
the gap will continue to open and
we’ll soon be all alone.
 Our planned performance (BCWS) has
fallen off the actual pace (BCWP) and
we need to do something about it,
and we need to do it fast.
 If we can get back on pace (BCWP) – go back to our planned 20
mph – this will be good, but the gap that opened up will
remain (SPI < 1.0).
 We’ll still have the gape between us and the peloton.
 Our riding group is now far ahead.
 We’re not falling further behind, but we’re still behind.
 We’ll need to pick up the pace (SPI > 1.0).

9.  In order to close the gap,
riding at our planned 20
mph pace is not enough.
 We have to ride faster –
say a 22 mph to close the
gap to rejoin the peloton.
 Let’s assume we have the strength, skills, stamina, and
mental fortitude needed to pick up the pace and ride a 22 mph
pace to try to regain contact with the group.
 Exactly how to do this will require some thought:
 Simply peddle faster – steady increase in effort.
 Sprint to close the gap on an uphill section.
 Ride faster down hill.
 Find someone to pull us to the Peloton in a draft.

10.  In order to close the gap,
we need to find the
needed actions that put
us back on pace – 20 mph.
 But no matter how we
need to ride faster – at
22mph.
 Two things are actually needed:
 Close the gap – ride at 22 mph to regain contact.
 Once reconnected with the group, keep on planned pace –
maintain 20 mph.
 Easy in concept – hard in the execution.

11. Lots of concurrent activities
The planned pace is BCWS for the group and for individual “packages of work”
The actual pace is BCWP for the group and for the individual “packages of work”
The work effort needed to ride at the planed pace is ACWP.
The effort need to close the gap for the group and the individual TCPI.

12.  Budgeted Cost for Work Scheduled (BCWS)
 The planned cost in hours and / or dollars.
 Budget Cost of Work Performed (BCWP)
 The planned value of the work delivered.
 When BCWS = BCWP we’re staying with the Peloton.
 This is the “Earned Value” over the period of
performance.
 Actual Cost of Work Performed (ACWP)
 The cost in dollars or hours to “earn” the Earned Value
(BCWP).

13. BCWS
BCWP
ACWP
The same work component is in all three Earned
Value variables
† CPM–300: Principles of Earned Value Implementation, Lesson E: Developing the Performance
Measurement Baseline, Dennis W. White, IPMC 2002 Fall Conference, Professional Education Program.

14. Time
Now
We’ve spent
Planned Cost
more than
planned Actual Costs
Measuring budget
performance is useful for the
COST
Spending Gap financial staff.
$ But program managers need
insight into the delivery of
technical value.
So measuring cost variance is
not that useful without know
technical progress.
TIME
Time Now

15. Time
Now
Planned Costs
We’ve made less
progress than Actual Costs
planned Earned Value
It’s the Earned Value
COST
measurement we’re after.
$ We need to earn our budgeted
Progress Gap cost.
The EV represents the
delivered value to the
customer, not just the
consumption of resources.
TIME
But the technical performance
is still missing
Time Now

16. EAC: Estimate at Complete
TAB: Total Allocated Budget
Management Reserve
BAC: Budget at Complete
PMB
The Performance
Measurement Baseline
Schedule Variance (PMB) represents of the
Cost
program “on baseline”
$ ACWP
Variance
BCWS
BCWP
time Time Completion
Now Date

17. TPM
Upper Limit
Planned Profile
Current Estimate
Planned Value
Mean To Between Failure
Threshold
Variance Lower Limit
Achieved to Date
Milestones
Time = Program Maturity

18.  When a gap opens in cost or schedule, it
needs to be closed.
 Knowing the CPI and SPI is necessary but not
sufficient.
 We need to know how much better we must
perform to close the gap:
 Have much faster do we need to ride to get back
to the Peloton?
 How much more efficient do we need to be for
each dollar spent to get back on schedule?

19.  The To Complete Performance Index (TCPI)
index states how much better we need to
perform to close the gap:
BAC  BCWP
TCPI 
EAC  ACWP
 The TCPI is an indicator of how our
performance needs to improve to close the
gap between the planned performance and
the actual performance.

20.  If the TCPI is > 1.0 something has to change
to stay on schedule and budget:
 Reduce scope – do less work (BCWP) for the same
effort.
 Reduce rework – reduce breakage
 Increase efficiency – do more work (BCWP) with
the same (ACWP).

21.  When a gap opens …
 Getting back on the original
plan (pace) is necessary but
not sufficient.
 We have to perform better
(faster than plan) in order to
close any gaps that opened
while we were falling
behind.
 Knowing the level to which we need to perform to
close the gap is the To Complete Performance
Index (TCPI) …
 Being able to perform at this level requires we
understand what went wrong and how to fix it.

22. Performance Based Management
Puts You On the Road to Success …
What does done look like?
How do we get there?
Are there enough resources?
What are impediments to progress?
How do we measure progress?