Earned Value Management
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Program and Project Management Enablement
Program and Project Management Enablement
April 2010
Contact: jjacobi@scottmadden.com
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What is Earned Value Management and Why Do I Need It?
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Complex projects have a need for accurate and consistent status information 70% of large projects are over budget and behind schedule1
50% of all projects finish at 190% of their initial budget1
And some, after huge investments of time and money, are simply never complete1
EVA compares the PLANNED amount of work with what has actually been COMPLETED to determine if COST,
SCHEDULE, and WORK ACCOMPLISHED are progressing as planned
Work is “earned” or credited as it is completed
Earned Value Management (EVM) is needed because
— There are different measures of progress for different types of tasks
— There is a need to “roll up” progress of many tasks into an overall project status
— There is a requirement for a uniform unit of measure (dollars or work-hours)
Additionally, EVM provides an early warning signal for prompt corrective action
Earned Value Management is required for ARRA projects and DOE Grants, but is also a premium project management
tool in its own right
ScottMadden has built, managed, and evaluated Earned Value systems on behalf of our clients –
with projects as large as $250 million in value
Copyright © 2010 by ScottMadden. All rights reserved.
Note 1: The Standish Group
Why is Earned Value Different?
Why is Earned Value Different?
Integrated project performance is determined by the three parameters displayed in the “Performance Triangle” below
All three dimensions of project performance must be monitored and controlled to ensure that all project deliverables are attained
Scope
Schedule
Cost/Resources
Traditional project management often reverts to “pick any two;” EVM is a way to look at all three
simultaneously a true measure of project effectiveness
Earned Value Basics
Earned Value Basics
Earned Value Management (EVM) is a systematic approach to the integration and measurement of cost, schedule, and
technical (scope) accomplishments on a project or task
The Earned Value Management system includes:
In comparing Earned Value Management to Traditional Management, Traditional Management does not allow for analysis of the
physical amount of work performed. Earned Value Management allows for both schedule and cost analysis against physical amount of work performed
Project Schedule
WBS/OBS
Earned Value (EV) Actual Cost (AC)
Metrics and performance measurements
Forecasting
Integrated baseline review
The inputs required for an EVM system include:
Work Breakdown Structure (WBS)
Organizational Breakdown Structure (OBS)
Schedule Resource Planning
Define/Assign Schedule/Budget
Establish Baseline Performance Measurement
Organizational Breakdown Structure (OBS)
Project schedule
Time-phased baseline budget
Cost/resource control plan
Change control plan
$$$
Early Warning & Detection • Informed Management Decisions • Corrective Actions • Recovering Planning Earned Value Management system
The outputs required for an EVM system include:
Reporting requirements
Accounting System
Copyright © 2010 by ScottMadden. All rights reserved.
Proper analysis of reports
Earned Value is a National Standard
Earned Value is a National Standard
Earned Value Management (EVM) has become an ANSI standard primarily driven by PMI (Project Management Institute) sponsorship since the 1990’s, and is prominently included in PMBOK
EVM is a system that manages project cost and schedule performance measurements as integrated elements and not as
EVM is a system that manages project cost and schedule performance measurements as integrated elements and not as
separate entities
— EVM is a primary element of the all government sponsored projects, but is also utilized by major construction
companies, nuclear organizations, and some fossil organizations
EVM is essentially based on three basic metrics:y
— Budgeted Cost of Work Scheduled –BCWS
• How much work (in terms of both time and money) is planned for the project?
— Actual Cost of Work Performed –ACWP
• How much did that same work actually cost (labor, materials, etc.) to perform?y ( ) p
— Budgeted Cost of Work Performed (or Earned Value) – BCWP (or EV)
• What was/is the value of the work that was/is planned for a given time period in the project schedule?
The BCWS can be depicted as an “S” curve with cost on the vertical axis and schedule (time) on the horizontal axis
The BCWP is the % task complete multiplied by the task’s total project budget (BAC or Budget at Completion)
The ACWP (actual cost incurred) will be reported from the company financial system at a total project level
Earned Value is the standard for all federal projects including all stimulus work, and is an industry
standard used by large construction EPC contract management firms
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Earned Value Starts With the WBS and OBS
Earned Value Starts With the WBS and OBS
WBS
WBS =
OBS =
Organization Breakdown Structure
Work Breakdown Structure
The Work Breakdown Structure (WBS) is
a tool that defines a project and groups the project’s discrete work elements in a the project s discrete work elements in a way that helps organize and define the total work scope of the project
WBS provides the necessary framework
for detailed cost estimating and control along with providing guidance for schedule development and control.
Control Accounts (CA),
where work scope,
schedule and cost are
Additionally the WBS is a dynamic tooland can be revised and updated as needed by the project manager
schedule and cost are
planned and managed
The Organization Breakdown Structure
OBS
(OBS) indicates the organizational relationships and is used as the framework for assigning work responsibilities
The OBS is structured by Responsible
Department and then by Performing Department at the lowest level The Department at the lowest level. The Performing Department level is where the responsibility and resource needed to accomplish the project will be assigned
Copyright © 2010 by ScottMadden. All rights reserved.
Calculating Earned Value Metrics
Calculating Earned Value Metrics
There are a variety of useful metrics that can be generated within the EVM system – all derived from the three basic measurements of BCWS, ACWP, and BCWP
Metrics
— Basic
• BCWS = Budgeted Cost of Work Scheduled
• ACWP = Actual Cost of Work Performed
• ACWP Actual Cost of Work Performed
• BCWP (or EV) = Budgeted Cost of Work Performed or Earned Value
• BAC = Budget at Completion (total dollars budgeted for project)
— Variance
• CV (Cost Variance) = BCWP – ACWP
• CV (Cost Variance) BCWP ACWP
• CV % (Cost Variance %) = (BCWP - ACWP) / BCWP
• SV (Schedule Variance) = BCWP - BCWS
• SV % (Schedule Variance %) = (BCWP – BCWS) / BCWS
— Performance IndicesPerformance Indices
• CPI (Cost Performance Index) = BCWP / ACWP
– Is the work tracking above/below budget given the actual work completed to date?
• SPI (Schedule Performance Index) = BCWP / BCWS
– Is the work tracking above/below schedule given the actual work completed to date?Is the work tracking above/below schedule given the actual work completed to date?
Managing through a well-constructed Earned Value system will provide the ability for project
managers to identify schedule and cost issues early enough to positively react
EVM Dashboard Displays From ScottMadden Toolkit
EVM Dashboard Displays From ScottMadden Toolkit
Project-Level Summary
Basic Metrics Status Metrics
Summary (BCWP) Budgeted Cost of
Work Performed
(BCWS) Budgeted Cost of Work Scheduled
(ACWP) Actual Cost of Work
Performed (BAC) Budget at Completion
% Scheduled: (BCWSc/BAC)
% Complete: (BCWPc/BAC)
Proj X $0 $0 $0 $21,117,000 0.0% 0.0%
Variance Metrics Performance Indices
Data Updated: xx/xx/xxxx Reporting Month: xx/xxxx (CV) Cost Variance: (BCWP-ACWP) (SV) Schedule Variance: (BCWP-BCWS) (CV %) Cost Variance %: (BCWP-ACWP/BCWP) (SV %) Schedule Variance %: (BCWP-BCWS/BCWS)
(CPI) Cost Performance Index: (BCWP/ACWP) (SPI) Schedule Performance Index: (BCWP/BCWS) ( ) ( ) ( ) ( ) ( ) ( ) $0 $0 0.0% 0.0% 0.00 0.00 $17,500,000 $20,000,000 $22,500,000 $7,500,000 $10,000,000 $12,500,000 $15,000,000 $ , ,
The Blue line is the BCWS
$-$2,500,000 $5,000,000
Earned Value Management
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Terminology
Earned Value Management Terminology
EVMS BASIC COMPONENTS
AC = actual cost = ACWP = actual cost of work performed
EV = earned value = BCWP = budgeted cost for work performed
PV = planned value = BCWS = budgeted cost for work scheduled
BAC = cumulative PV = cumulative BCWS = budget at completion
VARIANCES
CV =EV -AC = BCWP -ACWP = cost variance
SV = EV-PV = BCWP-BCWS = schedule variance
CV% = (EV-AC)/EV = (BCWP-ACWP)/BCWP = cost variance, percentage
SV% = (EV- PV)/PV = (BCWP- BCWS)/BCWS = schedule of variance, percentage
VAC = BAC EAC = variance at completion
VAC = BAC - EAC = variance at completion
OVERALL STATUS
% scheduled = PVcum /BAC = BCWScum/BAC
% complete = Evcum/BAC = BCWPcum/BAC
% b d t t AC /BAC ACWP /BAC
% budget spent = ACcum/BAC = ACWPcum/BAC
WR = BAC -EVcum = BAC -BCWPcum = work remaining
BR = BAC -ACcum = BAC -ACWPcum = budget remaining
PERFORMANCE INDICES
CPI = EV/AC = BCWP/ACWP = cost performance index
SPI = EV/PV = BCWP/BCWS = schedule performance index
TCPIBAC = WR/BR = to complete performance index, BAC
Integrating EVM Into Other ScottMadden Project
Management Tools
F.G.P. PROJECTS DRIVING BOARD
Status Tendency (previous)Tendency (actual) TIME COST (Euro) Open issues
Dashboard
Project
Management
Tools Overview
Management Tools
Order Project Description ManagerProject Type Impact 30 -A pr-0131-M ay-01B as eline S tart B a seline
End F o reca st
End B udget
A ctua l F o rec ast& Critical Points
CMFR0027 PRGT00PB Pow erbrain Sorrenti F M 1-Nov-00 31-Aug-01 31-Aug-0126,550 26,085 26,550 CMEV0007 PRGT1572 Impl. Verrone PlantSerafino F M 15-Jan-01 28-Sep-01 28-Sep-0182,633 0 82,633 CMSP0015 PRGT2982 HRMS new . Devel. Pukly F H 1-Jan-01 31-Dec-01 31-Dec-01 108,785 0 108,785 CMSP0015 PRGT3044Web professional Pukly F M 15-Apr-01 31-Dec-01 31-Dec-0171,975 0 71,975 CMSP0039 PRGT0017 Estesa Di Carlo O L 7-May-01 30-Jun-01 30-Jun-0123,750 0 23,750 CMSP0015 PRGT3047 I.I.S. HR FGP Pukly F L 1-Jan-0131-Jul-01 31-Jul-01 77,468 0 77,468 CMSP0028 PRGT0014 Engine Sperim. Appl. Brezigar O M 12-Apr-01 31-Dec-01 31-Dec-01 158,479 0 158,479
Total 549,640 26,085 549,640
Legend
T C l (O) I tHi h (H) St t C iti l T d Fl t
Risk Map
Low
Data Migration and Go-Live Change Management
Project Governance Interfaces
Type Compulsory (O) ImpactHigh (H) Status Critical Tendency Flat
Firm (F) Medium (M) Medium Raising
Opportunity (O) Low (L) On track Falling
CODE NAME TYPE 28733
33000 38114 34303 36545 40949 25355 29058 33375 34678 36920 38489 25000 30000 35000 40000 45000
Baseline (Core) Baseline (Contingency)
Actual Forecast
Integrated Cost and Progress (EVM)
Project Scorecard (each project and a roll-up)
Value Project Documentation Resources Project Management Technological Architecture Application Legacy Systems ORDER XXX XXX Date 05/17/2001
PROJECT PRGTnnnn Implementation CompulsoryFirmOpportunity
Description: References Architecture
Client: Operating System: Windows NT
Client Legal Entity/Functions: IT Project Manager: HW Platform: Server Compaq NT
IT Client Manager: Data Base: TBD
User Legal Entity/Functions: IT Application Manager: IT Architect:
Impact on other Projects/Applications Notes Operating Costs Forecast
Operational: TBD
Maintenance: TBD
Milestones Issues
Start 28-Feb-01 Initial Budget 40,949
End (Baseline) 31-Mar-03 Actual 19,208 Open Issues 10
End (Estimate to date) 31-Mar-03 Total Cost Forecast 38,489
Expected gap 0.00% Expected gap -6.01% Closed Issues 20
Total Issues 30
Costs (Euro)
actual today
CODE NAME TYPE
ORDER XXX XXX Date 05/17/2001
PROJECT PRGTnnnn Implementation CompulsoryFirmOpportunity
Description: References Architecture
Client: Operating System: Windows NT
Client Legal Entity/Functions: IT Project Manager: HW Platform: Server Compaq NT
IT Client Manager: Data Base: TBD
User Legal Entity/Functions: IT Application Manager: IT Architect:
Impact on other Projects/Applications Notes Operating Costs Forecast
Operational: TBD
Maintenance: TBD
Milestones Issues
Start 28-Feb-01 Initial Budget 40,949
End (Baseline) 31-Mar-03 Actual 19,208 Open Issues 10
End (Estimate to date) 31-Mar-03 Total Cost Forecast 38,489
Expected gap 0 00% Expected gap 6 01% Closed Issues 20
Costs (Euro)
CODE NAME TYPE
ORDER XXX XXX Date 05/17/2001
PROJECT PRGTnnnn Implementation CompulsoryFirmOpportunity
Description: References Architecture
Client: Operating System: Windows NT
Client Legal Entity/Functions: IT Project Manager: HW Platform: Server Compaq NT
IT Client Manager: Data Base: TBD
User Legal Entity/Functions: IT Application Manager: IT Architect:
Impact on other Projects/Applications Notes Operating Costs Forecast
Operational: TBD
Maintenance: TBD
Milestones Issues
Start 28-Feb-01 Initial Budget 40,949
E d (B li ) 31 M 03 A t l 19 208 O I 10
Costs (Euro)
CODE NAME TYPE
ORDER XXX XXX Date 05/17/2001
PROJECT PRGTnnnnImplementation CompulsoryFirmOpportunity
Description: References Architecture
Client: Operating System: Windows NT
Client Legal Entity/Functions: IT Project Manager: HW Platform: Server Compaq NT
IT Client Manager: Data Base: TBD
User Legal Entity/Functions: IT Application Manager: IT Architect:
Impact on other Projects/Applications Notes Operating Costs Forecast
Operational: TBD
Maintenance: TBD
CODE NAME TYPE
ORDER XXX XXX Date 05/17/2001
PROJECT PRGTnnnn Implementation Compulsory FirmOpportunity
Description: References Architecture
Client: Operating System: Windows NT
Client Legal Entity/Functions: IT Project Manager: HW Platform: Server Compaq NT
IT Client Manager: Data Base: TBD
User Legal Entity/Functions: IT Application Manager: IT Architect:
Impact on other Projects/Applications Notes Operating Costs Forecast
Operational: TBD 15000 19108 21356 25130 15020 19208 21531 0 5000 10000 15000 20000 25000 Ge n 0 1 Fe b 0 1 Ma r 0 1 Ap r 0 1 Ma g 0 1 Gi u 0 1 Lu g 0 1 Ag o 0 1 Se t 0 1 Ot t 0 1 N o v 01 D ic 01 Ge n 0 2 Fe b 0 2 Ma r 0 2 Ap r 0 2 Ma g 0 2 Gi u 0 2 Lu g 0 2 Ag o 0 2 Se t 0 2 Ot t 0 2 N o v 02 D ic 02 Ge n 0 3 Fe b 0 3 Ma r 0 3
DOE PVMS (for stimulus projects)
Data Migration and Go-Live Resources Change Management Project Governance High Low High Manageability Project Management Technological Architecture Application Legacy Systems Interfaces Project Documentation
% Open Issues/Total Issues 33.33%
Overall Project Status Best Practice Adherence
Impact: Supplier:
Project Characteristics 50%100%150%200%
total cost forecast
50% 100% 150%200%
total duration forecast y
CRITICAL MEDIUM GOOD HIGHMEDIUMLOW 0 1 2 3 4
Expected gap 0.00% Expected gap -6.01% Closed Issues 20
Total Issues 30
% Open Issues/Total Issues 33.33%
Overall Project Status Best Practice Adherence
Impact: Supplier:
Project Characteristics 50% 100%150%200%
total cost forecast
50% 100%150% 200%
total duration forecast
actual today
CRITICAL MEDIUM GOOD HIGHMEDIUMLOW 0 1 2 3 4
End (Baseline) 31-Mar-03 Actual 19,208 Open Issues 10
End (Estimate to date) 31-Mar-03 Total Cost Forecast 38,489
Expected gap 0.00% Expected gap -6.01% Closed Issues 20
Total Issues 30
% Open Issues/Total Issues 33.33%
Overall Project Status Best Practice Adherence
Impact: Supplier:
Project Characteristics 50%100%150%200%
total cost forecast
50% 100% 150%200%
total duration forecast
actual today
CRITICAL MEDIUM GOOD HIGHMEDIUMLOW 0 1 2 3 4
Milestones Issues
Start 28-Feb-01 Initial Budget 40,949
End (Baseline) 31-Mar-03 Actual 19,208 Open Issues 10
End (Estimate to date) 31-Mar-03 Total Cost Forecast 38,489
Expected gap 0.00% Expected gap -6.01% Closed Issues 20
Total Issues 30
% Open Issues/Total Issues 33.33%
Overall Project Status Best Practice Adherence
Impact: Supplier:
Costs (Euro)
Project Characteristics 50% 100%150%200%
total cost forecast
50% 100%150% 200%
total duration forecast
actual today
CRITICAL MEDIUM GOOD HIGHMEDIUMLOW 0 1 2 3 4
Maintenance: TBD
Milestones Issues
Start 28-Feb-01 Initial Budget 40,949
End (Baseline) 31-Mar-03 Actual 19,208 Open Issues 10
End (Estimate to date) 31-Mar-03 Total Cost Forecast 38,489
Expected gap 0.00% Expected gap -6.01% Closed Issues 20
Total Issues 30
% Open Issues/Total Issues 33.33%
Overall Project Status Best Practice Adherence
Impact: Supplier:
Costs (Euro)
Project Characteristics 50%100%150%200%
total cost forecast
50% 100%150% 200%
total duration forecast
actual today
CRITICAL MEDIUM GOOD HIGHMEDIUMLOW 0 1 2 3 4
PROJECT PRGTnnnn Implementation MONTHLY STATUS REPORT
REF. 1 / 24
MONTH MARZO 2001
PHASE PROTOTIPAZIONE PROJECT STATUS
E’ stato definito il System Integrator. E' stato definito il Piano di progetto.
E' stata impostata la proposta di Struttura Organizzativa di Progetto. E' stata impostata la baseline per i costi di Progetto Sono state attivate le Procedure di Gestione Scope Change Request, di Gestione Issue List e di Gestione della Documentazione. E' stato Definito il tool di gestione della documentazione di Progetto. E' stata impostata l'Analisi del Rischio.
OPEN ISSUES ACTIONS RESPONSILE DUE DATE
1 - L'Ambiente di Prototipazione non è disponibile. Predisporre ambiente prototipazione IT Project Manager 06/04/01
ORDER COMM NameComm BASELINE VS ACTUAL VS FORECAST F.G.P.
PROJECT PRGTnnnn Implementation
COST (Euro)
Cost Type Cost Element Baseline Actual Forecast Notes
Development & Implementation 18,550 2,434 18,550
External Resources 0 0 0 O ti l/A li ti l M t 3 783 3 783 3 783 S yst em v e lop m e nt Back to index
DOE PVMS (for stimulus projects)
Costs Detail
p p p p p j g / /
NEXT STEPS
Ufficializzazione Struttura Organizzativa di progetto. Definizione dei componenti dei team da parte dei Responsabili/Referenti. Verifica profilo di spesa e budget Architettura Tecnologica. Impostazione attività di Quality Assurance.
APPROVED CHANGE REQUESTS
Nr. Description Approval Allocated
Date Contingency
Operational/Applicational Mngt 3,783 3,783 3,783 Total System Development 22,333 6,217 22,333 HW/SW Design & Consultancy 1,572 1,572 1,572
HW/SW Acquisition 6,500 6,500 6,500I costi relativi all'architettura tecnologica saranno dettagliati al termine
SW Licences 3,145 3,145 3,145della fase di definizione dei requisiti
Total HW/SW Mgnt 11,217 11,217 11,217 Total External Costs 33,550 17,434 33,550 Total Internal Resources 4,564 1,674 4,564 Partial Project Total 38,114 19,108 38,114
Contingency 2,835 100 375Sono state attivate 3 Scope Change Request
Overall Project Total 40,949 19,208 38,489
HW /S W M a na g e m e nt S De v Schedule
