Earned Value Analysis
What Is It ?
Why Do I Need It ?
How Do I Do It?
Todays Situation
Need for accurate and consistent status
information
Numerous complex (and interrelated)
projects
Projects with many WBS activities
Virtual offices
Diverse technology platforms
Theres Room For Improvement
70% of projects are:
Over budget
Behind schedule
52% of all projects finish at
189% of their initial budget
And some, after huge
investments of time and
money, are simply never
comple
3
How to answer the
question: Have we done what
we said wed do?
% complete
estimating
Budget spent
work done
time elapsed
% of
% of
% of
subjective, incomplete
draws false
conclusions
Enter Earned Value
Analysis
Earned Value Analysis is:
an industry standard way to:
measure a projects 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.
5
Whats more Important?
Knowing where you
are on schedule?
Knowing where you
are on budget?
Knowing where you
are on work
accomplished?
6
EVA Integrates All Three
It 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 needed
because...
Different measures of progress for
different types of tasks
Need to roll up progress of many
tasks into an overall project status
Need for a uniform unit of
measure (dollars or work-hours).
Earned Value needed
because...
Provides an Early Warning signal for
prompt corrective action.
Bad news does not age well.
Still time to recover
Timely request for additional funds
And One More
Reason
Why You Need EVA
10
Because You Gotta !
These Set the Stage:
GPRA; 1993
FASA, Title V; 1994
Clinger-Cohen Act; 1996
And Then Along Came OMB! (Circular A-11,
Part 7)
"Agencies must use a performance based
acquisition management system, based on
ANSI/EIA Standard 748, to measure
achievement of the cost, schedule, and
performance goals."
11
OK, So What Is This
Stuff?
12
So, Is This Stuff New ?
Its been around since the sixties.
Cost/Schedule Control Systems
Criteria
(C/SCSC)
13
Examples of informal Earned Value
Analysis
Its done informally without realizing it.
30% time used,
30% $$ spent
So, if 30% of the work is done, I must be
OK ??
Shop floor estimates
Cost comparisons
Budget vs. Actual
14
Hows this project doing?
120000
100000
80000
Projected
60000
Actual
40000
20000
0
Jan-03
Feb-03
Mar-03
Apr-03
May-03
Jun-03
Jul-03
Aug-03
Sep-03
Oct-03
Nov-03
Dec-03
15
Lets Take A Look Under The
Hood
16
But First! - We gotta get
organized
EVA works best when work is
compartmentalized.
Compartmentalization is best achieved with
a well-planned Work Breakdown Structure.
So, how do I create a WBS for a really
complex project?
17
How am I gonna eat this
elephant?
Obviously in small
bites.
18
Proper WBS Design
One WBS per program
Deliverable-oriented
Work not in the WBS is out-of-scope
Each descending level represents more
detail
Full (and accurate) definition is key
Defined deliverable(s)
Timeframe for delivery of product
Total cost (direct and indirect) to deliver
product
19
A sample Work Breakdown
Structure
Serve Pizzas to Customers
Provide the
Place
Make the
Dough
Cook the
Food
Cook the
Sauce
Serve
Customers
(Others)
Build the Pizza
20
WBS Units are Work Packages
Lowest level WBS elements
Have an accompanying narrative
Have three measurable components
Scope of work to be accomplished
Total (direct and indirect) cost
Timeframe for completion
21
Control Account Plans
A CAP is essentially a Work Package with some
added features:
Assignment of responsibility
Organization
Individual
Division (if necessary) into lower-level Work
Packages.
Metrics for measuring EV performance
Milestones
% complete
Other
The sum of the CAPs constitutes the Performance
Measurement Baseline
22
Enough With the WBS Stuff
Already !
We came here to talk about Earned
Value.
23
Some New Terms
BCWS - Budgeted Cost of Work
Scheduled
ACWP - Actual Cost of Work
Performed
BCWP - Budgeted Cost of Work
Performed
24
Earned Value Definitions
BCWS: Budgeted Cost of Work
Scheduled
Planned cost of the total amount of work
scheduled to be performed by the milestone
date.
25
BCWS - Budgeted Cost of Work
Scheduled
120000
100000
80000
60000
BCWS
40000
20000
Dec-03
Nov-03
Oct-03
Sep-03
Aug-03
Jul-03
Jun-03
May-03
Apr-03
Mar-03
Feb-03
Jan-03
26
Earned Value Definitions
(cont.)
ACWP: Actual Cost of Work
Performed
Cost incurred to accomplish the work that has
been done to date.
27
ACWP - Actual Cost of Work Performed
120000
100000
80000
56000
60000
BCWP
ACWP
49000
40000
20000
Dec-03
Nov-03
Oct-03
Sep-03
Aug-03
Jul-03
Jun-03
May-03
Apr-03
Mar-03
Feb-03
Jan-03
28
Earned Value Definitions
(cont.)
BCWP: Budgeted Cost of Work Performed
The planned (not actual) cost to complete the
work that has been done.
29
BCWP - Budgeted Cost of Work
Performed
120000
100000
80000
BCWP
55000
60000
BCWS
49000
40000
20000
Dec-03
Nov-03
Oct-03
Sep-03
Aug-03
Jul-03
Jun-03
May-03
Apr-03
Mar-03
Feb-03
Jan-03
30
The Whole Story
120000
100000
80000
BCWS
56000
60000
BCWP
55000
49000
40000
ACWP
20000
Dec-03
Nov-03
Oct-03
Sep-03
Aug-03
Jul-03
Jun-03
May-03
Apr-03
Mar-03
Feb-03
Jan-03
31
Some Derived Metrics
SV: Schedule Variance (BCWP-BCWS)
A comparison of amount of work performed
during a given period of time to what was
scheduled to be performed.
A negative variance means the project is
behind schedule
CV: Cost Variance (BCWP-ACWP)
A comparison of the budgeted cost of work
performed with actual cost.
A negative variance means the project is over
budget.
32
Schedule Variance & Cost Variance
Schedule Variance = BCWP-BCWS
$49,000
- 55,000
SV = - $ 6,000
Cost Variance
= BCWP-ACWP
$49,000
56,000
CV = - $7,000
33
Some More Derived Metrics
SPI: Schedule Performance Index
SPI=BCWP/BCWS
means project is behind schedule
SPI<1
CPI: Cost Performance Index
CPI= BCWP/ACWP
means project is over budget
CPI<1
CSI: Cost Schedule Index (CSI=CPI x SPI)
The further CSI is from 1.0, the less likely project
recovery becomes.
34
Performance Metrics
SPI: BCWP/BCWS
49,000/55,000 = 0.891
CPI: BCWP/ACWP
49,000/56000 = 0.875
CSI: SPI x CPI
.891 x .875 = 0.780
35
Making Projections
Once a project is 10% complete, the
overrun at completion will not be less
than the current overrun.
Once a project is 20% complete,
the CPI does not vary from its current
value by more
than 10%.
The CPI and SPI are statistically accurate
indicators of final cost results.
Source: Defense Acquisition University
36
Making Projections
120000
103865
102000
90882
100000
80000
Today
BCWS
60000
BCWP
ACWP
40000
20000
Dec-03
Nov-03
Oct-03
Sep-03
Aug-03
Jul-03
Jun-03
May-03
Apr-03
Mar-03
Feb-03
Jan-03
37
Estimate to Complete
140000
120000
116,571
100000
102000
80000
60000
Today
BCWS
BCWP
ACWP
40000
20000
0
38
A New Criteria
Activities earn value as they are completed.
The value earned is the WBS budgeted cost of
the activity completed to date.
39
Value of Earned Value
Schedule Status
Reporting
Cost Status Reporting
Forecasting
40
But How Do I Do All This Stuff
?
With an Earned Value Management System
41
A-11, Part 7 Requires an
EVMS
. . . based on ANSI/EIA Standard 748
And what does that mean?
ANSI/EIA 748 provides a list of
guidelines
Organization
Planning, Scheduling, and Budgeting
Accounting Considerations
Analysis and Management Reports
Revisions and Data Maintenance
But, ANSI/EIA 748 doesnt identify
approved systems
42
A-11, Part 7 Requires an
EVMS
So where do I get one?
Buy a prepackaged one. (Lot of em
around)
Make your own.
Microsoft Project
Microsoft Excel
Or it could be as simple as this:
43
Requirements of Earned
Value
Proper WBS Design
Baseline Budget Control Accounts
Baseline Schedule
Work measurement by Control
Account
work-hours, dollars, units, etc.
Good Project Management
Practices
44
Shortcomings of Earned Value
Quantifying/measuring work
progress can be difficult.
Time required for data
measurement, input, and
manipulation can be considerable.
45
Summary
EVA & EVMS will help reduce guesswork in:
Measuring performance
forecasting
Need to get beyond misleading measures
of progress.
Reasons to use EVA and EVMS:
Good project management practice
OMB requirement
Incorporate into contracts
46
Earned Value
Resources
http://www.pmi.org/
http://www.acq.osd.mil/pm/
ANSI/EIA 748 is available from:
Global Engineering Documents
800-854-7179
47
Some Compliant Systems
Welcom Cobra
http://www.welcom.com/
Schedulemaker
http://www.schedulemaker.com/
Planisware OPX2
http://www.planisware.com/
RiskTrak
http://www.risktrak.com/index.htm
Winsight
http://www.cs-solutions.com
Primavera Systems
http://www.primavera.com
48
Earned Value Analysis
Questions/Discussion
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