Earned Value Management Prepared For: PMI-L.I. Chapter Prepared - - PowerPoint PPT Presentation

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Earned Value Management Prepared For: PMI-L.I. Chapter Prepared - - PowerPoint PPT Presentation

Feb 05, 2023 138 likes •412 views

Earned Value Management Prepared For: PMI-L.I. Chapter Prepared By: Jean Cronan Presentation on: 11 January 2017 Learning Objectives Earned Value Background Definitions Establishing a Performance Baseline Performance Management

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SLIDE 1

Earned Value Management

Prepared For: PMI-L.I. Chapter Prepared By: Jean Cronan Presentation on: 11 January 2017

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SLIDE 2

Learning Objectives

Earned Value

  • Background
  • Definitions
  • Establishing a Performance Baseline
  • Performance Management
  • Summary
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SLIDE 3

Background

Earned Value –Why Use - Benefits?

  • Early trending leads to proactive management resolution
  • Improves customer communications and relationship
  • Ensures scope planned and risks and budget managed
  • Creates an open culture within IPT
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SLIDE 4

Background

Earned Value – Current Standards

  • ANSI/EIA-478
  • PMI Practice Standard for Earned Value
  • PMI EVM Community of Practice
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SLIDE 5

Background

How Does EVM Relate to PMBOK Process Groups and Knowledge Areas ?

Initiate Execute Plan Monitor and Control

Organize Project through the Charter Assign Responsibilities through Stakeholder Management Establish a Performance Measurement Baseline (PMB):

  • Scope

Management

  • Time

Management

  • Cost

Management

  • Risk

Management Direct and Manage Work against PMB:

  • Conduct

Procurements

  • Acquire

Resources Measurement against PMB: Generate:

  • Change Requests
  • Variance Analysis
  • Control Risks
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SLIDE 6

Source: DAU;EMIG

Background

ANSI/EIA-748

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SLIDE 7

Background

Earned Value -Timeline

1950’s Program Evaluation Review Techniques - PERT 1967 Department of Defense (DoD) creates Cost/Schedule Control System Criteria (C/S CSC) 1972 C/S CSC Joint Implementation Guide launched for use by all military branches 1991 DoD issues DoD Instruction 5000.2 Defense Acquisition Management Policies; use of EVM on DoD-wide Programs 1998 Initial issue of American National Standards Institute/Electronic Industries Alliance publishes Earned Value Management Systems (EVMS) called ANSI/EIA-A

Source: EVMPEDIA, EVM History

1999 Undersecretary of Defense adopts the ANSI/EIA-748 as agency standard on all US DoD acquisition contracts 2005 PMI releases 1st Edition EVM Standard 2009 Weapons Systems Acquisition Reform Act, all US DoD contractors to have fully compliant ANSI/EIA-748B compliant 2011 PMI releases 2nd Edition EVM Standard,PMBOK Releases

Increasing Oversight, Program Management Profession Acknowledged As Industry Experienced Delays and Overruns

2002 Sarbanes Oxley Act 2016 PMIAA – Program Management Improvement and Accountability Act

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SLIDE 8

Background

Earned Value - Summary

  • Industry Standards Established
  • Continued Oversight
  • Increase use of EVM within DoD and Commercial Projects

DoD, Commercial Industry, and PMI recognizes EVM as a critical Project Management Tool

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SLIDE 9

Definition

Earned Value

  • Based on: Technical, Schedule, Cost, Risk elements
  • Measures project performance by comparing work (hours/dollars)

planned to work (hours/dollars) completed, formulae

  • Management Tool
  • Performance Measurement- what is going on
  • Performance Management – what can be done
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SLIDE 10

Definition

Earned Value – “Demand Diamond”

Technical Schedule Cost Risk

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SLIDE 11

Definition

Earned Value How is this project performing ?

Budget: $45 Actual: $55 Variance: ($10)

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SLIDE 12

Definition

Earned Value - Revisit How is this project performing adding EV ?

AC= $55 PV=$45 EV=$60 SVAR= $15

SVAR= EV-PV 60-45

CVAR= $5

CVAR= EV-AC 60-55

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SLIDE 13

Definition

Earned Value – Formulae -Variances

Source: PMBOK, 5th Edition

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SLIDE 14

Definition

Earned Value – Formulae -Variances

Management Reserve Projected Slip

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SLIDE 15

Definition

Earned Value – Formulae -Variances

Management Reserve Projected Slip

March Cumulative CVAR: EV-AC ($60-$55) $5 SVAR: EV-PV($60-$45) $15 CPI: EV/AC ($60/$55) 1.09 SPI: EV/PV($60/$45) 1.33 VAC: BAC-EAC ($85-$110) ($25) March Cumulative PV: $45 AC: $55 EV: $60 BAC: $85 EAC: $110 MR: $55 Total Authorized Budget/ Contract Baseline: $140

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SLIDE 16

Definition

Earned Value – Formulae ETC/EAC

Source: PMBOK, 5th Edition

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SLIDE 17

Definition

Earned Value – Formulae – ETC/EAC

# EAC Description EAC Formula EAC Calculation EAC 1 Cost expected to remain constant EAC=BAC/CPI $140/1.09 $128 2 Future work will be accomplished at planned rate (PV) EAC=AC+(BAC-EV) $55+($85-$60) $80 3 Bottom-Up: Initial plan, PV, no longer valid EAC=AC+Bottum-Up ETC $55+55 $110 4 CPI and SPI influence remaining work EAC=AC+((BAC-EV)/(CPI*SPI)) $55+(($85-$60)/(1.09*1.33)) $80

1 2 3 4

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SLIDE 18

Organize The Work: Responsibility Assignment Matrix (RAM)

Source: MIL STD 881-C

RADAR System Receiver Transmitter Antenna Antenna Electronics Antenna Control Transmit/Receive Modules Program Manager

Test IPT Elect IPT MFG IPT Design

Electrical Design

Drafting/Checking

Mech Design

Control Account Control Account Control Account Control Account Control Account

Organizational Breakdown Structure Work Breakdown Structure Level 1 Level 2 Level 3 Reporting

Establishing a Performance Baseline

Organize The Work

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SLIDE 19

Level 1 Level 2 Level 3 Reporting Level 4+ Planning and Performing

RADAR System Receiver Transmitter Antenna Antenna Electronics Antenna Control Transmit/Receive Modules Program Manager

Test IPT Elect IPT MFG IPT Design

Electrical Design

Drafting/Checking

Mech Design

Control Account Control Account Control Account Control Account Control Account

Organizational Breakdown Structure Work Breakdown Structure

Establishing a Performance Baseline

Plan The Work

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SLIDE 20

Establishing a Performance Baseline

Planning Techniques

  • Detail Planning
  • LOE
  • % Complete
  • Apportioned
  • Rolling Wave
  • Planning Packages

Best Practice: No more than 10% of plan to consist of LOE

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SLIDE 21

Establishing a Performance Baseline

Scheduling

Tier 0 – Customer/Contract

Specified Milestones

Tier 1 – Program Top Level Summary Schedule

  • Customer, Executive Management, Program Office
  • Customer/Contract specified milestones
  • Program major milestones, phases
  • One page

Tier 2 – Integrated Master Schedule

  • Further delineation of Tier 1
  • Major tasks within each phase
  • Significant inter-phase events
  • Task links/Critical path(s)

Tier 3 – Detailed IPT Schedules

  • Further delineation of Tier 2
  • End item deliverables, Tests, Services
  • Functional commitment to IPT

Tier 4 – Control Accounts

  • Work Packages
  • Earned Value Performance Measurement

Horizontal/ Vertical

  • Accountability
  • Integration
  • Use of Rollingwave
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SLIDE 22

Establishing a Performance Baseline

Budgeting

Scope : WBS: Define the work Time Management : Schedule the work

20 20 60 20 20 60 60 60

Cost Management : Distribute/allocate Budgets Risk Management : Plan risk responses

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SLIDE 23

Establishing a Performance Baseline

Incorporating Risk Plans

Risk #8

X

  • Identify Risks
  • Perform Qualitative Risk Analysis
  • Perform Quantitative Risk Analysis
  • Plan Risk Response
  • Approved Reserves
  • Approved Change Request
  • Risk Mitigated

Risk Mitigation Leads to Proactive Project Management

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SLIDE 24

Establishing a Performance Baseline

Baselined

  • Ensure no more than 10% level of effort control accounts
  • Established management reserve, undistributed budget
  • Management Reserve Log established
  • Ready to start executing, monitoring/controlling,

managing to baseline

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SLIDE 25

Performance Management

Managing with Data -What Can Be Done

  • 10% into project, trend forecasts future performance
  • Focus on indicators that reveal trends
  • Reporting includes root cause/corrective action plans
  • Rigorously review Risk Register, ensure mitigation steps

incorporated into planning

  • Utilize data to drive projects to success

Ensures Oxley Act of 2002 Is Being Satisfied

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SLIDE 26

Summary

Earned Value is a Management Tool , when used properly, can successfully measure and manage a project to increase internal and external customer satisfaction

  • Early trending leads to proactive management resolution
  • Improves customer communications and relationship
  • Ensures scope planned and risks and budget managed
  • Creates an open culture within IPT
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SLIDE 27

Questions