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EEAARRNNEEDD VVAALLUUEE

Simplified for New Missions

By Kris Athey

1.0 INTRODUCTION & HISTORY

Earned Value Management has long been

accepted as an invaluable tool in the

management of large, hundred-million dollar

project efforts. The intent of this whitepap

to show how simplified Earned Value

Management techniques can be just as

powerful in much smaller projects and can also

provide some very unique benefits.

First, let’s start with a nutshell history:

of “Earned Value” (EV) as a metric in a

formalized process “Earned Value

Management” (EVM) has been a well defined

best practice in Project Management since the

early 1960s. At that time the U.S. Government

needed a method to ensure that progress was

being made, and money was being

effectively, on large space and defense projects.

The application of EV methods proved a very

effective way to achieve this goal. It enabled the

government to keep the focus on the overall

mission and better predict when work would be

completed. As data was collected over time

analysis of EV project reports across decades of

projects tracked by the U.S. Government

established that a disciplined EVM approach

EVM – Simplified for New Missions

Copyright © 2008 QuantumPM, LLC

EE MMAANNAAGGEEMMEENNTT


long been

accepted as an invaluable tool in the

million dollar

of this whitepaper is

to show how simplified Earned Value

just as

and can also

some very unique benefits.

a nutshell history: The use

metric in a

has been a well defined

practice in Project Management since the

Government

needed a method to ensure that progress was

spent

efense projects.

pplication of EV methods proved a very

. It enabled the

keep the focus on the overall

when work would be

s data was collected over time,

analysis of EV project reports across decades of

projects tracked by the U.S. Government

established that a disciplined EVM approach

could accurately predict the final cost of a

project to within 10% as early as 1/5

way through the project. This ability for early

and accurate cost forecasting opened the door

to more general EVM use in support of project

tracking and also in proactive

management of projects within

Recognizing the value of EVM, the US

Department of Defense tried for many years to

get private industry to adopt it. Finally, in 1998

the DoD succeeded as ANSI-EIS

established as a Standard in the private sector.

The DoD immediately rewrote their internal

standards to reference the ANSI

and by 1999 the responsibility for EVM had

officially passed to the private sector. Since

then an entire industry has evolved around

ANSI-748 to ensure that it is used correctly

US “President’s Management Age

continued to force adoption in Civil Agencies

and Contractors doing business with Civil

Agencies. With this level of focus, EVM

evolved to be seen as either a friend or a foe, a

cost saving tool or an overhea

as intended, it is a great tool for management. If

not well understood, it strikes fear in the hearts

of those required to comply.


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could accurately predict the final cost of a

project to within 10% as early as 1/5th

of the

way through the project. This ability for early

and accurate cost forecasting opened the door

to more general EVM use in support of project

also in proactive selection and

management of projects within a portfolio.

he value of EVM, the US

Department of Defense tried for many years to

get private industry to adopt it. Finally, in 1998

EIS-748-A was

established as a Standard in the private sector.

The DoD immediately rewrote their internal

andards to reference the ANSI-748 Standard

and by 1999 the responsibility for EVM had

officially passed to the private sector. Since

entire industry has evolved around

to ensure that it is used correctly. The

US “President’s Management Agenda” has

continued to force adoption in Civil Agencies

and Contractors doing business with Civil

With this level of focus, EVM has

evolved to be seen as either a friend or a foe, a

cost saving tool or an overhead burden. If used

s a great tool for management. If

not well understood, it strikes fear in the hearts

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2.0 THE VALUE IN EVM

EVM has been proven on large projects but the overhead of using EVM is generally assumed to be too

expensive to use on smaller projects. This is patently

at what EVM is doing/providing. The EVM concept

project into “value” pieces (this is where we get the “V” in EVM). The cost of each Value component is

estimated and the duration over which that cost is

is to understand that you are measuring the value of “what” is created, not “how” it was done. H

the Value is achieved (typically shown

EVM.

For simplicity, the lowest level “value

work-package, the actual cost/schedule, the original cost/schedule and the deviation

different from the model of real life that we capture in a project schedul

For example, in the military space, there is a great deal of history around logistic plans. This history can

take the form of models or schedule templates.

might have general components like th

rescue effort,” “establish food distribution points

“work-packages” and their associated tasks and activities.

(very quickly/early) how reality differs from the logistical

emergency. Knowledge that the muddy terrain in a specific flood relief effort is impacting the relief




expensive to use on smaller projects. This is patently not the case when used correctly

The EVM concept requires that you initially decompose the scope of a


estimated and the duration over which that cost is expended is captured. The key to proper use of E

is to understand that you are measuring the value of “what” is created, not “how” it was done. H

typically shown via tasks and activities modeled in a schedule) is not the focus of

For simplicity, the lowest level “value” pieces are called “work-packages.” At the completion of each

package, the actual cost/schedule, the original cost/schedule and the deviations are captured as

data points. As the set of data points grows

(the result of completion of more and more

work-packages), the individual deviations

between the original plan and the

trying to fulfill on that plan form trends that

can be extended out to completion and

provide better and better estimates of final

project cost.

Unique benefits and applications can be

visualized when we understand the

difference between the model and reality

EVM provides the method to measure (and

subsequently leverage) how

from the model of real life that we capture in a project schedule.

there is a great deal of history around logistic plans. This history can

models or schedule templates. For a disaster relief effort, these models and templates

might have general components like the proven way to “setup a field HQ,” “establish a

“establish food distribution points,” etc. Each of these can be broken down into a set of

” and their associated tasks and activities. EVM can be used in this arena to determine

differs from the logistical plans that were pulled off the shelf for this




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when used correctly. Let’s look again

requires that you initially decompose the scope of a


The key to proper use of EVM

is to understand that you are measuring the value of “what” is created, not “how” it was done. How”

via tasks and activities modeled in a schedule) is not the focus of

At the completion of each

s are captured as

As the set of data points grows

(the result of completion of more and more

packages), the individual deviations

between the original plan and the reality of

trying to fulfill on that plan form trends that

completion and

provide better and better estimates of final

lications can be

understand the

the model and reality.

method to measure (and

subsequently leverage) how real life is in fact

there is a great deal of history around logistic plans. This history can

a disaster relief effort, these models and templates

a search and

” etc. Each of these can be broken down into a set of

in this arena to determine

that were pulled off the shelf for this


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plans is information that can be tracked, trended

remainder of the relief effort. Later analysis of the adjustments made to the original off

can be used to provide better coverage/planning

Examples like this are only possible if EVM

techniques are simplified and

incorporated into the planning/scheduling

process. The techniques must be intuitive

and support the process without

defocusing the overall efforts. Defocusing

can be caused by spending a large amount

of time to maintain the model or adding

unnecessary complexity that leads to

confusion and misapplication of data. The

tools used must be tools already accepted

in the field, with a broad base of users so

they can be easily maintained by many

people and be easily understood. You need to use tools that your users are already familiar with

tools should make it easy to follow industry best practices

required: 1) Decompose the work into log

work breakdown structure or WBS). 2) Model the lowest level of the work (work packages) in a schedule

of how that work will be accomplished. 3) Monitor performance of the

package level. 4) Use the results to either adjust the planning going

expectations around the projected completion of the

project.

3.0 EVM AND SCHEDULING

With over 20 million users, there is no question that

Microsoft Office Project is the desktop scheduling engine of

choice. It is an effective way to model

get done to accomplish a goal. QuantumPM

Manager (EVManager) was created as an integral

component inside MS Project to provide the integration of



that can be tracked, trended, and used to adjust the tactics and plans for the

effort. Later analysis of the adjustments made to the original off

can be used to provide better coverage/planning in the future.

xamples like this are only possible if EVM

incorporated into the planning/scheduling

intuitive

. Defocusing

a large amount

or adding

complexity that leads to

confusion and misapplication of data. The

tools used must be tools already accepted

in the field, with a broad base of users so

many

You need to use tools that your users are already familiar with

tools should make it easy to follow industry best practices for EVM. In the simplest form,

required: 1) Decompose the work into logical components that describe what must be accomplished (a


that work will be accomplished. 3) Monitor performance of the value earned at the work

the results to either adjust the planning going forward or better set the

expectations around the projected completion of the

is no question that

Microsoft Office Project is the desktop scheduling engine of

It is an effective way to model how work needs to

QuantumPM Earned Value

was created as an integral

to provide the integration of



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and used to adjust the tactics and plans for the

effort. Later analysis of the adjustments made to the original off-the-shelf plans

You need to use tools that your users are already familiar with. The

simplest form, four things are

must be accomplished (a


earned at the work

or better set the

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EVM best practices with the schedule.

proven methods of EVM.

One of the biggest benefits of “marrying” the WBS and the Schedule in this manner is a much more

intuitive way to initially build schedules, as well as navigate

EVManager has a unique navigation view that keeps the focus on

and reporting in an extremely intuitive way.

can cause confusion or errors when updating

the schedule.

The reporting engine produces live, dynamic

charts that support on-the-fly analysis of

schedules in execution.

Because EVManager captures all field status

and EVM information inside MS Project plans,

it is easy to use Project Server to centralize

the information. Using Project Server with

EVManager provides new Earned Value

analysis opportunities across repositories and



with the schedule. This tight coupling simplifies the process and reinforces the

discipline.

EVManager places the initial focus

on the Work Breakdown Structure

decomposition of the scope

resulting work-packages

tracked and updated with actual

information that is used to generate

EV reports within project. WBS

elements can come from templates.

The import of actual cost information

can be accomplished through

simple spreadsheet

that can be simplified to 2

produces the EVM outputs.

EVManager makes it easy to use the


intuitive way to initially build schedules, as well as navigate through them during execution.

has a unique navigation view that keeps the focus on work-package scope, achievement,

and reporting in an extremely intuitive way. It can reduce or completely hide schedule complexity that

when updating

The reporting engine produces live, dynamic

fly analysis of

captures all field status

MS Project plans,

use Project Server to centralize

Using Project Server with

ned Value

analysis opportunities across repositories and



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This tight coupling simplifies the process and reinforces the

places the initial focus

on the Work Breakdown Structure

decomposition of the scope. The

packages are then

and updated with actual

information that is used to generate

EV reports within project. WBS

elements can come from templates.

The import of actual cost information

can be accomplished through a

simple spreadsheet import. A wizard

that can be simplified to 2-clicks

produces the EVM outputs.

makes it easy to use the


them during execution.

package scope, achievement,

schedule complexity that

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new web-based ways to view Work elements within and across projects, opening the door to a larger

extended team concept and fast communication/collaboration methods.

4.0 BENEFITS OF INTEGRATED EVM

Integration of EVM inside the Microsoft Project platform provides

through complex systems on very large capital

all sizes can now reap the benefits of the science of

A few of the benefits are:

Scope management and WBS rules

packages.

The scope of the project is graphically visible so that it is easy to guard in the

The WBS can be used to filter the schedule

Users can create/customize their own

Financial data can be easily i

A WBS Data Dictionary is included and easily produced as an output report.

Reporting

A wizard that is simple to setup creates the

are generated and retained in the Project file.

Graphing of Time-phased Data

A few technical benefits:

All Object data and Reports (for all reporting periods)

(or database repository it is stored in).

The Work Breakdown Structure is maintained as

The Object Model and Events are exposed to VBA macro coding

for simple external system integration

for simple customer enhancements

Objects and their attributes

EVM is no longer a large overhead and complex undertaking. With the new, intuitive integration of EVM

into the MS Office Project platform accomplished by QuantumPM

applications is now possible.



based ways to view Work elements within and across projects, opening the door to a larger

extended team concept and fast communication/collaboration methods.

EVM

ration of EVM inside the Microsoft Project platform provides benefits that used to be available only

through complex systems on very large capital-intensive planning efforts. With EVManager

all sizes can now reap the benefits of the science of EVM. It doesn’t need to be complicated.

WBS rules are automatically enforced since all work must be in work

The scope of the project is graphically visible so that it is easy to guard in the WBS element

ilter the schedule and simplify navigation.

customize their own WBS “element level” and “project-level”

Financial data can be easily imported from spreadsheet to Time-phased attributes on

BS Data Dictionary is included and easily produced as an output report.

A wizard that is simple to setup creates the DOD CPR Report Formats 1

generated and retained in the Project file.

phased Data is easily and readily available in real-time.

All Object data and Reports (for all reporting periods) are maintained within the MS Project File

(or database repository it is stored in).

The Work Breakdown Structure is maintained as a totally separate Object Model

Object Model and Events are exposed to VBA macro coding inside MS Project:

for simple external system integration

for simple customer enhancements

Objects and their attributes are exportable to xml files accessible by other systems

overhead and complex undertaking. With the new, intuitive integration of EVM

form accomplished by QuantumPM EVManager, a whole new world of



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based ways to view Work elements within and across projects, opening the door to a larger

benefits that used to be available only

Manager, projects of

EVM. It doesn’t need to be complicated.

l work must be in work-

WBS elements.

level” attributes.

phased attributes on Nodes.

1-5. The reports

time.

maintained within the MS Project File

a totally separate Object Model

inside MS Project:

exportable to xml files accessible by other systems

overhead and complex undertaking. With the new, intuitive integration of EVM

a whole new world of

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