PROJECTS CONTROLGuide Lines for projects control implementation using the

earned value tools, and technique.

2Missions…Support Projects/Programs managers on projects control using EVM tools & Technique for integrate management of Projects Scope, Time, and Cost.

Earned Value is needed because...o Preventing scope creep.o Improving communication and visibility with

stakeholders.o Performance tracking, and forecastingo Enable measures for different types of tasks.o Roll up progress of many tasks into an overall project

status.o Need for a uniform unit of measure (Cost or work-

hours).

EVM can answering management questions that are critical to the success of every project, such as:

o Are we ahead of or behind schedule? o How efficiently are we using our time?o When is the project likely to be completed? o Are we under or over our budget?o How efficiently are we using our resources? o What is the remaining work likely to cost? o What is the entire project likely to cost? o How much will we be under or over budget?

Successful projects are standard; there is a continuous improvement of planning on one hand, and budget and schedule control on the other.

VISION: Management With the Lights ON

3Earned Value Management (EVM)…EVM Develops and Monitors Within Planning & Execution Phases.

Key practice of the project control process consist of two phases

Establish a Performance Measurement Baseline (PMB)

Budget Schedule

Measure and analyze performance against the baseline

Actual Cost Actual Progress

PV EV ACTIME CONTROL COST CONTROL

4Earned Value Management (EVM)…It’s a project management technique that’s required the formation of an Integrated Baseline against which Performance can be measured for the duration of the project.

EVM Develops and Monitors Three Key dimension for each work package.

5Establishment of a Performance Measurement Baseline

First01 Decompose work scope to a

manageable level [WBS]

Second02 Develop the Baseline Schedule

03 Third Estimate the Project Budget

04 Four Develop the Performance Measurement Baseline

WBS – Work Breakdown Structure

• Define the Scope of Work

• Decompose Deliverables into Work Package

• Decompose to Manageable Level Activities

Develop the Baseline Schedule

• Define the Major Project Milestones

• Logical Relations Between Activities, and WBS

• Develop Baseline Schedule

Estimate the Project Budget

• Quantities Survey

• Develop CBS

• Estimated Material, Labors, and Non-Labors Cost

• Develop Baseline Budget

Develop the Performance Measurement Baseline

• Assign Budget “Resources” to Baseline Schedule

• Resources Leveling & Balancing

• Establish a Performance Measurement Baseline

6Establish a Performance Measurement Baseline (PMB)…Does Planned Resource Consumption Make Sense?

1. DEFINE THE WORK

2. SCHEDULE THE WORK

3. ALLOCATE BUDGETS

J F M A

Time

$ Re

sour

ces

400

300

200

100

M J J A

ProgramBudget

Front Loaded

End Loaded

Normal

7EVM Performance Analysis and Forecasting

First01 Calculate The EVM Three Key

dimension

Second02 Calculate the Time & Cost Variances

03 Third Calculate the Project Key Performance Indicates

04 Four Forecast at Completion Project Status

The EVM Three Key dimension

• Record resource usage during project execution

• Objectively measure the physical work progress

• Calculate AC - Actual Cost, and EV earned value

The Time & Cost Variances

• Schedule Variance (SV)

• Cost Variance (CV)

• Variance at Complete (VAC)

The Project Key Performance Indicates

• Schedule Performance Index (SPI)

• Cost Performance Index (CPI)

• To-Complete Performance Index (TCPI)

Forecast at Completion Project Status

• Time Estimate at Completion (EACt)

• Estimate at Completion (EAC)

• Variance at Completion (VAC)

8Earned Value Management Three Key dimension…

Performance measurement baseline ..

Budget that is spread over . . .time, to accomplish the scope of workand against which progress can be measured

when all work has been phased, cumulative BCWS = BAC

Planned Value (PV):

Describes how far along a project is supposed to be at any given point in the project schedule. The authorized Budget assigned to the Activities, or Work Breakdown structure

The planned (Budget) cost to complete the work that has been done

Earned Value = Assigned Budget for each work task * the physical work progress

Earned Value (AC):

Is the value of work performed expressed in terms of the approved budget assigned to that work for an Activity or Work Breakdown Structure

The costs actually incurred and recorded in accomplishing the work performed (BCWP) within a given time period

LaborMaterial (Subcontractor/vendor)Other, Equipment's, computer costs, etc.Indirect Costs

Actual Cost (AC):

Is an indication of the level of resources that have been expended to achieve the actual work performed to date or in a time period.

9Earned Value Management Three Key dimension…

10Schedule Analysis and Forecasting:How are we doing TIME wise? … EV Vs. PV

+ Value ... Ahead– Value … Behind

Example: If the project is 25 percent behind schedule, meaning that 25 percent of the planned work has not been accomplished.

Schedule Variance (SV):

Are we ahead or behind schedule?

SV = EV – PV SV% = SV / PV

SPI > 1 ... AheadSPI < 1 … Behind

This SPI indicates that work is being accomplished percent efficiency, usually used also for compare various projects performance together.

Schedule Performance Index

How efficiently are we using our time?

SPI = EV / PV

Using the SPI and the average Planned Value per unit of time, can generate a rough estimate of when the project will be completed, if current trends continue, compared to when it was originally supposed to be completed.

Time Estimate at Completion

When are we likely to finish the work?

EACt = (BAC / SPI) / (BAC / MONTHS)

11Cost Analysis and Forecasting:How are we doing COST wise? … EV Vs. AC

+ Value ... Under-Budget [Save]– Value … Over-Budget [Non-Recoverable Loss]

Cost Variance (CV) is a measure of cost performance on Budget. The EVM CV is particularly Critical because it indicate the relationship of Physical Performance to the Cost Spend.

Cost Variance (CV):

Are we under or over budget?

CV = EV – AC CV% = CV / EV

SPI > 1 ... Under-Budget [Save]SPI < 1 … Over-Budget [Non-Recoverable Loss]

If we translate this into dollars, it would mean that Project has a cost efficiency of $0.xx worth of work for every dollar spent to date, usually used also for compare various projects performance together.

Cost Performance Index:

How efficiently are we using our resources?

CPI = EV / ACThe Estimate at Completion (EAC) tells a manager where the cost of a project is likely to end up if current performance trends continue.

Variance at Completion:

Will we finish under or over budget

VAC = BAC – EAC

Cost Estimate at Completion

12Estimate at Complete (EAC)…Estimate at Complete (EAC) technique that’s depend on various factors as contract type, and previous key performance indicates.

Usually calculated within one of the following formulas.EA

CEs

timat

e At

Com

plet

eForecast for ETC Work Performed at

the Budget Rate EAC = AC + (BAC-EV)

Forecast for ETC Work Performed at the Present CPI EAC=BAC/Cumulative CPI

Forecast for ETC Work Considering Both SPI & CPI EAC=AC+[(BAC-EV)/(CPI*SPI)]

13To-Complete Performance Index (TCPI)…Which can tell a manager the efficiency that must be achieved for a project to meet a specified endpoint such as the Budget at Completion (BAC). This means that for Project EZ to achieve BAC, performance must improve from a CPI of 0.83 to a TCPI of 1.07 for the remaining work.

To-Complete Performance

Index:

How efficiently must we use our

remaining resources?

14Final EVM Trend Analysis …Does It Given You All Information You Need To Know?

RiskAt Complete Variance

Cost Variance

J F M A

Time

Reso

urce

s

400

300

200

100

Time Now

ACWP (Actual Cost)

BCWS(Planned Value)

BCWP (Earned Value)

M J J A

Schedule Slip

Schedule Variance

Management Reserve

▲

Approx. Time Variance

15Final EVM Trend Analysis [REPORT]…

Does It Given You All Information You Need To Know?

PV EV AV SV SPI CV CPI ETC EAC VAC TCPIProject

DeliverablesWork Package

Activity 01Activity 02Activity 03Activity 04Activity 05Activity 06Activity 07Activity 08Activity 09Activity 10Activity 11

ForecastStatus

Month, yearMain Elements ManpowerCode

Work Breakdown Structure

BAC Analysis

16Example:

Problem: A project has a budget of £10M and schedule for 10 months. It is assumed that the total budget will be spent equally each month until the 10th month is reached. After 2 months the project manager finds that only 5% of the work is finished and a total of £1M spent.

The best way to understand an EVM example is to solve it.

PV = £2M

EV = £10M * 0.05 = £0.5M

AV = £1M

CV = EV-AC = 0.5-1 = -0.5M

CV% = 100 * (CV/EV) = 100*(-0.5/0.5) = -100% overrun

SV = EV-PV = 0.5-2 = -1.5 months

SV% = 100 * (SV/PV) = 100*(-1.5/2) = -75% behind

CPI = EV/AC = 0.5/1 = 0.5

SPI = EV/PV = 0.5/2 = 0.25

EAC = BAC/CPI = 10/0.5 = £20M

ETC = (BAC-EV) / CPI = (10-0.5)/0.5 = £19M

Time to compete = (10-0.5)/0.25 = 38 Months

This project will take TOTAL £20M (19+1) and 40 (38+2) Months to

complete.

Solution:

PART ONE COMPLETETHANK YOU

Questions? Comments?

NOW … EVM Implementation

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