Author

PROJECT HEALTH MONITORING BY

EARNED VALUE ANALYSIS

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Index

i. Abstractii. Introductioniii. Historyiv. Terminologiesv. More Derived Metricsvi. an Example to illustrate the EVvii. Best Practices followed to get EVviii. what do do with EVM Dataix. Main RESULTSx. Prosxi. Pre measures to be considered for EVAxii. CONCLUSIONSxiii. ACKNOWLEDGMENTxiv. REFERENCES

Abstract — An Execution of engineering projects are tracked against critical

metrics such as safety, quality, delivery cost and inventory. Earned value is a key

parameter that helps in assessing delivery (schedule) and cost. Static shows that

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 completed.

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INTRODUCTION

Earned Value (EV) technique is an industry standard way to measure a project’s

progress, forecast its completion date and final cost, and to 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 EV. EV is primarily a schedule tracking tool, determining schedule from

cost and earned value of individual Work Breakdown Structure (WBS) tasks

performed in time.

History

Earned Value Management (EVM) emerged as a financial analysis specialty in

United States Government programs in the 1960s [1], but it has since become a

significant branch of project management and cost engineering.

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Terminologies

Figure 1: Earned Value example

(ACWP)

(BCWP)

(BCWS)

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Schedule and Cost Variances

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SV: Schedule Variance (EV-PV)49,000hr - 55,000hr SV = - 6,000hr A negative variance means the project is behind schedule.

CV: Cost Variance (EV-AC)49,000hr- 56,000hr CV = - 7,000hr A negative variance means the project is over budget.

CPI: Cost Performance Index CPI=EV/AC49,000/56000 = 0.875 If CPI is lesser than 1, means project is over budget.

CSI: Cost Schedule Index (CSI=CPI x SPI) .891 x .875 = 0.780 When CSI is greater than 1, the less likely project recovery becomes.

SPI: Schedule Performance Index SPI=EV/PV 49,000/55,000 = 0.891 If SPI is lesser than 1, means project is behind schedule.

More Derived Metrics

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An Example to illustrate the EV: 1

complete cycle of Test task

By Referring the Figure , A set of module test is divided based on function calls. To testeach function call complete cycle of Test task need to be done. For initial module it willtake more than base line hours. For all models base line hour will be assumed as 16 hours.From Task Gather Data to Structural coverage, total 70% of test task completed. Once it issent for review, then only Manger will notice the EV and can take credit for the moduleand till then based on Tester and manger trust, work will be done.

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Consider a project where the work has to be completed in two months in Rs 20,000. Cost breakdown is Rs.10,000 for each month. The work scheduled in each month is half of the total work to be completed.

1st month 25% completed but cost utilised is that of 50% of the total work.actual cost(AC) incurred =50% of total budgeted cost =10,000

The planned value(PV) for the work to be completed by the end of the first month=50% of total =50% of 20,000 =10,000

The Earned value(EV) or the value of the work actually completed in monetary termsRate of Performance * Planned Value =50% * 10000 =5000

This implies that we have utilized Rs.10,000(AC) for the work which should have utilizedRs. 5,000(EV) according to our budget.

Best practices followed to get EV

A) Operating system element is called Visual Management (VM).

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B) Activity based management (ABM)

It is a method of identifying and evaluating activities that a business performs. In XLS sheet it will have Tabs called Life cycle, Data, PCT Chart, EV chart, RFS state. In Data tab, Task is assigned with responsible person, base line hours, actual start, Percentage complete these data’s are filled daily/weekly/every 15days by Leads. This ABM xls will be maintained in secured share drive.

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C) Minority Report Tool/JIRA Tool

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What to Do With EVM Data

EV indicators provides an early warning about the project performance andalso gives an unambiguous lead to the project manager on what is the mostappropriate action. Because of that the utitative value of EV indicators is veryimportant.

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MAIN RESULTSBy applying EVA technique, Project will be delivered at the maximum percentage ontimeConsidering the example below:Suppose we are calculating EV for 6 employees for a week.

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Pros:

I. EVA is a flexible and easy to learn tool adaptable to projects of any size, able to control them all with minimal effort.

II. Since all the process activities (artifacts, license, ctp/hilite queues, CM21, analysis time, etc) required for project execution are in place, the outcome of deliverables will be on-time.

III. EV analysis/calculation process can asses in real time true project schedule and cost performance.

IV. With EV analysis, a project manager will be allowed to only study and manage cost in time, leaving the performance metric of technical variable to technical discipline leads. This burden release emphasizes the benefit of 20% effort for 80% results.

V. EVA is very objective and robust when many owners contribute its data in calculating.

VI. SPI and CPI these are an early warning signals

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Pre measures to be considered for EVA:

I. While doing earned value analysis, we don't take quality into consideration. It may be possible that our project is scoring high on earned value performance scale, but the quality of work is below par. Quality is an important criteria in any project, and unfortunately it is not considered in EVA.

II. If the Project schedule is very large (around x000 hours), 70% of the work schedule is based on the trust on the team members. If there is any deviation in the plan, the effort considered will not holds good. To recover the same, a project manager has to think on the alternative way to achieve.

III. If updating the EVA tool with cost and percentage of completed work is not done on regular basis, hides early problem identification.

IV. When the percentage of work assessments is not discussed with team members, the EVA report is often slanted, leading to increased subjectivity. The one doing the work has the best assessment of its status.

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CONCLUSIONS

After analyzing through all the scenarios and data, we can come to conclusion: Earned Value is needed because different measures of progress for different type 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).

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ACKNOWLEDGMENT

I would like to acknowledge my gratitude for presenting this paper and thank all my colleagues: Laveen, Pavan, Mukund, Arunkumar and other managers for their support.

REFERENCES

[1] Booz, Allen and Hamilton Handbook Tutorial “Earned Value Management Tutorial” [2] Quentin W. Fleming & Joel M. Koppleman, Handbook of” Earned Value”. [3]Quentin W. Fleming Handbook of” Cost/Schedule Control Systems Criteria” Robert R. Kemps Handbook of “Project Performance Measurement” [4] Kevin Forsberg, Ph.D., Hal Mooz and Howard Cotterman Handbook of “Visualizing Project Management” [5] Kevin Bury, President & CEO, Quick Arrow Paper on 'Earned Value Management' Websites http://www.pmi.org/ http://www.acq.osd.mil/pm/

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Thank You

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