Apply Earned Value Management Principles to Case Study Scenario: Completing the Great Pyramid © Dale R. Geiger 20111.

Apply Earned Value Management Apply Earned Value Management Principles to Case Study Scenario: Principles to Case Study Scenario:

Completing the Great PyramidCompleting the Great Pyramid

© Dale R. Geiger 2011 1

If Only the Pharaoh Had If Only the Pharaoh Had the Corps of Engineersthe Corps of Engineers


Terminal Learning ObjectiveTerminal Learning Objective• Task: Apply Earned Value Management Principles

to Case Study Scenario• Condition: You are training to become an ACE

with access to ICAM course handouts, readings, and spreadsheet tools and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors.

• Standard: with at least 80% accuracy• Identify key variables from case study data• Calculate BAC, schedule and cost variances, and EAC


Building the Great PyramidBuilding the Great PyramidCase A: The Air Force ApproachCase A: The Air Force Approach

• Read the paper “If the Pharaoh Had Only Used an Earned Value System in Building the Pyramids”

• By LTC Neimann (USAF Ret) found at https://acc.dau.mil/CommunityBrowser.aspx?id=19572

• Using the tools learned:• Build and verify the BAC presented in the paper• Determine schedule variance at Year 12• Determine the cost variance at Year 12• Calculate EAC at Year 12


https://acc.dau.mil/CommunityBrowser.aspx?id=19572

Budget at Completion: BACBudget at Completion: BACYear Design Mfg Comp

Test Assemble Intg Test Total Cum

2 1 1 14 1 1.5 2.5 3.56 1 1.5 1 3.5 78 1 1.5 1 3.5 10.5

10 1.5 1 2.5 1312 1 .5 1.5 14.514 .5 1 1.5 1616 .5 1 1.5 17.518 .5 1 1.5 1920 1 1 20

4 6 4 2 4 20


BAC

(Note: your chart may look a little different as there is some ambiguity about start/end dates)

Schedule and Cost Variances:Schedule and Cost Variances:Design at Year 12Design at Year 12


BCWS Schedule Variance BCWP Cost

Variance ACWP

Design 1 1 1

Cost per Unit Design 4 4 4

Cost for Design 4 -- 4 -- 4

Schedule and Cost Variances:Schedule and Cost Variances:Manufacture at Year 12Manufacture at Year 12



Variance ACWP

Blocks 1000 667 667

Cost per Block .006 .006 .009

Cost for Manufacture 6 (2) 4 (2) 6

Schedule and Cost Variances:Schedule and Cost Variances:Component Test at Year 12Component Test at Year 12



Variance ACWP

Component Test 100% 50% 50%

Cost per Component Test 4 4 6

Cost for Component Test 4 (2) 2 (1) 3

Year 12 ResultsYear 12 Results

• We are now behind schedule and over cost: terrible!!

• ACWP is 130% of BCWP so EAC can be projected at 130% of BAC: (1.30)20M = 26M



Variance ACWP

Cost for Design 4 -- 4 -- 4

Cost for Manufacture 6 (2) 4 (2) 6

Cost for Component Test 4 (2) 2 (1) 3

Cost at end of Year 12 14 (4) 10 (3) 13

Building the Great PyramidBuilding the Great PyramidCase B: Corps of EngineersCase B: Corps of Engineers

• The Pharaoh was quite displeased with the Air Force Pyramid Building Project’s AAR results• LTC Neimann was re-assigned to flying carpets and

moved to a lovely tent in the Sinai where he soon retired

• The Pharaoh turned to the Corps of Engineers• He asked for project proposals to complete the Great

Pyramid within four years• The Corps of Engineers tasked six teams to make

proposals to complete an enhanced, Army-ized Army-ized pyramid


The U.S. Army Corps of EngineersThe U.S. Army Corps of Engineerswww.usace.army.mil/services www.usace.army.mil/services

• Is the Nation’s number one federal provider of outdoor recreation• Owns and operates more than 600 dams• Operates and maintains 12,000 miles of commercial inland navigation channels• Dredges more than 200 million cubic yards of construction and maintenance

dredge material annually• Maintains 926 coastal, Great Lakes and inland harbors• Restores, creates, enhances or preserves tens of thousands of acres of wetlands

annually under the Corps’ Regulatory Program• Provides a total water supply storage capacity of 329.2 million acre-feet in major

Corps lakes• Owns and operates 24 percent of the U.S. hydropower capacity or 3 percent of the

total U.S. electric capacity• Manages an Army military construction program between 2006 and 2013 totaling

approximately $44.6 billion between—the largest construction effort since World War II


Team Design Options:Team Design Options:Pick Two from Left and Three from RightPick Two from Left and Three from Right

Take advantage of Corps’ Core Competencies• Add a dam and lake to

provide recreational venue for tourists and pilgrims

• Divert the Nile River to ease transportation to site

• Build levees around pyramid to eliminate any flooding threat

• Build barracks facilities for workers and guests

• Up to one more of your choice

Army-ize the project in the interests of National Defense

• Camouflage the pyramid• Add armor• Build system of mutually

supporting archer nests• Build roads for rapid

reaction chariot forces • Up to two others of your

choice


Task 1: Build Your BACTask 1: Build Your BAC• Build your work breakdown structure given your

choices from the previous page• Assume each task takes two years• Don’t ignore need for more blocks and the assembly

task• You should have seven tasks (blocks, assembly, two corps’

core competency, and three Army-ize)• Estimate cost for each task for years 1, 2, 3, 4 (in year

3000 BC shekels) • Present your design, work schedule and graph of BCWS

to the class• Make sure you don’t exceed the $13M the Air Force had

estimated for added cost to completion© Dale R. Geiger 2011 13

Budgeted Cost of Work Scheduled:Budgeted Cost of Work Scheduled:Fill in the BlanksFill in the Blanks

Block Assembly Corps 1 Corps 2 Army 1 Army 2 Army 3 Total Cum

Year 1

Year 2

Year 3

Year 4

Total


Graph of Pyramid Completion ProjectGraph of Pyramid Completion Project


$000

Team Proposal PresentationsTeam Proposal Presentations


Task 2: AAR for the PharaohTask 2: AAR for the Pharaoh

• Generate actual cost and schedule per following page’s instructions

• Present to class• Cost and schedule variances for each year until completion

(4+ slides)• BAC and EAC for the first year (1 slide)• Graph of BCWS, BCWP, ACWP (1 slide)• A reconciliation of your variance results at completion (1

slide)• Suggestions for continuous improvement (1 slide) • A view of what your finished pyramid looks like (1 slide)


Task 2: Developing Actual Task 2: Developing Actual Cost and ScheduleCost and Schedule

• Use the randbetween formula in Excel to generate a random number between 1 and 10 for each task: =RANDBETWEEN(1,10)

• Follow the instructions on the next page to find what happened to the actual cost and schedule for that task

• Determine the actual results of the project year by year


Task 2: Reality HitsTask 2: Reality Hits

1 Freak rain storms wash out a year’s progress: add year at same cost

2 Assyrians attack but are easily defeated: however, add 20% to task cost

3 Engineering error: task takes a third year at same average cost per year

4 Outsourcing accelerates progress, raises 1st year cost 50% but completes task

5 Slaves rebel: add 50% to task cost

6 Conquests add slaves to workforce: cut task cost 30% & finish one year early

7 Dust storms disrupt work: add 20% to task cost

8 Hidden Air Force funds discovered: reduce task cost 50%

9 LSS improves process: eliminate 2nd year and its cost

10 Finance Corps ACES assigned to project: reduce cost of all tasks 10%


Team AAR PresentationsTeam AAR Presentations


Teacher’s Notes: ExampleTeacher’s Notes: Example


1 2 3 4 total cumblock 500 500 1000 1000assemble 500 500 1000 2000divert nile 1000 1000 2000 4000dam and lake 2000 1000 3000 7000camo 2000 1000 3000 10000armor 1000 1000 2000 12000roads 500 500 1000 13000 total bcws 1000 4500 5500 2000 13000

BAC

BCWS

Selected tasks

Budget for tasks

Teacher’s Notes: Actual CostsTeacher’s Notes: Actual Costs


random # impact 1 2 3 4 Total cum4 1st +50% no 2nd block 675 0 675 6752 20% more cost assemble 540 540 1080 1755

1010% less all tasks divert nile 900 900 1800 35553 add yr at same cost dam and lake 1800 900 1350 4050 76052 20% more cost camo 2160 1080 3240 108458 50% less cost armor 450 450 900 117458 50% less cost roads 225 225 450 12195

total 1215 3465 4635 2880 12195

Teacher’s Notes: ExampleTeacher’s Notes: Example11stst Year Results Year Results


bcwsschedulevariance bcwp

cost variance acwp

units completed 166.5 333 333block cost per unit 3 3 2

cost at point in time 500 500 1000 325 675

units completed 0.5 0.5 0.5assbly cost per unit 1000 1000 1080

cost at point in time 500 0 500 (40) 540year 1 total 1000 500 1500 285 1215

acwp/bcwp 81%bac 13000eac 10530

Teacher’s Notes: 2Teacher’s Notes: 2ndnd Year Results Year Results


schedule cost bcws variance bcwp variance acwp

units completed 166.5 0 0block cost per unit 3 3 0

cost at point in time 500 (500) 0 0 0

units completed 0.5 0.5 0.5assbly cost per unit 1000 1000 1080

cost at point in time 500 0 500 (40) 540

units completed 0.5 0.5 0.5nile cost per unit 2000 2000 1800


units completed 0.67 0.44 0.44lake cost per unit 3000 3000 3941

cost at point in time 2000 (667) 1333 (467) 1800

units completed 0.5 0.5 0.5road cost per unit 1000 1000 450

cost at point in time 500 0 500 275 225year 2 total 4500 (1167) 3333 (132) 3465

after 2 years 5500 (667) 4833 153 4680


Teacher’s Notes: 3Teacher’s Notes: 3rdrd Year Results Year Resultsschedule cost

bcws variance bcwp variance acwpunits completed 0.5 0.5 0.5

nile cost per unit 2000 2000 1800cost at point in time 1000 0 1000 100 900

units completed 0.33 0.22 0.22lake cost per unit 3000 3000 4050

cost at point in time 1000 (333) 667 (233) 900

units completed 0.67 0.67 0.67camo cost per unit 3000 3000 3240


units completed 0.50 0.50 0.50armor cost per unit 2000 2000 900


units completed 0.5 0.5 0.5road cost per unit 1000 1000 450

cost at point in time 500 0 500 275 225year 3 total 5500 (333) 5167 532 4635

after 3 years 11000 (1000) 10000 685 9315

Teacher’s Notes: Teacher’s Notes: 44thth Year Results Year Results


schedule cost bcws variance bcwp variance acwp

units completed 0.00 0.33 0.33lake cost per unit 000 0/ 3000 4050

cost at point in time 0 0/ 1000 0/ 1000(1350)/

(350) 1350

units completed 0.33 0.33 0.33camo cost per unit 3000 3000 3240


units completed 0.50 0.50 0.50armor cost per unit 2000 2000 900


year 4 total 2000 0/ 1000 2000/ 3000

(880)/ 120 2880

after 4 years 13000 0 13000 805 12195

Graphing the Pyramid ProjectGraphing the Pyramid Project


ACWP

BCWS

BCWP

Graphing the Pyramid ProjectGraphing the Pyramid Project


ACWP

BCWS

BCWP

Teacher’s Notes: Teacher’s Notes: ReconciliationReconciliation


Budgeted at Completion 13000

Actual Cost at Completion 12195

Cost Variance 805

Reconciliation:

Army audit agency discovered hidden Air Force funds 1500

Added ACES to project 1300

Block outsourcing continuous improvement 250

Engineering error on dam task (1500)

Disruption from Assyrian attacks (800)

Miscellaneous rounding effects 55

Total Explained 805

Teacher’s Notes: Teacher’s Notes: Continuous Improvement SuggestionsContinuous Improvement Suggestions


• Get more ACES and involve them more • Check Engineering designs before they create

major cost overruns• Double check Engineering designs• Look for more outsourcing opportunities

Camouflaged Pyramid on Lake: Camouflaged Pyramid on Lake: Excellent Camouflage, Isn’t It?!Excellent Camouflage, Isn’t It?!


Apply Earned Value Management Principles to Case Study Scenario: Completing the Great Pyramid © Dale R. Geiger 20111.

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