Using Earned Value Management System (EVMS) Briefing for ATC Engineering & Test Division (ACT-200) Managers and Leads.

Using Earned Value Using Earned Value Management System Management System

(EVMS)(EVMS)

Briefing for ATC Engineering & Briefing for ATC Engineering & Test Division (ACT-200) Test Division (ACT-200)

Managers and LeadsManagers and Leads

February 7, 2000 2

Briefing ObjectivesBriefing Objectives

What is a Project?What is a Project? What is a Program?What is a Program? What is Project Management?What is Project Management? What is EVMS?What is EVMS? Why do we need EVMS?Why do we need EVMS? How is EVMS Implemented?How is EVMS Implemented? Who will implement it?Who will implement it?

February 7, 2000

Project Management Project Management Terms - IVTerms - IV Project - Project -

• A temporary endeavor A temporary endeavor • To create a unique product or service.To create a unique product or service.

Program - Program - • A group of related projects - e.g. DSR, A group of related projects - e.g. DSR,

VSCS, URET, STARS, ...as part of NASVSCS, URET, STARS, ...as part of NAS• Managed in a coordinated way - ACT-Managed in a coordinated way - ACT-

200 Coordinating 200 Coordinating • Usually include elements of ongoing Usually include elements of ongoing

operationsoperationsComplements of Project Management InstituteComplements of Project Management Institute

February 7, 2000 4

Project Management Project Management Terms - ITerms - I

PM is the Application of PM is the Application of Knowledge, Skills, Tools, and Knowledge, Skills, Tools, and Techniques to Project Activities to Techniques to Project Activities to Meet or Exceed Stakeholders’ Meet or Exceed Stakeholders’ Needs & Expectations.Needs & Expectations.• Knowledge of general management Knowledge of general management

practice & relevant application areas.practice & relevant application areas. PM overlaps general management PM overlaps general management

in many areas but they are not in many areas but they are not synonymous - e.g DSR vs. synonymous - e.g DSR vs. Division/Branch.Division/Branch.

February 7, 2000 5

Project Management Project Management Terms - IITerms - II

Work Breakdown Structure (WBS): A Work Breakdown Structure (WBS): A deliverable-oriented grouping of deliverable-oriented grouping of project elements which organizes and project elements which organizes and defines the total scope of the project. defines the total scope of the project. Each descending level represents an Each descending level represents an increasingly detailed definition of a increasingly detailed definition of a project component. Project project component. Project components may be products or components may be products or services.services.

February 7, 2000 6

Project Management Project Management Terms - IIITerms - III

Work Package: Lowest Level of the WBS Work Package: Lowest Level of the WBS that may be Divided into Activities.that may be Divided into Activities.

OBS: An Organizational Chart Relating OBS: An Organizational Chart Relating Work Packages to Organization Units.Work Packages to Organization Units.

Responsibility Matrix: Relates Responsibility Matrix: Relates Organization Structure to WBS & Ensures Organization Structure to WBS & Ensures that each Element of the Project’s Scope that each Element of the Project’s Scope of is Assigned to a Responsible Individual.of is Assigned to a Responsible Individual.

February 7, 2000 7

Earned Value Earned Value Management System Management System

(EVMS) - I(EVMS) - I

EV - Tool for Measuring Project EV - Tool for Measuring Project PerformancePerformance

Compares work actually accomplished Compares work actually accomplished to work planned to determine if cost to work planned to determine if cost & schedule performance is as planned& schedule performance is as planned

EV is an Early Warning System EV is an Early Warning System Helps management make proactive Helps management make proactive

decisions to keep projects on coursedecisions to keep projects on course

February 7, 2000 8

Earned Value Earned Value Management System Management System (EVMS) - II(EVMS) - II

EV Integrates Cost, Scope & EV Integrates Cost, Scope & Schedule measurementsSchedule measurements

EV Involves Calculating 3 key values EV Involves Calculating 3 key values for each activityfor each activity• Budget - BCWSBudget - BCWS• Actual Cost - ACWPActual Cost - ACWP• Earned Value/Physical Progress - BCWPEarned Value/Physical Progress - BCWP

Basis for variance analysisBasis for variance analysis

February 7, 2000 9

Planning for EVMS - IPlanning for EVMS - I

Create a work breakdown structureCreate a work breakdown structure Organize work into discrete work Organize work into discrete work

packages and activitiespackages and activities Allocate a budget to each of the activitiesAllocate a budget to each of the activities Develop a schedule and Assign resources Develop a schedule and Assign resources

to accomplish each activity on the to accomplish each activity on the scheduleschedule

Be sure to include all work in the scheduleBe sure to include all work in the schedule

February 7, 2000 10

Planning for EVMS - IIPlanning for EVMS - II

Award performance credit for physical Award performance credit for physical % complete using any of these methods% complete using any of these methods

0-1000-100• Short duration tasks < 160 hoursShort duration tasks < 160 hours• EV is Zero until activity is completeEV is Zero until activity is complete

50-100 50-100 • Duration less than 600 hoursDuration less than 600 hours• 50% at start of activity & 50% at 50% at start of activity & 50% at

completioncompletion

February 7, 2000 11

Planning for EVMS - IIIPlanning for EVMS - III

Interim milestone; Interim milestone; • Duration less than 600 hoursDuration less than 600 hours• Based on completed milestone for taskBased on completed milestone for task

Level of Effort (LOE)Level of Effort (LOE)• Long duration & consistent tasksLong duration & consistent tasks• Difficult to measure - no deliverablesDifficult to measure - no deliverables• Measured by duration of time used e.g. Measured by duration of time used e.g.

10 weeks support is 50% complete at 5 10 weeks support is 50% complete at 5 weeksweeks

February 7, 2000 12

Tracking & AnalysisTracking & Analysis

Each update cycle/Reporting PeriodEach update cycle/Reporting Period• Monthly or Bi-MonthlyMonthly or Bi-Monthly• Obtain physical % complete for each taskObtain physical % complete for each task• Calculate EV for each taskCalculate EV for each task• Sum up EV for all tasks as project EVSum up EV for all tasks as project EV• Calculate actual expenditure for actual Calculate actual expenditure for actual

work completed during the periodwork completed during the period• Compare the Cumulative EV to Actual Compare the Cumulative EV to Actual

expenditureexpenditure

February 7, 2000 13

Elements of EV Analysis - IElements of EV Analysis - I

Performance indices relate value of Performance indices relate value of work performed to dollar spent. e.g. CPI work performed to dollar spent. e.g. CPI = 0.65 means that for every dollar = 0.65 means that for every dollar spent, actual value of the work spent, actual value of the work performed is $0.65.performed is $0.65.

Cumulative CPI used to forecast project Cumulative CPI used to forecast project cost at completion (also slide 17)cost at completion (also slide 17)

Cumulative SPI used to forecast project Cumulative SPI used to forecast project completion date (also slide 17)completion date (also slide 17)

February 7, 2000 14

Elements of EV Analysis - Elements of EV Analysis - IIII

Cost Variance - Difference between Cost Variance - Difference between budgeted cost of work scheduled & budgeted cost of work scheduled & actual cost of work performedactual cost of work performed• CV = BCWP - ACWPCV = BCWP - ACWP

Schedule Variance - Difference Schedule Variance - Difference between budgeted cost of work between budgeted cost of work scheduled & actual cost of work scheduled & actual cost of work performed performed • SV = BCWP - BCWSSV = BCWP - BCWS

February 7, 2000 15

Elements of EV Analysis - Elements of EV Analysis - IIII

SPI - BCWP/BCWSSPI - BCWP/BCWS SPI => 1.0, Project Schedule SPI => 1.0, Project Schedule

performing as planned or betterperforming as planned or better SPI < 1.0, Project not performing SPI < 1.0, Project not performing

as planned - needs helpas planned - needs help

February 7, 2000 16

Elements of EV Analysis - Elements of EV Analysis - IIIIII

CPI - BCWP/ACWPCPI - BCWP/ACWP CPI => 1.0, Project Cost performing CPI => 1.0, Project Cost performing

as planned or betteras planned or better CPI < 1.0, Project Cost not CPI < 1.0, Project Cost not

performing as planned - needs helpperforming as planned - needs help % Over/Under Budget - CAC - BCWS% Over/Under Budget - CAC - BCWS

February 7, 2000 17

Project Cost & Schedule Project Cost & Schedule Forecast MethodsForecast Methods

Estimate at Completion (EAC) is Estimate at Completion (EAC) is total cost to complete an activity, total cost to complete an activity, work package, or a project work package, or a project expressed as:: expressed as:: • EAC = Actuals-to-date + Estimate to EAC = Actuals-to-date + Estimate to

complete (ETC)complete (ETC) Cost EAC - BAC/CPICost EAC - BAC/CPI Schedule EAC - BAC/SPISchedule EAC - BAC/SPI

February 7, 2000 18

EV ReportingEV Reporting

Interpret the results of the Interpret the results of the calculations - Slides 8 - 11calculations - Slides 8 - 11

Take or recommend corrective Take or recommend corrective action as necessaryaction as necessary

February 7, 2000 19

ConclusionConclusion EVMS provides management with an EVMS provides management with an

effective effective • tool for program planning and controltool for program planning and control• early warning system for program mgt.early warning system for program mgt.

EV Integrates Cost, Quality, & EV Integrates Cost, Quality, & Schedule objectives when Schedule objectives when appropriately implementedappropriately implemented

Must a baseline for measurements, Must a baseline for measurements, and control at the start of project.and control at the start of project.

February 7, 2000 20

ReferencesReferences

Project Management Institute (PMI), 1996. Project Management Institute (PMI), 1996. A Guide to the Project Management Body A Guide to the Project Management Body of Knowledge (the PMBOKof Knowledge (the PMBOKTMTM Guide) - Guide) -

Ray W. Stratton, 1999. Improving SPI and Ray W. Stratton, 1999. Improving SPI and CPI Calculations on LOE Heavy Programs, CPI Calculations on LOE Heavy Programs, Proceedings of the 30th Annual PMI Proceedings of the 30th Annual PMI Seminars & SymposiumSeminars & Symposium

Fleming and Koppeman, 1996. Earned Fleming and Koppeman, 1996. Earned Value Project Management.Value Project Management.

Thank you for ListeningThank you for Listening

Pat A. Eigbe, PMPPat A. Eigbe, PMP®,®, -- Hi-Tec -- Hi-Tec SystemsSystems

x. 5-7857x. 5-7857