We’re Baselined…..Now What?

1. We’re Baselined…..Now What? How do we look at the P3 database which contains over 14,000 activities and make sense of what we see?

2. CAM Notebooks Work Breakdown Structure (WBS) Responsibility Assignment Matrix (RAM) Work Packages/Planning Packages (COBRA & P3) Cost Profiles (COBRA) System Milestones Detailed Schedules Full Time Equivalent (FTE) Monthly Performance Reports (CPRs, CAPs, VARs) Baseline Change Requests Acronyms/EVM definitions

3. Milestone Hierarchy Level 1 – DOE: HQ Controlled Level 2 – DOE: Hanley Lee Controlled Level 3 – LCLS Project Controlled Controlled by John and Mark. Also referred to as “backbone” milestones. Include major handoffs or interface milestones. Locked down with Mandatory constraints. Level 4 – LCLS System Manager Controlled Defined in support of Level 3 milestones.

4. The Milestone “Backbone” A controlled set of milestones describing key interfaces and events in the schedule that allow PM to: Allocate float Measure near term critical path(s) Track progress easily Management by exception

5. EV101 An introduction to Earned Value Management

6. What is Earned Value Management? Earned Value Management (EVM) is a systematic approach to the integration and measurement of cost, schedule and technical (scope) accomplishments on a project. EVM is intended to provide data from a project’s management system to the government in standard data elements that… Relate time-phased budgets to contract tasks Integrate cost, schedule and technical performance Indicate work progress objectively Are valid, timely and auditable Are from the internal system of the project uses to manage Are at a practical level of summarization

7. Why Use Earned Value Management? It is mandated by some key DOE directives and guidance that Earned Value will be implemented. A memorandum from the Deputy Secretary of Energy, dated September 19, 2001… “I intend to continue the direction contained in DOE 413.3. The responsibilities contained in the Order require that you know what is going on with your projects and that assist your program managers and project managers in resolving issues and problems. The quarterly performance reviews, monthly status updates utilizing the Earned Value Management System as a metric, and periodic independent reviews are all sources for project information that allow us the opportunity to intercede before projects get off track.”

8. Why Use Earned Value Management? Current Department of Energy policy, DOE Order 413.3, Program Management for the Acquisition of Capital Assets, states the requirements for the Contractor’s project management system “The industry standard for project control systems described in American National Standard Institute (ANSI) EIA-748, Earned Value Management Systems, must be implemented on all projects with a total project cost (TPC) greater than $20M for control of project performance during the project execution phase . ”You cannot manage what you cannot measure…and what gets measured get done.” -Bill Hewlett, Hewlett Packard

9. EVMS Criteria – DoD 5000.2-R The Industry Standard Earned Value Management System guide provides a uniform set of 32 criteria for developing an EVMS. The criteria are divided into five categories: Organization WBS, OBS, Work Authorization, Cost/Schedule Integration, RAM Planning and Budgeting IMS, Milestones, Time-Phased Budget Baseline, MR Accounting Direct vs Indirect costs, Material costs, Summary and Detail visibility of costs Analysis and Management Reports Monthly reports, Variance reporting, Recovery plans, EAC/LREs Revisions and Data Management Change Control

10. EVMS Basic Structure The intersection between the WBS and the functional organization (OBS) produces the Responsibility Assignment Matrix (RAM) which defines the Control Account and subsequently the person responsible for the cost, schedule, and performance of that Control Account. Each Control Account is made up of Work Packages and Planning Packages. The Work Package is the level at which Earned Value is calculated, and represents a detailed plan for some portion of the budget allocated to the Control Account. The Planning Package contains the summarized remainder of the work for the Control Account when a “rolling wave” process is being utilized by the program.

11. Rolling Wave Methodology Each Work Package (as it is opened) is assigned an Account Number for cost tracking.

12. LCLS Earned Value Planning Methodology LCLS will be implementing a “Rolling Wave” type of Earned Value Management System. We will detail plan and schedule roughly by Fiscal Year. Work Packages will be assigned Earned Value Techniques. Planning Packages will be opened and detailed planned (turned into new Work Packages) approximately 3 months before the commencement of the Planning Package. The new Work Package will represent the detailed plan for the next Fiscal Year, and the remaining budget will stay in the Planning Package. The Rolling Wave process allows for greater planning flexibility and accommodates project changes easily.

13. EVMS Basic Concepts BAC - Budget at Complete BAC is the sum of all budgets allocated to a project scope. BCWS - Budgeted Cost of Work Scheduled The budget or plan for the project ACWP – Actuals or Actual Cost of Work Scheduled The cost incurred for executing work on a project. BCWP – Earned Value or Budgeted Cost of Work Performed The quantification of the “worth” of the work done to date.

14. Earned Value Example Time Now CUM BCWS = $9,000 Current BCWS = $3,000 BAC = $15,000 CUM ACWP = $3,200 Current BCWS = $1,200 CUM BCWP = $3,100 Current BCWP = $1,000

15. Earned Value Methods How do you determine the “Physical accomplishment of work”? There are numerous EV Methods to Measure Progress. Fixed Formula (0/100, 50/50, 25/75) Milestone Weights Milestone Weights with % Complete * Units Complete Percent Complete Level of Effort (LOE)* * These are the methods we are using on LCLS

16. Earned Value Methods Weighted Milestone with % Complete We defined the resource loaded task in P3 as the “milestone” in Cobra. The budget value (BCWS) of the task is the milestone weight. The %Complete for each task/milestone is provided by the CAM. The CAM must be able to clearly justify the %Complete derived. When a task is complete, the amount earned (BCWP) is equal to the BCWS of the task. Level of Effort (LOE) Based on the passage of time The monthly budget value (BCWS) is automatically earned No Schedule Variance

17. Project Status When reporting on the status of the project in an Earned Value Management System, the following terms are often used: Estimate to Complete (ETC) = BAC - BCWP Estimate at Completion (EAC = ACWP + ETC (for example) Cost Variance (CV)= BCWP-ACWP % Cost Variance (CV%) = CV/BCWP Schedule Variance (SV) = BCWP-BCWS % Schedule Variance (SV%) = SV/BCWS Cost Performance Index (CPI) = BCWP/ACWP Schedule Performance Index (SPI) = BCWP/BCWS Variance at Complete (VAC) = EAC-BAC

18. Estimate at Complete (EAC) There are several formulas that can be used to calculate the estimate to complete: EAC = ACWP/BCWP x BAC Assumes that the burn-rate will be the same for the remainder of the project Uses the Actuals, performance and the Budget at Complete EAC = BAC/CPI Assumes that the burn-rate will be the same for the remainder of the project Uses Budget at Complete and Cost Performance Index instead of Actuals We can also use the actuals plus the current BCWS in P3 to calculate a new EAC

19. Cost Performance Index (CPI) • Potential Causes of Unfavorable CPI • Work more complex than anticipated • Design Review Comments extensive • Unclear requirements • Scope Creep • Unfavorable market fluctuations in cost of Labor or Material • Overhead rate increase • Potential Causes of Favorable CPI • Efficiencies being realized • Work less complex than anticipated • Fewer revision and rework • Scope Creep • Favorable market fluctuations in cost of Labor or Material • Overhead rate decrease Cost Performance Index (CPI) – BCWP/ACWP If the result is less than 1.0, the cost is GREATER than budgeted. You are overrun! If the result is greater than 1.0, the cost is LESS than budgeted. You are underrun!

20. Schedule Performance Index (SPI) • Potential Causes of Unfavorable SPI • Manpower Shortage • Revised Execution Plan • Late Vendor delivery • Rework • Unclear requirements • Scope Creep • Potential Causes of Favorable SPI • Efficiencies being realized • Work less complex than anticipated • Fewer revision and rework • Scope Creep • Favorable market fluctuations in cost of Labor or Material • Subcontractor ahead of schedule Schedule Performance Index (SPI) – BCWP/BCWS If the result is less than 1.0, the project is BEHIND schedule. If the result is greater than 1.0, the project is AHEAD of schedule.

21. Weighted Milestone with %Complete: Example Time Now Using a Building Design Schedule, assume that “Building Design” is your work package and the tasks are your milestones. You can see that the Site Inspection task is complete and the Phase 1 design is in progress and 33% complete. Your actual cost (via your timecards, etc) is $275.

22. VAC CV BAC BCWS BCWP SV EAC/LRE ACWP Example: Cost Performance Report (CPR)

23. Example: Variance Analysis Report