Earned Value Management

1. Earned Value Management How do we get started?

2. What is it? • A planning process • An internal policy • A contract requirement • A way to measure performance • A way to identify problems • A forecasting tool • A way of doing business

3. What is it? A way to integrate scope, schedule, and resources all at once!

4. How is it used? • A reporting tool • Satisfy the contract reporting requirements • “filling the square” • As a decision-making tool • To evaluate project planning • To communicate status • To forecast resource needs

5. Language of EVM • Budgeted Cost of Work Scheduled (BCWS) • The plan to spend budget • Actual Cost of Work Performed (ACWP) • The costs of the work that has occurred • Budgeted Cost of Work Performed (BCWP) • What was performed (what it should have cost) • This is EARNED VALUE

6. Language of EVM • Schedule Variance SV = BCWP – BCWS • On/Off plan in dollars (>0 is ahead, 0 is on target, <0 is behind) • Schedule Performance Index SPI = BCWP/BCWS • On/off plan as a ratio (>1 is ahead, 1 is on target, <1 is behind) • Cost Variance CV = BCWP – ACWP • Over/under running (>0 is underrun, 0 is on target, <0 is overrun) • Cost Performance Index CPI = BCWP/ACWP • Return on actual costs (>1 is under, 1 is on target, <1 is over)

7. Language of EVM • Budget Authority for unknowns • Management Reserve • Budget at Complete, BAC • The budget to do the work • Estimate to Complete, ETC • Estimate of the cost to do the remaining work • Estimate at Complete • Best guess of cost of entire cost of project • Latest Revised Estimate • Contractor’s best guess of cost of entire cost of project

8. In a Picture EAC Management Reserve BAC PMB Schedule Variance Cost Variance $ ACWP BCWS BCWP time Time Now Completion Date

9. How do we do this? • Performance Measurement Baseline • Scope • Identify the scope of work • WBS • Extend to Work package level

10. How do we do this? • Performance Measurement Baseline • Schedule • Arrange work packages in order • Schedule start and finish • Classify work and choose EV technique

11. How do we do this? • Performance Measurement Baseline • Budget • Identify needed resources (budget) • Spread budget • Calculate Cumulative BCWS

12. How do we do this? • Performance measurement baseline Graph Cumulative BCWS

13. Example Task Cost Start End WP1 9 1 3 WP2 12 3 7 WP3 28 3 4 WP5 8 6 9 WP5 10 1 10

14. 1 2 3 4 5 6 7 8 9 10 WP1 WP2 WP3 WP4 Monthly BCWS Cumulative BCWS WP5 Example

15. Next time • New cost spreading techniques • 0/100% • 50/50% • % complete • Balanced Level of Effort • Directed Milestone

16. Organizational Chart Vickery’s Egg Delivery Company President & CEO Vickery VP Engineering VP Construction Senior VP Operations VP Design VP Finance VP Espionage VP Materials

17. Organizational Chart • Organizational chart glossary • What kind of organization do you have? • What is your decision-making paradigm? • How do you resolve conflict? • Who has what responsibilities? • What do they do? • Who do they report to? • What do they cost? • How will you track it?

18. Organizational Chart Rest of Class is part one of your project • Organizational Chart • Corporation Name • Team Members • Positions • Responsibilities • Charge Track