Matthew T. Davis PMP, MCTS, MCITP

2. Matthew T. Davis PMP, MCTS, MCITP

3. PC313 EVM De-Mystified!Understanding Earned Value Management in Project Matthew T. Davis, PMP, MCITP

4. EVM De-Mystified Presentation Summary EVM Analysis Views and Reports in Pro Views and Reports in PWA EVM Overview Key Concepts Terminology Interpretation EVM Modeling Data Requirements Process Needs Modeling Options Demo EVM Fundamentals A day in the life of an EVM Project Q&A

5. The Ultimate PM Challenge Simple Questions. What’s your answer? Are we on schedule? Will we be on budget? Are our resources delivering? Will we meet customer expectations? Can we keep our promises? Resources Schedule Cost Accountability Efficiency Value

6. EVM Overview – Key Concepts What is EVM? ‘A method for measuring project performance. It indicates how much of the budget should have been spent, in view of the amount of work done so far and the baseline cost for the task, assignment, or resources.’ - Microsoft Project 2003 User Guide

7. Other Definitions "A methodology used to measure and communicate the real physical progress of a project taking into account the work complete, the time taken and the costs incurred to complete that work.“ - Project Magazine "An integrated management control system for assessing, understanding and quantifying what a contractor or field activity is achieving with program dollars. EVM provides project management with objective, accurate and timely data for effective decision making.“ - NASA "A method for measuring project performance. It compares the amount of work that was planned with what was actually accomplished to determine if cost and schedule performance is as planned.“ -Englert and Associates, Inc

8. EVM Overview – Working Definition What is EVM? A project management technique for measuring project performance and progress. It combines measurements of Scope, Schedule, and Cost in a single integrated system which enables extremely accurate forecasts of project performance.

9. EVM Analysis Components Three fundamental values calculated for each task PV – Planned Value (BCWS) AC (ACWP) – Actual Cost of Work Performed EV– Earned Value (BCWP)

10. EVM Analysis Components - PV PV (BCWS) is the budgeted cost of tasks as scheduled based on the costs of resources (people, equipment, and material) assigned to those tasks, plus any fixed costs. Shows how much of the budget SHOULD have been spent at a point in time, based on the baseline cost of the task, assignment, or resource. PV is calculated as the cumulativetime-phasedbaselinecosts up to the status date.

11. EVM Analysis Components – AC (ACWP) AC (ACWP) is the cost that has actually been incurred to date for a task, resource, or assignment. What cost have I incurred so far?

12. EVM Analysis Components – EV (BCWP) EV (BCWP) is the value of the work performed by the status date, measured in currency. This is literally the value earned by the work performed. For example, if after 2 days 60% percent of the work on a task has been completed, you might expect to have spent 60 percent of the total task budget, or $60 of a $100 task. (Or not!)

13. EVM Analysis Components - Recap Three fundamental values calculated for each task PV – Planned Value (BCWS) How much should I have spent for work PLANNED to this point in time (Status Date) AC (ACWP) – Actual Cost of Work Performed How much did I ACTUALLY spend for the work PERFORMED so far? EV – Earned Value (BCWP) How much VALUE should I have for the cost of work PERFORMED so far? (Status Date)

14. Understanding EV – ‘Emotional Value’ What these elements are really telling you... “We’ve spent all the money and more, we’re behind schedule, and the house is only 25% done.”

15. Typical EVM Graph

16. The Indices: CPI, SPI and TCPI Derived from previous 3 values CPI - Cost Performance Index SPI- Schedule Performance Index TCPI -To Complete Performance Index

17. The Indices: CPI, SPI and TCPI CPI - Cost Performance Indexshows the efficiency of the resources>1 is good, <1 is bad SPI - Schedule Performance Indexshows the efficiency of the time utilized >1 is good, <1 is bad TCPI – To Complete Performance IndexRatio of work remaining to funds remaining

18. UnderstandingThe Indices (Or Idiocies!) What CPI, SPI and TCPI is really telling you... “Yeah, we’re supposed to be done next week but we’ve been working for 18 weeks! We need another 6 weeks.”

19. TCPI – To Complete Performance Index Funds Remaining Work Remaining Funds Remaining Work Remaining

20. Data Requirements in Project Dependencies / Dynamic Tasks / Critical Path No Task Constraints – Unless they are REAL All Task have a Predecessor and Successor or implied successor Resources with Costs Standard Rate at minimum Accurate Max Units – Single or Group Resources OK Consider Cost Per Use Values and Non-Work Resource Types Resource Assignments Recommend Work Modeling vs. 100% Unit Allocations Loaded per resource / task as work (not duration based) Consider Work, Contours, Overtime, and Task Calendars

21. Data Requirements in Project Complete Baseline Start / Finish Dates Work / Cost/ Duration No Missing Baseline Values Status Date Determines date for EVM Calculations Actuals / Progress Actual Work / Remaining Work Actual Start / Finish Dates

22. Data Requirements in Project Start / Finish Dates for Tasks Baseline Start / Finish Planned Start / Finish Actual Start / Finish

23. Process Needs Work / Effort Estimation Resource Scheduling Baseline Management Actuals Updates & Analysis Re-Planning

24. Process Needs Actuals Updates & Analysis % complete vs. Actual Work Start / Finish Dates Duration Based Physical % complete Work / Effort Estimation Team / SME Based Quantifiable Manageable Assumptions Known Clear ‘Done’ State Resource Scheduling May not be ‘Levelling Delay’ Other Methods include Team Planner, Overtime, Weekend Task Calendars, Additional Resources, etc. Baseline Management When to baseline? When can I re-baseline? Ensure new added tasks are baselined The EVM baseline vs. ‘other baselines’ Re-Planning No completed tasks in the future! Re-Estimate in-progress tasks Re-Schedule Incomplete Work

25. Process Needs Typical ScheduleMaintenance Cycle Weekly? Monthly? Quarterly?

26. EVM Modeling Options in Project • % Complete is duration based and is calculated by Project when entering Actual Start/Actual Finish or Actual Work • Physical % Complete is always entered manually by you. Allows for a more accurate measure of real work performed when duration is not a good indicator.

27. EVM De-Mystified Demo Data Requirements in Project EVM Fundamentals – A Day In The Life EVM Reporting & Analysis

28. Challenges with EVM Projects will look ‘RED’ all the time! Are estimates too optimistic? Are resource availability assumptions too high? Getting Actuals is too hard! Consider SharePoint Sync Updates Consider Project Online Stakeholders won’t understand EVM Reports! Simple charts and graphs always tell a story

29. The Real Value of EVM It’s not just about reporting. It’s about driving results. Are we on schedule? Will we be on budget? Are our resources delivering? Will we meet customer expectations? Can we keep our promises? Monitor Control Deliver Understand Respond Trust

30. Additional Resources http://office.microsoft.com/en-us/project-help/earned-value-analysis-for-the-rest-of-us-HA102840086.aspx http://office.microsoft.com/en-us/project-help/applying-earned-value-analysis-to-your-project-HA001021179.aspx www.pm-providers.com

31. Microsoft Project Earned Value Fields • ACWP Fields • Baseline Cost (BAC) Fields • BCWP Fields • BCWS Fields • CPI Fields • CV Fields • CV% Fields • EAC (Task Field) Fields values are calculated by Project based on Task level data • Earned Value Method (Task Field) • Physical % Complete (Task Field) • SPI Fields • SV Fields • SV % Fields • TCPI (Task Field) • VAC Fields www.pm-providers.com

32. EVM De-Mystified Q&A