SMU CSE 7315 Planning and Managing a Software Project

1. SMU CSE 7315Planning and Managing a Software Project Module 29 Earned Value

2. Objective of This Module • To introduce earned value techniques – a powerful tool for tracking and oversight

3. Some of the Values Typically Known for a Project • The project schedule in days or weeks or months or years • We will denote this as SCHED • The project budgetin dollars or labor hours • We will denote this as BAC or BCWSBAC • The current estimate for the final project cost • We will denote this as EAC or BCWSEAC • The amount of money that has actually been spentso far • We will denote this as ACWP or AV

4. How Accurate Are Estimates Of the Following? • How much time is left before we pass all of the tests? • Is it always “just a little more”? • What percent of the work is complete? • Are you always “90% done”? • How much more money or labor does the project need?

5. Earned Value is a Way to Measure These Things Information Needed: • Amount of work actually performed • Projections for duration of project Measures: • Earned Value = the value of the total work performed • Performance indices for cost & schedule

6. Most Projects Keep Track of Plan and Actual Cost and Schedule • Your Plan or Planned Value - how much time or money you expect or estimate you will spend • In Earned Value, this is denoted: BCWS or PV • Your Actual Expenses or Actual Value - how much it has actually cost you • In Earned Value, this is denoted: ACWP or AV But these do not tell you whether the plan is realistic or when you will finish the work

7. This is the new measure that makes this a powerful technique Earned Value Techniques Use These Data • Your Plan or Planned Value - how much you expect or estimate you will spend • BCWS or PV • Your Actual Expenses or Actual Value - how much it has actually cost you • ACWP or AV • Your EarnedValue - the value of the work you have performed • BCWP or EV

8. Earned Value Terminology • BCWS(Budgeted Cost of Work Scheduled) or PV(Planned Value) • Your plan. How much work should have been done by now, according to the schedule? • ACWP (Actual Cost of Work Performed) or AV(Actual Value) • Actual. How much has been spent? • BCWP(Budgeted Cost of Work Performed) orEV (Earned Value) • Earned. How much should have been spent for the work actually performed?

9. Units • “Budget” and “work” can be measured in money (example: dollars), effort (example: staff-hours), or other units • Effort is usually the easiest way to measure • But money can be adjusted to include overhead costs and non-labor costs, so it may be a more accurate unit

10. Each Value Metrics are Computed Several Ways • “CTD” or “current, to date” values indicate what you have spent or earned or planned as of the current date • “BAC” or “budget at completion” values indicate what you have budgeted to complete the entire project • “EAC” or “estimate at completion” values indicate what you estimate you will spend for the entire project

11. Example • BCWSCTD is the “current, to date” value of the project budget - the amount budgeted to be spent up to the current date. • BCWSBAC is the total project budget. This is sometimes represented as BAC. • ACWPEAC is the “estimate at complete” for the actual cost - your estimate of what you will actually spend. This is sometimes just represented as EAC.

12. ACWPEAC BCWSBAC BCWSCTD Example, Shown in a Rate Chart Typically, EAC = BAC when you start

13. BCWSBAC ACWPCTD BCWSCTD Example:Actual Costs Exceed Budget

14. ACWPEAC BCWSBAC ACWPCTD BCWSCTD EAC is Current Estimated Cost EAC is your current estimate of actual cost

15. Actual Cost vs. Budget • By plotting actual cost against budget, you can tell how much you are spending compared with your plan • But you cannot tell … … whether you are running ahead or behind schedule … whether the work will actually be done by the time the budget is spent … whether the work will be done by the scheduled completion date

16. In Other Words … … you could be spending exactly according to budget, yet be running very far behind in actual work completed … you could be spending more than budget, yet be running ahead in actual work completed

17. Earned ValueAnswers Those Questions • BCWP or Earned Value tells how much you have earned for the money you have spent • And thus tells you whether you have a problem or not

18. Questions You Can Answer with Earned Value • Are we getting the work done on schedule? • Are we overspending? • Will we overrun or under run the budget? • What is a realistic end date? • What performance level is required to meet the budget or the deadline?

19. Earned Value Provides Insight Early in the Project • You can tell if there are problems after completing 5-10% of the work • You have time to make adjustments • You can communicate the problems and their scope using quantitative methods rather than guesswork

20. Earned Value Measures are a way to Quantify Progress, Predict Future Performance and Manage Project Risk

21. WBS or Requirements “Are we getting the work done?” Budget “Are we overspending?” Top Level View ofEarned Value Measure • $ Spent vs. $ Planned • $ Spent vs. thresholds of what should have been spent Earned Value

22. A Simple Way to Determine Earned Value • This method avoids a lot of the jargon and just focuses on the substance • If you understand this method you will find it easier to understand the definitions of earned value metrics found in other places

23. Develop a Micro Schedule for the Next Part of the Project Top Level Schedule Micro Schedule for the Next Phase Micro Schedule is the locally-managed schedule, defined by those doing the work

24. What Is a Micro Schedule • A schedule of small tasks or “inch stones” whose duration can be measured in days or a few weeks • This represents the work tasks assigned to individuals • Have the individuals who will do the work develop their micro schedule

25. Task Characteristics • Defined durations (specific schedules) • Defined values (labor effort required for each task) • Objective criteria for task completion

26. Earned Value Micro ScheduleBasic Task Estimates TaskEffort PlannedComplete Date Resp. (days) (week #) Set Up 3 1 Joe Get Specs 2 2 Mary Design Output 10 5 Pete & Joe Plan Tests 3 6 Joe Code 5 7 Mary Unit Test 3 8 Joe Integrate 2 9 Mary Beta Test 3 10 Pete Total 31

27. CMMI Maturity Level and Micro Schedule • At level 1 or 2 • Micro schedule is typically developed by individuals, with little organizational knowledge • At level 3 • Organizational process is often a major factor in defining the schedule • At level 4 or higher • Organizational process and past performance data are typically major factors

28. Convert Micro Schedule to a Running Total of Effort Planned WeekTotal Effort Planned to be Complete 1 3 2 5 3 5 (*) 4 5 (*) 5 15 6 18 7 23 8 26 9 28 10 31 (*) Does not allow partial credit for progress on “design output” task

29. BCWS The Total Planned Effort is the Budgeted Cost of Work Scheduled WeekTotal Effort Planned to be Complete 1 3 2 5 3 5 4 5 5 15 6 18 7 23 8 26 9 28 10 31

30. BCWS BCWSBAC BAC is Ending Value of Budgeted Cost of Work Scheduled WeekTotal Effort Planned to be Complete 1 3 2 5 3 5 4 5 5 15 6 18 7 23 8 26 9 28 10 31

31. BCWSCTD BCWS BCWSBAC CTD Value of Budgeted Cost of Work ScheduledCorresponds to Where We Are Today WeekTotal Effort Planned to be Complete 1 3 2 5 3 5 4 5 5 15 6 18 7 23 8 26 9 28 10 31

32. BCWS Earned Value Plan Graph (BCWS)

33. What About Partial Credit? • The whole point of having “inchstones” is to define the work in small enough chunks so that there is no partial credit. • This avoids judgment about what portion of the work task is complete • But as seen from the previous graph, it can understate the amount of work that has actually been performed

34. Solutions to the Understating Problem • Break every task into small pieces so you can take credit for completing parts of the task (next several slides) • Allow partial credit for larger tasks • But ONLY in LARGE portions, such as: • 25%, 50%, 75% or 100% • 33%, 67%, or 100% (see Appendix A) Even with these techniques, earned value does tend to slightly underestimate the actual work performed.

35. Revisiting with More Uniform Inchstones (Basic Task Estimates) TaskEffort PlannedComplete Date Resp. (person-days) (week #) Set Up 3 1 Joe Get Specs 2 2 Mary Design Output1 2 3 Pete & Joe Design Output2 4 4 “ Design Output3 4 5 “ Plan Tests 3 6 Joe Code 5 7 Mary Unit Test 3 8 Joe Integrate 2 9 Mary Beta Test 3 10 Pete Total 31

36. Convert to Running Total of Effort Planned WeekTotal Effort Planned to be Complete 1 3 2 5 3 7 4 11 5 15 6 18 7 23 8 26 9 28 10 31

37. BCWS The Total Planned Effort is the Budgeted Cost of Work Scheduled WeekTotal Effort Planned to be Complete 1 3 2 5 3 7 4 11 5 15 6 18 7 23 8 26 9 28 10 31

38. BCWS BCWSBAC BAC is Ending Value of Budgeted Cost of Work Scheduled WeekTotal Effort Planned to be Complete 1 3 2 5 3 7 4 11 5 15 6 18 7 23 8 26 9 28 10 31

39. BCWSCTD BCWS BCWSBAC CTD Value of Budgeted Cost of Work Scheduled Corresponds to Where We Are Today WeekTotal Effort Planned to be Complete 1 3 2 5 3 7 4 11 5 15 6 18 7 23 8 26 9 28 10 31

40. BCWS Earned Value Plan Graph (BCWS)

41. BCWS Shortcut Version of Earned Value Plan Graph (BCWS) Some systems estimate BCWS by drawing a straight line from 0 at start to total project budget at end.

42. Budget • Your actual budget should match this plan • If the actual budget does not match, you can negotiate what to do before beginning the work • Reduce plan to match available budget • Increase budget to match plan • Somewhere in between • Renegotiate plan with developers • Track twice - against budget and against plan

43. BCWPCTD Earned Value Datafor a Given Week TaskEffort (days)% CompleteEarned Set Up 3 100 3 Get Specs 2 50 1 Design Output 10 25 2.5 Plan Tests 3 0 0 Code 5 0 0 Unit Test 3 0 0 Integrate 2 0 0 Beta Test 3 0 0 Total 31 6.5

44. Earned Value Procedure • Each week you compute a new “% complete” value for each task • Perhaps allow only 0 or 100% • Or perhaps allow 50% or 33% or 25%, but you should avoid smaller increments • Then compute the total work performed so far • Plot the total each week in the plan graph, representing an “earned” line

45. BCWS BCWP Earned ValueTypical Graph

46. Earned Value Applications • You can spot deviations from plan and project completion dates • You can also plan overtime or other contingency activities • You can show your management that you know where you are and are not suffering from the “always 90% done” syndrome

47. Earned Value Advantages • By using only small tasks, it is easier to tell what is actually complete • Developers can use the data to manage their work - it is their plan • The data gives them insight on what they are accomplishing • The detailed work sequence does not matter. All completed work is “earned” • Developers can make the right decisions about work sequencing

48. BCWP = Work Completed (earned value) ACWP = Money Spent (or effort spent) ACWP vs BCWP • ACWP (Actual Cost of Work Performed) is what you have actually spent • Whereas BCWP (Budgeted Cost of Work Performed) is what you have “earned” or accomplished

49. Typical Graph Showing Work Behind but On Budget

50. BCWS (plan) Typical Graph Showing Work Behind but On Budget