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Earned
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Earned Value Management Earned Value Management Pranay Srivastava Pranay Srivastava
Mar 2008Mar 2008
Agenda
� Earned Value Management � EVM Introduction
� Base Data
� Summary Data
� Forecast Data
� EVM in Practice.
Agenda
� Earned Value Management � EVM Introduction
� Base Data
� Summary Data
� Forecast Data
� EVM in Practice.
EVM History� 1967 DoD Instruction Cost/Schedule
control system criteria
� 1987 PMI recommends EVM
� 1997 DoD Regulation 5000.2R on EVM
� 1998 ANSI/EIA 748 adopts EVM.
What is EVM� Best practices focusing on process, people & tools for project tracking and control
� Integrates� Technical performance (status of work)
� Schedule performance
� Cost performance
� When used to its full extent, it allows � Measuring performance
� Analyzing variance
� Developing forecasts.
Advantages of EVM
� Easy to understand
� Low overhead
� Integrates cost and schedule
� Based on results
� Simplifies status reporting
� Reliable prediction
� Well proven.
Disadvantages of EVM
� Doesn’t address critical path
� Deterministic
� Can drive wrong behavior
� Doesn’t account quality
� Can’t handle management reserves
� Doesn’t reveal the cause.
Type Of Data
� Base Data� Data ONLY for the current period
� Summary Data� Derived data based on the base data
� Rolled-up data till date
� Indicates the current health of the project
� Forecast Data� Project forecast/estimate based on summary data.
Agenda
� Earned Value Management � EVM Introduction
� Base Data
� Summary Data
� Forecast Data
� EVM in Practice.
Base Data
� Total Budget (BAC)� Total planned value for the project
� Planned value (PV)� Estimated effort/cost for all tasks planned to be completed in the period
� Earned value (EV)� Planned effort/cost for all tasks completed during the period.
Base Data
� Actual Cost (AC)� Actual effort/cost incurred on all tasks completed during the period
� Total Spent (TS)� Actual effort/cost incurred on all tasks to date, regardless of whether the task has been completed or not.
Base Data
� Assume today is 22nd Feb; Task A, B, C, D are complete, E is in-progress, and F not yet started
Total
1025-feb-2008F
3*520-Feb-2008E
131015-Feb-2008D
7510-Feb-2008C
14105-Feb-2008B
551-Feb-2008A
TSACEVPVSchedule DateTask
Agenda
� Earned Value Management � EVM Introduction
� Base Data
� Summary Data
� Forecast Data
� EVM in Practice.
Summary Data
� Cost Variance (CV)� Difference between Earned Value and Actual Cost i.e. EV – AC
� Cost Performance Index (CPI)� Ratio of Earned Value and Actual Cost (EV/AC)
� <1.0 indicates project will be over budget
� >1.0 indicates project will be under budget
� = 1 indicates project will finish on-budget.
Summary Data
� Schedule Variance (SV)� Difference between Earned Value and Planned Value i.e. EV – PV
� Schedule Performance Index (SPI)� Ratio of Earned Value and Planned Value (EV/PV)
� <1.0 indicates project will be delayed
� >1.0 indicates project will finish before time
� = 1 indicates project will finish on-time.
Summary Data - Emerging Trend
� Why required� SV/SPI are measure of work scope not time
� At end of project, SV = 0 & SPI = 1
� Time Based Schedule Variance� Difference between Planned Time and Actual Time
� SV(t) = Planned Time – Actual Time
� Time Based Schedule Performance Index� Ratio of Planned Time and actual Time
� SPI(t) = Planned Time / Actual Time
Summary Data
� Assume today is 22nd Feb; Task A, B, C, D are complete; E is in-progress, F not yet started
Total
10F
3*5E
1310D
75C
1410B
55A
SPISVCPICVTSACEVPVTask
Agenda
� Earned Value Management � EVM Introduction
� Base Data
� Summary Data
� Forecast Data
� EVM in Practice.
Forecast Data
� Estimate To Complete (ETC)� Estimated effort/cost to complete all pending scheduled tasks
� Project ETC� Team's estimate of effort/cost required to complete all scheduled tasks (valid when earlier estimations are no longer valid)
� Statistical ETC� ETC = (BAC – EV) assuming similar variance will not occur in future
� ETC = (BAC-EV)/CPI assuming similar variance will occur in future.
Forecast Data
� Estimate At Completion (EAC)� Estimated effort/cost incurred to complete all scheduled tasks
� Project EAC� Team's estimate of total effort/cost to complete all scheduled tasks
� Project EAC = Total Spent + Project ETC
� Statistical EAC� EAC = Actual Cost + (BAC-EV)
� EAC = Actual Cost + (BAC-EV)/CPI.
Forecast Data - Emerging Trend
� Future cost performance is assumed to be same as past 3 periods cost performance
� EAC = AC + ( BAC - EV)/ ((EVi+EVj+EVk)/ACi+ACj+ACk)
� Future cost performance is assumed to be also influenced by schedule performance
� EAC = AC + ( BAC - EV)/ (CPI*SPI)
� Future cost performance is assumed to be influenced by both cost & schedule performance in some ratio (x,y)
� EAC = AC + ( BAC - EV)/ (x CPI + y SPI)
Forecast Data - Emerging Trend
� Time Estimate At Completion (EACT)� Approx time incurred to complete all scheduled tasks
� An emerging trend in EVM that uses time-based measure of schedule as an alternative or supplement to traditional work-based measure
� Statistical EACT� EACT = BAC/SPIat current trend.
Forecast Data
� Variance At Completion (VAC)� Forecasted variance between Total Budget and Estimate At Completion
� Project VAC� Team's forecasts of difference between budgeted and actual cost for all tasks
� Project VAC = Total Budget - Project EAC
� Statistical VAC� Statistical VAC = Total Budget - Statistical EAC.
Forecast Data
� To Complete Performance Index (TCPI)� Forecasts how efficient the project team needs to be to complete the project on budget
� TCPI = (Total Budget – Earned Value)
_________________________
(Total Budget – Actual Cost)
Forecast Data
� Assume today is 22nd Feb; Task A, B, C, D are complete; E is in-progress, F not yet started
Total
10F
3*5E
1310D
75C
1410B
55A
TCPI
VACEACETCSPICPIACPVTask
Agenda
� Earned Value Management � EVM Introduction
� Base Data
� Summary Data
� Forecast Data
� EVM in Practice.
Steps in using EVM
Develop
task level
Budget
Record task
level usage
Analyze &
Forecast
performance
Measure
physical
progress
Take
corrective
action
Report
performance
� Are we ahead/behind schedule?� Schedule Variance
� How efficiently are we using time?� Schedule Performance Index
� When are we likely to finish work?� Time Estimate at Completion.
How EVM helps in Time management?
� Are we under/over budget?� Cost Variance
� How efficiently are we using resource?� Cost Performance Index
� What is the project likely to cost?� Estimate At Completion
� What will the remaining work cost?� Estimate To Complete
� How much under/over budget will we be at end of project?� Variance At Completion.
How EVM helps in Cost management?
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