What Is It ? Why Do I Need It ? How Do I Do It?

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Earned Value Analysis. What Is It ? Why Do I Need It ? How Do I Do It?. Todays Situation. Need for accurate and consistent status information Numerous complex (and interrelated) projects Projects with many WBS activities Virtual offices Diverse and integrated manufacturing processes. - PowerPoint PPT Presentation

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  • *What Is It ?

    Why Do I Need It ?

    How Do I Do It?Earned Value Analysis

  • *Todays SituationNeed for accurate and consistent status informationNumerous complex (and interrelated) projectsProjects with many WBS activitiesVirtual officesDiverse and integrated manufacturing processes

  • *Theres Room For Improvement70% of projects are:Over budgetBehind schedule

    52% of all projects finish at 189% of their initial budget

    And some, after huge investments of time and money, are simply never completed

    Source:The Standish Group

  • *How to answer the question: Have we done what we said wed do?% complete estimating % of Budget spent% of work done% of time elapsedsubjective, incomplete

    draws false conclusions

  • *Enter Earned Value AnalysisEarned Value Analysis is:an industry standard way to:measure a projects progress,forecast its completion date and final cost, andprovide schedule and budget variances along the way.

    By integrating three measurements, it provides consistent, numerical indicators with which you can evaluate and compare projects.

  • *Whats More Important?Knowing where you are on schedule?

    Knowing where you are on budget?

    Knowing where you are on work accomplished?

  • *EVA Integrates All ThreeIt compares the PLANNED amount of work with what has actually been COMPLETED, to determine if COST , SCHEDULE, and WORK ACCOMPLISHED are progressing as planned.Work is Earned or credited as it is completed.

  • *Earned Value is needed because...Different measures of progress for different types of tasks

    Need to roll up progress of many tasks into an overall project status

    Need for a uniform unit of measure (dollars or work-hours).

  • *Earned Value is needed because...Provides an Early Warning signal for prompt corrective action.

    Bad news does not age well.

    Still time to recover

    Timely request for additional funds

  • *And One More ReasonWhy You Need EVA?

  • *Because It May Be Required!These Set the Stage:GPRA; 1993FASA, Title V; 1994Clinger-Cohen Act; 1996And Then Along Came OMB! (Circular A-11, Part 7)"Agencies must use a performance based acquisition management system, based on ANSI/EIA Standard 748, to measure achievement of the cost, schedule, and performance goals."

  • *OK, So What Is This Stuff?

  • *So, Is This Stuff New ?Its been around since the sixties.

    Cost/Schedule Control Systems Criteria(C/SCSC)

  • *Examples of Informal Earned Value AnalysisIts done informally without realizing it.30% time used,30% $$ spentSo, if 30% of the work is done, I must be OK ??

    Shop floor estimates

    Cost comparisonsBudget vs. Actual

  • *Hows This Project Doing?

    EVA Chart

    500050005000

    120001100012500

    190001750019000

    290002620029000

    390003500039000

    550004900055000

    650005600065000

    800003783437834

    900003786537865

    950003789537895

    1000003792637926

    1020003795637956

    Project is:

    13.8% Behind Schedule16.1% Over Cost

    BCWS

    BCWP

    ACWP

    Typical Chart

    90008640

    1800017280

    2700025920

    3600034560

    4500043200

    5400051840

    6300060480

    7200037834

    8100037865

    9000037895

    9900037926

    10800037956

    Projected

    Actual

    Typical Data

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    Projected900018000270003600045000540006300072000810009000099000108000

    Actual8640172802592034560432005184060480

    Factor0.96

    EVA Data

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWS5000120001900029000390005500065000800009000095000100000102000

    BCWP5000110001750026200350004900056000

    ACWP5000125001900029000390005500065000

    Schedule Variance0-1000-1500-2800-4000-6000-9000

    Sched. Var. %0.0%-8.3%-7.9%-9.7%-10.3%-10.9%-13.8%

    Schedule Perf. Index1.0000.9170.9210.9030.8970.8910.862

    Cost Variance0-1500-1500-2800-4000-6000-9000

    Cost Var. %0.0%-13.6%-8.6%-10.7%-11.4%-12.2%-16.1%

    Cost Perf. Index1.0000.8800.9210.9030.8970.8910.8621.161

    EAC 1

    VAC 1

    VAC % 1

    EAC 2

    Project is:

    13.8% Behind Schedule16.1% Over Cost

  • *Lets Take A Look Under The Hood

  • *But First! - We Must Get OrganizedEVA works best when work is compartmentalized.

    Compartmentalization is best achieved with a well-planned Work Breakdown Structure.

    So, how do I create a WBS for a really complex project?

  • *Proper WBS DesignOne WBS per programDeliverable-orientedWork not in the WBS is out-of-scopeEach descending level represents more detailFull (and accurate) definition is keyDefined deliverable(s)Timeframe for delivery of productTotal cost (direct and indirect) to deliver product

    Lets Look at an example:

  • *A Sample Work Breakdown StructureServe Pizzas to CustomersProvide the PlaceCook the FoodServe Customers(Others)Cook the SauceMake the DoughBuild the Pizza

  • *WBS Units are Work PackagesLowest level WBS elements

    Have an accompanying narrative

    Have three measurable componentsScope of work to be accomplishedTotal (direct and indirect) costTimeframe for completion

  • *Control Account PlansA CAP is essentially a Work Package with some added features:Assignment of responsibilityOrganizationIndividualDivision (if necessary) into lower-level Work Packages.Metrics for measuring EV performanceMilestones% completeOther

    The sum of the CAPs constitutes the Performance Measurement Baseline

  • *Some New TermsPV Planned Value

    AC - Actual Cost

    EV Earned Value

  • *Earned Value DefinitionsPV: Planned Value

    Planned cost of the total amount of work scheduled to be performed by the milestone date.

  • *PV Planned Value or Budgeted Cost of Work Scheduled

    Chart2

    5000

    12000

    19000

    29000

    39000

    55000

    65000

    80000

    90000

    95000

    100000

    102000

    BCWS

    EVA Chart

    500050005000

    120001100012500

    190001750019000

    290002620029000

    390003500039000

    550004900055000

    650005600065000

    800003783437834

    900003786537865

    950003789537895

    1000003792637926

    1020003795637956

    Project is:

    13.8% Behind Schedule16.1% Over Cost

    BCWS

    BCWP

    ACWP

    Typical Chart

    90008640

    1800017280

    2700025920

    3600034560

    4500043200

    5400051840

    6300060480

    7200037834

    8100037865

    9000037895

    9900037926

    10800037956

    Projected

    Actual

    Typical Data

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    Projected900018000270003600045000540006300072000810009000099000108000

    Actual8640172802592034560432005184060480

    Factor0.96

    EVA Data

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWS5000120001900029000390005500065000800009000095000100000102000

    BCWP5000110001750026200350004900056000

    ACWP5000125001900029000390005500065000

    Schedule Variance0-1000-1500-2800-4000-6000-9000

    Sched. Var. %0.0%-8.3%-7.9%-9.7%-10.3%-10.9%-13.8%

    Schedule Perf. Index1.0000.9170.9210.9030.8970.8910.862

    Cost Variance0-1500-1500-2800-4000-6000-9000

    Cost Var. %0.0%-13.6%-8.6%-10.7%-11.4%-12.2%-16.1%

    Cost Perf. Index1.0000.8800.9210.9030.8970.8910.8621.161

    EAC 1

    VAC 1

    VAC % 1

    EAC 2

    Project is:

    13.8% Behind Schedule16.1% Over Cost

    EVA Data

    BCWS

  • *Earned Value Definitions (cont.)AC: Actual Cost of Work Performed

    Cost incurred to accomplish the work that has been done to date.

  • *ACWP - Actual Cost of Work Performed

    Chart6

    50005000

    1100012500

    1750019600

    2620029900

    3500039900

    4900056000

    3780337803

    3783437834

    3786537865

    3789537895

    3792637926

    3795637956

    BCWP

    ACWP

    EVA Chart

    500050005000

    120001100012500

    190001750019600

    290002620029900

    390003500039900

    550004900056000

    650003780337803

    800003783437834

    900003786537865

    950003789537895

    1000003792637926

    1020003795637956

    Project is:

    13.8% Behind Schedule16.1% Over Cost

    BCWS

    BCWP

    ACWP

    Typical Chart

    90008640

    1800017280

    2700025920

    3600034560

    4500043200

    5400051840

    6300060480

    7200037834

    8100037865

    9000037895

    9900037926

    10800037956

    Projected

    Actual

    Typical Data

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    Projected900018000270003600045000540006300072000810009000099000108000

    Actual8640172802592034560432005184060480

    Factor0.96

    ACWP

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWP50001100017500262003500049000

    ACWP50001250019600299003990056000

    ACWP

    BCWP

    ACWP

    BCWP

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWP50001200019000290003900055000

    BCWP

    BCWP

    BCWS

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWS5000120001900029000390005500065000800009000095000100000102000

    BCWS

    BCWS

    EVA Data

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWS5000120001900029000390005500065000800009000095000100000102000

    BCWP50001100017500262003500049000

    ACWP50001250019600299003990056000

    Schedule Variance0-1000-1500-2800-4000-6000

    Sched. Var. %0.0%-8.3%-7.9%-9.7%-10.3%-10.9%

    Schedule Perf. Index1.0000.9170.9210.9030.8970.891

    Cost Variance0-1500-2100-3700-4900-7000

    Cost Var. %0.0%-13.6%-12.0%-14.1%-14.0%-14.3%

    Cost Perf. Index1.0000.8800.8930.8760.8770.875

    EAC 1

    VAC 1

    VAC % 1

    EAC 2

    Project is:

    10.9% Behind Schedule14.3% Over Cost

  • *Earned Value Definitions (cont.)EV: Earned value or Budgeted Cost of Work PerformedThe planned (not actual) cost to complete the work that has been done.

  • *EV- Earned Value or Budgeted Cost of Work Performed

    Chart2

    50005000

    1100012000

    1750019000

    2620029000

    3500039000

    4900055000

    37803

    37834

    37865

    37895

    37926

    37956

    BCWP

    BCWS

    EVA Chart

    500050005000

    120001100012500

    190001750019600

    290002620029900

    390003500039900

    550004900056000

    650003780337803

    800003783437834

    900003786537865

    950003789537895

    1000003792637926

    1020003795637956

    Project is:

    13.8% Behind Schedule16.1% Over Cost

    BCWS

    BCWP

    ACWP

    Typical Chart

    90008640

    1800017280

    2700025920

    3600034560

    4500043200

    5400051840

    6300060480

    7200037834

    8100037865

    9000037895

    9900037926

    10800037956

    Projected

    Actual

    Typical Data

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    Projected900018000270003600045000540006300072000810009000099000108000

    Actual8640172802592034560432005184060480

    Factor0.96

    ACWP

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWP50001100017500262003500049000

    ACWP50001250019600299003990056000

    ACWP

    BCWP

    ACWP

    BCWP

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWP50001100017500262003500049000

    BCWS50001200019000290003900055000

    BCWP

    BCWP

    BCWS

    BCWS

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWS5000120001900029000390005500065000800009000095000100000102000

    BCWS

    BCWS

    EVA Data

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWS5000120001900029000390005500065000800009000095000100000102000

    BCWP50001100017500262003500049000

    ACWP50001250019600299003990056000

    Schedule Variance0-1000-1500-2800-4000-6000

    Sched. Var. %0.0%-8.3%-7.9%-9.7%-10.3%-10.9%

    Schedule Perf. Index1.0000.9170.9210.9030.8970.891

    Cost Variance0-1500-2100-3700-4900-7000

    Cost Var. %0.0%-13.6%-12.0%-14.1%-14.0%-14.3%

    Cost Perf. Index1.0000.8800.8930.8760.8770.875

    EAC 1

    VAC 1

    VAC % 1

    EAC 2

    Project is:

    10.9% Behind Schedule14.3% Over Cost

  • *The Whole Story

    Chart4

    500050005000

    120001100012500

    190001750019600

    290002620029900

    390003500039900

    550004900056000

    650003780337803

    800003783437834

    900003786537865

    950003789537895

    1000003792637926

    1020003795637956

    BCWS

    BCWP

    ACWP

    EVA Chart

    500050005000

    120001100012500

    190001750019600

    290002620029900

    390003500039900

    550004900056000

    650003780337803

    800003783437834

    900003786537865

    950003789537895

    1000003792637926

    1020003795637956

    Project is:

    13.8% Behind Schedule16.1% Over Cost

    BCWS

    BCWP

    ACWP

    Typical Chart

    90008640

    1800017280

    2700025920

    3600034560

    4500043200

    5400051840

    6300060480

    7200037834

    8100037865

    9000037895

    9900037926

    10800037956

    Projected

    Actual

    Typical Data

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    Projected900018000270003600045000540006300072000810009000099000108000

    Actual8640172802592034560432005184060480

    Factor0.96

    Combined Chart

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWS5000120001900029000390005500065000800009000095000100000102000

    BCWP50001100017500262003500049000

    ACWP50001250019600299003990056000

    Combined Chart

    BCWS

    BCWP

    ACWP

    ACWP

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWP50001100017500262003500049000

    ACWP50001250019600299003990056000

    ACWP

    BCWP

    ACWP

    BCWP

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWP50001100017500262003500049000

    BCWS50001200019000290003900055000

    BCWP

    BCWP

    BCWS

    BCWS

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWS5000120001900029000390005500065000800009000095000100000102000

    BCWS

    BCWS

    EVA Data

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWS5000120001900029000390005500065000800009000095000100000102000

    BCWP50001100017500262003500049000

    ACWP50001250019600299003990056000

    Schedule Variance0-1000-1500-2800-4000-6000

    Sched. Var. %0.0%-8.3%-7.9%-9.7%-10.3%-10.9%

    Schedule Perf. Index1.0000.9170.9210.9030.8970.891

    Cost Variance0-1500-2100-3700-4900-7000

    Cost Var. %0.0%-13.6%-12.0%-14.1%-14.0%-14.3%

    Cost Perf. Index1.0000.8800.8930.8760.8770.875

    EAC 1

    VAC 1

    VAC % 1

    EAC 2

    Project is:

    10.9% Behind Schedule14.3% Over Cost

  • *Some Derived MetricsSV: Schedule Variance (EV-PV)A comparison of amount of work performed during a given period of time to what was scheduled to be performed.A negative variance means the project is behind schedule

    CV: Cost Variance (EV-AC)A comparison of the budgeted cost of work performed with actual cost.A negative variance means the project is over budget.

  • *Schedule Variance & Cost VarianceSchedule Variance = EV-PV

    $49,000- 55,000SV = - $ 6,000

    Cost Variance = EV-AC

    $49,000 56,000CV = - $7,000

  • *SPI: Schedule Performance IndexSPI=EV/PV If SPI
  • *Performance MetricsSPI: EV/PV49,000/55,000 = 0.891

    CPI: EV/AC49,000/56000 = 0.875

    CSI: SPI x CPI.891 x .875 = 0.780

  • *Making ProjectionsOnce a project is 10% complete, theoverrun at completion will not be lessthan the current overrun.

    Once a project is 20% complete,the CPI does not vary from its currentvalue by morethan 10%.

    The CPI and SPI are statistically accurate indicators of final cost results.

    Source: Defense Acquisition University

  • *Making ProjectionsToday

    Chart5

    500050005000

    120001100012500

    190001750019600

    290002620029900

    390003500039900

    550004900056000

    650005791566188.5714285714

    800007128081462.8571428571

    900008019091645.7142857143

    950008464596737.1428571429

    10000089100101828.571428571

    10200090882103865.142857143

    BCWS

    BCWP

    ACWP

    EVA Chart

    500050005000

    120001100012500

    190001750019600

    290002620029900

    390003500039900

    550004900056000

    650003780337803

    800003783437834

    900003786537865

    950003789537895

    1000003792637926

    1020003795637956

    Project is:

    13.8% Behind Schedule16.1% Over Cost

    BCWS

    BCWP

    ACWP

    Typical Chart

    90008640

    1800017280

    2700025920

    3600034560

    4500043200

    5400051840

    6300060480

    7200037834

    8100037865

    9000037895

    9900037926

    10800037956

    Projected

    Actual

    Typical Data

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    Projected900018000270003600045000540006300072000810009000099000108000

    Actual8640172802592034560432005184060480

    Factor0.96

    Projections

    1/1/032/1/033/1/034/1/035/1/036/1/037/1/038/1/039/1/0310/1/0311/1/0312/1/03

    BCWS5000120001900029000390005500065000800009000095000100000102000

    BCWP50001100017500262003500049000579157128080190846458910090882

    ACWP50001250019600299003990056...