Project Management

Using
Earned Value
Second Edition

Gary C. Humphreys
© 2002, 2011 Gary C. Humphreys
Humphreys & Associates, Inc.
All rights reserved. No part of this book may be reproduced, distributed, or stored in any form or by any
means without the written permission of the author.

First edition published 2002. Second edition 2011

Printed in the United States of America

ISBN 0-9708614-0-0

Humphreys & Associates, Inc.

3111 North Tustin Street, Suite 250
Orange, CA 92865 USA
(714) 685-1730
[email protected]
www.humphreys-assoc.com
 iii

Table of Contents
List of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiii
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxv
SECTION 1 EARNED VALUE PROJECT MANAGEMENT AND ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

Chapter 1 Project Management Using Earned Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

What is a Project? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Managing Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
The Performance-Oriented Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Summary Implementation Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Factors Affecting System Implementation Detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Earned Value Management System Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
The Earned Value Management Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
The Process Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Chapter 1 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Chapter 2 Definition of Scope, Work Breakdown Structure (WBS) and WBS Dictionary . . . . . . 45
Defining Project Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
The Work Breakdown Structure (WBS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Considerations in Developing a WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
WBS Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
WBS Dictionary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Other Considerations in WBS Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
The Contract Work Breakdown Structure (CWBS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Scope Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Chapter 2 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Case Study 2.1 Work Breakdown Structure Part 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Case Study 2.2 Work Breakdown Structure Part 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Case Study 2.3 WBS Element Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Chapter 3 Managing Project Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Introduction to Managing Project Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
The Process Flow Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Relationship of Risk Management to the Earned Value Management System . . . . . . . . . . 85
Development of Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Quantitative Schedule Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Management Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Variance Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Estimates at Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Chapter 3 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Case Study 3.1 Using the Risk Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
iv Table of Contents

Chapter 4 Relating Organizations, Responsibility, and Work Scope . . . . . . . . . . . . . . . . . . . . . . 91

Organizational Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Responsibility Assignment Matrix (RAM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Control Account Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Chapter 4 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Case Study 4.1 Control Account Definition Part 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Case Study 4.2 Control Account Definition Part 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Chapter 5 Work Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

The Work Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Advantages of Work Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
The Work Team Lead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Chapter 5 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
Case Study 5.1 Organization Chart and Responsibility Assignment Matrix . . . . . . . . . . . 121
Case Study Section 1 Quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
SECTION 2 SCHEDULING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133

Chapter 6 What is Scheduling? Schedule Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

Project Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
What is a Schedule and Why Use One? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Data Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Data Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Using Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Schedule Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Gantt Charts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Milestone Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Bar Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Combination Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Modified Gantt/Milestone Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Flow Process Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Set Back Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Line of Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Network Diagrams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Chapter 6 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Case Study 6.1 Developing a Personal Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149

Chapter 7 Introduction to Network Logic Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

Precedence Diagramming Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Activity Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Representations of Logic in Time-Phased Formats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Chapter 7 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Case Study 7.1 Constructing a Network Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161

Chapter 8 Critical Path Method Fundamentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163

The Critical Path Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Critical Path Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Network Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
 Table of Contents v

Free Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170

Directed Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Critical Path Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
A Final Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
Chapter 8 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
Case Study 8.1 A More Complex Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
Case Study 8.2 CPM Network Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
Case Study 8.3 Date, Float and Critical Path Calculation . . . . . . . . . . . . . . . . . . . . . . . . 181
Case Study 8.4 Constructing a Bar Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Case Study 8.5 Path Analysis Using Total Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187

Chapter 9 Resource Loading and Leveling the Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

The Resource Loading Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Priority Rules and Strategies for Resource Leveling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
Additional Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
Leveled Start and Finish . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194
Resource Curves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194
Other Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196
Chapter 9 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
Case Study 9.1 Resource Leveling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199

Chapter 10 Considerations for Developing a Useful, Quality Schedule . . . . . . . . . . . . . . . . . . . . 203

Network Development Techniques: Top-Down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
Network Development Techniques: Bottom-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
Network Development Techniques: IMP/IMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
Concerns in the Schedule Development Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
Using Hammocks, Summary Activities and Grouping for Concise Reporting . . . . . . . . . . 209
Templates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
Lags, Leads and Date Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
Schedule Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
Buffer Activity Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
Baseline Finish Variance Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
Resource Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
Schedule Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
Schedule Visibility Versus Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Determining Detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Creating and Maintaining Quality Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
Fourteen Point Schedule Health Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
Fourteen Point Schedule Health Check – Correlation with GASP . . . . . . . . . . . . . . . . . . 226
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Chapter 10 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
Case Study 10.1 Build a Network Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231

Chapter 11 Crashing the Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235

The “Crashing” Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
An Example of Network Crashing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Other Schedule Acceleration Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
Chapter 11 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
vi Table of Contents

Case Study 11. 1 Crashing the Network or “What If” . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247

Chapter 12 Setting a Traceable Schedule Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249

Schedule Traceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251
A Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252
Defining the Schedule Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
Schedule Baseline Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254
Realism and Schedule Detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256
Timing of Schedule Baseline Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257
Schedule Baseline Revisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 258
The Baseline Schedule Versus the Current Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
Chapter 12 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261
Case Study 12.1 Vertical and Horizontal Schedule Traceability . . . . . . . . . . . . . . . . . . . 263

Chapter 13 Updating the Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267

Successful Schedule Update Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
Additional Statusing Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272
Methods for Addressing Out-Of-Sequence Logic Status . . . . . . . . . . . . . . . . . . . . . . . . . 272
Retained Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272
Progress Override . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275
Impact on Total Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278
Chapter 13 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279
Case Study 13.1 Analyzing the Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281

Chapter 14 Schedule Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283

Duration Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
Measuring Schedule Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286
Defining Significant Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286
Recording the Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286
Work-Around Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287
Baseline Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288
Chapter 14 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
Case Study 14.1 Analyzing Schedule Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291

Chapter 15 Resolving Negative Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295

Float Analysis at Status Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
Isolating the Cause of Float Deterioration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 298
Impact of the Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299
Resolution Alternatives for Negative Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300
Float Analysis by Project Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303
Chapter 15 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 304
Case Study 15. 1 Resolving Negative Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305

Chapter 16 Special Networking Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307

Directed Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307
Secondary Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316
Parallel SS/FF Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318
Level of Effort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319
Calendar Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321
 Table of Contents vii

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321
Chapter 16 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322
Case Study 16.1 A More Complex Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323

Chapter 17 Schedule Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325

Reasons for Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328
Risk Definition and Use of a Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329
The CPM Approach to Schedule Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330
Probabilistic Approach to Schedule Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330
Example: Building Foundation Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330
Example: CPM Path Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331
Risk Analysis of Path Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332
Cumulative Likelihood Curves (S-Curves) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333
Validity of CPM Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335
Highest Risk Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335
Schedule Risk at Path Convergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336
Schedule Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336
Merge Bias at Path Convergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336
Directed Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337
Reducing Durations to Fit the Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
Fast Track Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
Late Start Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
Early Start Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339
Risk Analysis Pitfalls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339
Risk Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340
Schedule Risk Analysis Output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
Cost Risk Analysis Output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
Other Scheduling Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
Risk Assessment Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342
PERT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342
Monte Carlo Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
Cost Effective Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
Chapter 17 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347
Case Study 17.1 Making Activity Duration Distributions . . . . . . . . . . . . . . . . . . . . . . . . . 349
Case Study 17.2 Combining Distributions Along a Path . . . . . . . . . . . . . . . . . . . . . . . . . 351
Case Study 17.3 Schedule EAC and Path Convergence . . . . . . . . . . . . . . . . . . . . . . . . . 357

Chapter 18 Scheduling in a Performance Measurement Environment . . . . . . . . . . . . . . . . . . . . 363

System Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363
Schedule Traceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363
Reconciliation to Time-Phased Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365
Reconciliation of Progress and Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365
Contract Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366
Special Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 368
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369
Chapter 18 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 370
Case Study 18.1 Schedule Traceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 371
Case Study Section 2 Quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375
viii Table of Contents

SECTION 3 ESTIMATING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .385

Chapter 19 The Estimating Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387

Impact of the Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389
Impacts of Poor Estimating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389
Prerequisites for Estimate Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390
Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 390
Work Breakdown Structure (WBS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391
Templates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391
WBS Dictionary and Code of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 392
Estimate Formats/Templates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 392
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393
Chapter 19 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 394

Chapter 20 Types of Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 395

Conceptual Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397
Preliminary Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397
Detailed Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398
Definitive Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398
Impact of “Fast Track” Projects on Estimating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
Chapter 20 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400

Chapter 21 Estimate Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401

The Estimating Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401
Estimating Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406
Inputs for Estimate Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406
Sources of Estimate Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407
The Use of Defaults in Estimate Preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407
Estimating Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408
Level of Estimate Detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410
Calculation of Indirect Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411
Developing a Cost Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411
Use of Other Escalation Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 414
Estimating Operating and Manufacturing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415
Software Estimating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417
Chapter 21 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418
Case Study 21.1 Developing an Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419
Case Study 21.2 Estimate Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421

Chapter 22 Learning Curves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425

Unit Learning Curve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427
Cumulative Average Learning Curve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427
The Difference between Unit Linear and Cumulative Average Linear . . . . . . . . . . . . . . . 427
Determining the Learning Curve to Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 428
Typical Learning Curve Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429
Impacts to Learning Curves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430
Chapter 22 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431
Case Study 22.1 Estimating Cost Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 433
 Table of Contents ix

Chapter 23 Cost Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435

Risk Model Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435
Risk Analysis Sampling Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437
Probability Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437
Risk Assessment Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438
Risk Assessment Output Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439
Conducting a Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 442
Implementation Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443
Chapter 23 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444

Chapter 24 Estimate Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445

External Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447
Other Factors in Estimate Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448
Team Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449
Chapter 24 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450
Case Study 24. 1 Assessing the Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451

Chapter 25 Tracking the Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453

Estimate Traceability: Tracking the Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459
Chapter 25 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 460
Case Study 25.1 Estimate History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461

Chapter 26 Automating the Estimating Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465

Software Evaluation Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468
Implementation Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 469
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 469
Chapter 26 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 470
Case Study Section 3 Quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 471
SECTION 4 EARNED VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .477

Chapter 27 Earned Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479

The Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481
The Earned Value Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484
The Value of Earned Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485
Chapter 27 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486
Case Study 27.1 The Importance of Earned Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487

Chapter 28 The Brick Wall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489

The Brick Wall Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489
Earned Value Brick Wall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495
Chapter 28 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496
Case Study 28.1 The Brick Wall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497

Chapter 29 Measuring Accomplishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499

Work Packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499
Typical Work Packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501
Discrete Effort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501
x Table of Contents

Milestone Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501

Incremental Milestone Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
50/50 Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505
0/100 Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506
Units Complete Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506
Equivalent Units Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507
Percent Complete Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509
Apportioned Effort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511
Level of Effort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511
Other Earned Value Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512
When is Earned Value Credited? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512
Other Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
Chapter 29 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Case Study 29.1 Control Account Plan Exercise 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 515

Chapter 30 Establishing the Performance Measurement Baseline . . . . . . . . . . . . . . . . . . . . . . . 519

Performance Measurement Baseline Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519
Rolling Wave Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521
Performance Measurement Baseline Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 522
Timing of the Baseline Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525
Work Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527
Chapter 30 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 528
Case Study 30.1 Control Account Plan Exercise 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529

Chapter 31 Collecting Actual Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 531

Actual Cost Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 531
Data Element Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533
Accounting Interface with Project Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 534
Cash Flow Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536
Material Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536
Indirect Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537
Late Reporting of Actual Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539
Accuracy of Reported Actual Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540
Reporting Labor Hours versus Labor Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 542
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543
Chapter 31 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 544

Chapter 32 Performance Measurement Calculations and Estimates at Completion . . . . . . . . . . 545

Performance Measurement Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545
Developing the Estimate at Completion (EAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 548
Performance Indices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550
Cost Performance Index (CPI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550
Schedule Performance Index (SPI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551
To Complete Performance Index (TCPI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551
Independent Estimates at Completion (IEAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551
Preparing a Range of Estimates at Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553
Percent Complete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554
Estimated Completion Date (ECD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554
Average Performance Rate Required to Achieve ECD . . . . . . . . . . . . . . . . . . . . . . . . . . . 554
Combining SPI with CPM Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555
Combining SPI with CPI (Labor Only) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556
Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556
 Table of Contents xi

Report Formats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556

Analyzing Material Cost Variances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558
Analyzing Labor Cost Variances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558
Earned Value and Cost/Schedule Impact Identification . . . . . . . . . . . . . . . . . . . . . . . . . . 559
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559
Chapter 32 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560
Case Study 32.1 Project Performance Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563
Case Study 32.2 Control Account Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569

Chapter 33 Variance Analysis and Corrective Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 573

Variance Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 573
Variance Thresholds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 574
Variance Analysis Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 577
Heading Information/Earned Value Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 577
Problem Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578
Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 579
Corrective Action Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 579
Estimate at Completion Justification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580
Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580
Chapter 33 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 581
Case Study 33.1 Calculation of Cost and Schedule Variances . . . . . . . . . . . . . . . . . . . . 583

Chapter 34 Baseline Revisions and Change Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585

Change Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585
Types and Causes of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585
Elements of a Change Control Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587
How to Control Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587
Change Control and the Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 588
Baseline Changes at the Control Account Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589
Incorporating Changes into the PMB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590
Detailed Tracking of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590
Internal Replanning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592
Rubber Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594
Chapter 34 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 596
Case Study 34.1 Contract Budget Base Log . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 597

Chapter 35 Subcontract Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603

Definition of Subcontracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603
Subcontract Flowdown Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604
Subcontract Requests for Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 605
Subcontract Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 606
Integrating the Subcontractor WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607
Integrating the Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608
Post Award Baseline Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608
Establishing the Schedule Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608
Establishing the Budget Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
Prime Contractor Considerations for Subcontracts without EVMSG Requirements . . . . . 612
Incentive or Cost Plus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612
Firm Fixed Price (FFP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 612
Time and Materials (T&M) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
Technical Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
xii Table of Contents

Additional Considerations When Planning Subcontract Budgets . . . . . . . . . . . . . . . . . . . 613

Factoring Subcontract Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614
Special Organizational Situations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615
Inter-Divisional Work Authorization (IDWA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615
Badgeless Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615
Revisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616
Directed Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617
Internal Replanning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 618
Formal Reprogramming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619
Subcontract Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619
Subcontract EVMS Reviews and Surveillance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620
EVMS Guideline Compliance with Validation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620
EVMS Guideline Compliance without Validation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621
EV Reporting without EVMS Guideline Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . 621
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621
Chapter 35 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622
Case Study Section 4 Quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625
SECTION 5 IMPLEMENTATION OF THE PROJECT MANAGEMENT PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .635

Chapter 36 Implementation of the Project Management Process . . . . . . . . . . . . . . . . . . . . . . . . . 637

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 637
System Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 638
System Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 640
The Creation of Storyboards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 642
Identification of Areas Needing Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 644
Hardware and Software Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 644
Development of Procedures and Training Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 644
System Start-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 645
Changes to System Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 645
Routine Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 645
Implementation Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 645
Tailoring the System for Project Unique Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 646
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 647
Chapter 36 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 648
SECTION 6 CONCLUSION, SOLUTIONS, AND REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .651
Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 653
Earned Value Analysis Formulas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 713
Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 721
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 735
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 737
About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 745
 xiii

List of Figures
Chapter 1 Project Management Using Earned Value
Figure 1-1 Shocking Surprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Figure 1-2 Budget Plan vs. Actual Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Figure 1-3 Overrun or Ahead of Schedule? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Figure 1-4 Underrun or Behind Schedule? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Figure 1-5 Significant Overrun or Accelerated Schedule? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Figure 1-6 A Performance Oriented Approach Provides Better Visibility . . . . . . . . . . . . . . . . . . . . 36
Figure 1-7 Cost and Schedule Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Figure 1-8 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Chapter 2 Definition of Scope, Work Breakdown Structure (WBS) and WBS Dictionary
Figure 2-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Figure 2-2 600 Megawatt WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Figure 2-3 Boiler Plant Equipment WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Figure 2-4 Coal Handling System WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Figure 2-5 Storage and Preparation WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Figure 2-6 Sewer Treatment Plant WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Figure 2-7 Floor Covering WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Figure 2-8 Consulting WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Figure 2-9 DOE Project Summary WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Figure 2-10 Sample Project WBS Software Development Project . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Figure 2-11 Sample Project WBS Software Development Project details . . . . . . . . . . . . . . . . . . . . 52
Figure 2-12 Sample Project WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Figure 2-13 CWBS Dictionary and Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Figure 2-14 Element of Cost Orientation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Figure 2-15 Phase Orientation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Figure 2-16 Engineering/Design WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Figure 2-17 Engineering/Design WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Figure 2-18 Product - User Mapping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Chapter 3 Managing Project Risks

Figure 3-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Figure 3-2 Managing Project Risks: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Figure 3-3 Sample Risk Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Figure 3-4 Widget Project Risk Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

Chapter 4 Relating Organizations, Responsibility, and Work Scope

Figure 4-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Figure 4-2 Functional Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Figure 4-3 Project Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Figure 4-4 Weak Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Figure 4-5 Strong Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Figure 4-6 Balanced Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Figure 4-7 Composite Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Figure 4-8 Responsibility Assignment Matrix (RAM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Figure 4-9 Responsibility Assignment Matrix and Control Account Structure . . . . . . . . . . . . . . . . 97
Figure 4-10 Control Account Example 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Figure 4-11 Control Account Example 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Figure 4-12 Control Account Example 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Figure 4-13 Control Account Example 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
xiv List of Figures

Chapter 5 Work Teams

Figure 5-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Figure 5-2 Typical Responsibility Matrix - Functional Alignment . . . . . . . . . . . . . . . . . . . . . . . . . 115
Figure 5-3 Potential Work Team Alignment - 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Figure 5-4 Potential Work Team Alignment - 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Figure 5-5 Potential Work Team Alignment - 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Figure 5-6 Work Team Application - Example 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Figure 5-7 Work Team Application - Example 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Figure 5-8 Work Team Application - Example 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

Chapter 6 What is Scheduling? Schedule Types

Figure 6-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Figure 6-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Figure 6-3 Gantt Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Figure 6-4 Milestone Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Figure 6-5 Bar Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Figure 6-6 Combination Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Figure 6-7 Modified Bar/Milestone Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Figure 6-8 Process Flowchart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Figure 6-9 Set Back Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Figure 6-10 Line of Balance Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Figure 6-11 Network Diagrams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145

Chapter 7 Introduction to Network Logic Development

Figure 7-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Figure 7-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Figure 7-3 PDM Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Figure 7-4 Finish to Start . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Figure 7-5 Finish to Finish . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Figure 7-6 Start to Start . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
Figure 7-7 Start to Finish . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
Figure 7-8 Time-Phased Diagrams - Variable Box Length . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
Figure 7-9 Time Phased Bar Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158

Chapter 8 Critical Path Method Fundamentals

Figure 8-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Figure 8-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Figure 8-3 Critical Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Figure 8-4 Standard Notation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Figure 8-5 Forward Pass (Activity Early Dates) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
Figure 8-6 Forward Pass (Activity Relationship Early Dates) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
Figure 8-7 Forward Pass (Early Dates - Converging Paths) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
Figure 8-8 Forward Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
Figure 8-9 Backward Pass (Activity Late Dates) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
Figure 8-10 Backward Pass (Activity Relationship Late Dates) . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
Figure 8-11 Backward Pass (Late Dates - Converging Paths) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
Figure 8-12 Backward Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
Figure 8-13 Early, Late Dates and Total Float - the Critical Path . . . . . . . . . . . . . . . . . . . . . . . . . . 169
Figure 8-14 Free Float Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
Figure 8-15 Total and Free Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
Figure 8-16 Impact of Directed Finish Date - Negative Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Figure 8-17 Impact of Directed Finish Date - Positive Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172

Chapter 9 Resource Loading and Leveling the Schedule

Figure 9-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 190
 List of Figures xv

Figure 9-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190

Figure 9-3 Resource Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Figure 9-4 Skyline Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
Figure 9-5 Time and/or Rersource Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192
Figure 9-6 Resource Boundaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194
Figure 9-7 Resource Boundaries - Time and Resource Floats . . . . . . . . . . . . . . . . . . . . . . . . . . 195
Figure 9-8 Resource Boundaries - Less and More Critical Curves . . . . . . . . . . . . . . . . . . . . . . . 196

Chapter 10 Considerations for Developing a Useful, Quality Schedule

Figure 10-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
Figure 10-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
Figure 10-3 Top Level Schedule - Contractual Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
Figure 10-4 ‘Unit A’ Top Level Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
Figure 10-5 ‘Unit A’ Widgets 1 and 2 Engineering Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
Figure 10-6 ‘Unit A’ Widget 1 Engineering Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206
Figure 10-7 Integrated Master Plan for the Widget Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207
Figure 10-8 Coding Relationship Between WBS, IMP, IMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
Figure 10-9 Hammock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
Figure 10-10 Summaries Using Code Fields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
Figure 10-11 Grouping Facility Showing Total Float by CAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
Figure 10-12 Templates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
Figure 10-13 Legend for the Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
Figure 10-14 Finish to Start with Lag . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
Figure 10-15 Start to Start with Lag . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
Figure 10-16 Finish to Finish with Lag . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
Figure 10-17 Parallel Start to Start and Finish to Finish Relationships with Lags . . . . . . . . . . . . . . 213
Figure 10-18 CPM Calculations - Start to Start Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Figure 10-19 CPM Calculations - Finish to Finish Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Figure 10-20 CPM Calculations - Activity B Date Possibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Figure 10-21 CPM Calculations - Activity B Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Figure 10-22 CPM Calculations - Effective Duration for Activity B . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Figure 10-23 Schedule Margin Using Buffer Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
Figure 10-24 Qualitative Selection Criteria for Schedule Detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
Figure 10-25 Missing Logic - Goal: 5% or Less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
Figure 10-26 Leads - Goal: 0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222
Figure 10-27 Lags - Goal: 5% or Less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222
Figure 10-28 Relationship Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222
Figure 10-29 Hard Constraints - Goal: 5% or Less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
Figure 10-30 High Total Float of 44 Working Days or More - Goal: 5% or less . . . . . . . . . . . . . . . 223
Figure 10-31 Negative Float - Goal: 5% or Less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
Figure 10-32 Durations Greater than 44 Working Days - Goal: 5% or less . . . . . . . . . . . . . . . . . . 224
Figure 10-33 Invalid Dates - Goal: 0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Figure 10-34 Missing Resources on Activities with Durations of 1 Day or More - Goal: 0% . . . . . . 224
Figure 10-35 Missed Activities - Goal: < 5% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
Figure 10-36 Critical Path Test, Before and After . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
Figure 10-37 CPLI Graphic Highlighting the .95 Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
Figure 10-38 Baseline Execution Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
Figure 10-39 Health Check/GASP Correlation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227

Chapter 11 Crashing the Network

Figure 11-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
Figure 11-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
Figure 11-3 Activity “Crashing” Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Figure 11-4 “Crashing” a Network - An Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
Figure 11-5 Step 1 and Step 2: “6 Weeks” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 238
xvi List of Figures

Figure 11-6 Step 3 - Identify Crash Time and Crash Costs for Each Activity . . . . . . . . . . . . . . . . . 239
Figure 11-7 Cost of Crashing Activity “A” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239
Figure 11-8 Step 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240
Figure 11-9 Step 5 and Step 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240
Figure 11-10 Step 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241
Figure 11-11 Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241
Figure 11-12 9 Weeks Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
Figure 11-13 8 Weeks Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
Figure 11-14 7 Weeks Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
Figure 11-15 7 Weeks Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
Figure 11-16 Project Cost vs. Time Relationship - The Tradeoff Curve . . . . . . . . . . . . . . . . . . . . . . 244

Chapter 12 Setting a Traceable Schedule Baseline

Figure 12-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
Figure 12-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
Figure 12-3 Horizontal Traceability Between Same Level of Detail . . . . . . . . . . . . . . . . . . . . . . . . 251
Figure 12-4 Vertical Traceability Btween Different Levels of Detail . . . . . . . . . . . . . . . . . . . . . . . . 251
Figure 12-5 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252
Figure 12-6 Vertifcal Traceability Coding Schema . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
Figure 12-7 Baseline Change Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254

Chapter 13 Updating the Schedule

Figure 13-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 268
Figure 13-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268
Figure 13-3 Calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
Figure 13-4 Impact of Status on Duration and Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
Figure 13-5 PDM Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273
Figure 13-6 Schedule Bar Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273
Figure 13-7 Out-of-Sequence Progress - Retained Logic Option (PDM Network) . . . . . . . . . . . . . 274
Figure 13-8 Out-of-Sequence Progress - Retained Logic Option (Bar Chart) . . . . . . . . . . . . . . . . 274
Figure 13-9 Out-of-Sequence Progress - Progress Override Option (PDM Network) . . . . . . . . . . 275
Figure 13-10 Out of Sequence Progress - Progress Override Option (Bar Chart) . . . . . . . . . . . . . . 276
Figure 13-11 Impact on Total Float - Sample Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277
Figure 13-12 Impact on Total Float - Retain Logic Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277
Figure 13-13 Impact on Total Float - Progress Override Option . . . . . . . . . . . . . . . . . . . . . . . . . . . 278

Chapter 14 Schedule Changes

Figure 14-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 284
Figure 14-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284

Chapter 15 Resolving Negative Float

Figure 15-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 296
Figure 15-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296
Figure 15-3 Trend in Float by Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297
Figure 15-4 Baseline vs. Current - Date and Duration Variances . . . . . . . . . . . . . . . . . . . . . . . . . 298
Figure 15-5 Resolution Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301
Figure 15-6 Analysis - Most Critical Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302
Figure 15-7 Analysis - Number of Critical Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302
Figure 15-8 Analysis - Number of Activities On or Behind Schedule . . . . . . . . . . . . . . . . . . . . . . . 303

Chapter 16 Special Networking Considerations

Figure 16-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 308
Figure 16-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308
Figure 16-3 Start Not Earlier Than Constraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310
Figure 16-4 Delayed Activity Using a Milestone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310
 List of Figures xvii

Figure 16-5 Start Not Earlier Than Constraint Bypassed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310

Figure 16-6 Delay Using a Schedule Visibility Task . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310
Figure 16-7 Small Project Bar Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311
Figure 16-8 Start Not Earlier Than Constraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312
Figure 16-9 Finish Not Later Than Constraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312
Figure 16-10 Must Start On Constraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313
Figure 16-11 Must Finish On Constraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313
Figure 16-12 Finish Date Constrained Network - Imposed Date Earlier Than Calculated Date . . . 314
Figure 16-13 Constraint Date Spectrum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315
Figure 16-14 Sample Network - Total Float Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316
Figure 16-15 Comparing Total and Secondary Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Figure 16-16 Total Float vs. Secondary Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Figure 16-17 Parallel, SS/FF Relationships 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318
Figure 16-18 Parallel, SS/FF Relationships 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 318
Figure 16-19 Parallel, SS/FF Relationships 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319
Figure 16-20 Parallel, SS/FF Relationships 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 319
Figure 16-21 LOE Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320
Figure 16-22 Alternate LOE Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320

Chapter 17 Schedule Risk Assessment

Figure 17-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 326
Figure 17-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326
Figure 17-3 Risk Assessment with CPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327
Figure 17-4 Risk Assessment with CPM Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327
Figure 17-5 Risk Analysis of the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328
Figure 17-6 Building Foundation Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331
Figure 17-7 Most Likely and Average Durations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331
Figure 17-8 Low and High Possible Durations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332
Figure 17-9 Risk Analysis of Path Duration Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333
Figure 17-10 Constructing the S-Curve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333
Figure 17-11 Likelihood of Slippages and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334
Figure 17-12 Cumulative Distribution for Path A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 334
Figure 17-13 Validity of CPM Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335
Figure 17-14 Identifying the HIghest Risk Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335
Figure 17-15 Identify the Highest Risk Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336
Figure 17-16 Merge Bias at Convergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337
Figure 17-17 Direct Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337
Figure 17-18 Reducing Durations to Fit the Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
Figure 17-19 Two Path Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
Figure 17-20 Late Starts on Path B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339
Figure 17-21 Early Starts on Path B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339
Figure 17-22 Schedule Risk Histogram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
Figure 17-23 Cost Risk Histogram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342
Figure 17-24 Standard Deviation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343
Figure 17-25 Six Activity Network Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343
Figure 17-26 PERT Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344
Figure 17-27 Distribution Curve for Path U-V-X-Z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344
Figure 17-28 Distribution Curve for Path U-W-Y-Z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344

Chapter 18 Scheduling in a Performance Measurement Environment

Figure 18-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 364
Figure 18-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 364
Figure 18-3 Schedule Integration - Schedules Must Tier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367
Figure 18-4 WBS Levels vs. Schedule Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367
xviii List of Figures

Chapter 19 The Estimating Process

Figure 19-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 388
Figure 19-2 Estimating Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388
Figure 19-3 Levels of Estimate Detail 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393
Figure 19-4 Levels of Estimate Detail 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393

Chapter 20 Types of Estimates

Figure 20-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 396
Figure 20-2 Estimating Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 396
Figure 20-3 Types of Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399

Chapter 21 Estimate Development

Figure 21-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 402
Figure 21-2 Estimating Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402
Figure 21-3 The Estimating Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403
Figure 21-4 Inputs for Estimate Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 406
Figure 21-5 Estimate Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407
Figure 21-6 Estimate Development Example 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408
Figure 21-7 Estimate Development Example 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409
Figure 21-8 Estimate Development Example 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409
Figure 21-9 Estimate Development Example 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409
Figure 21-10 Level of Detail Summarization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410

Chapter 22 Learning Curves

Figure 22-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 426
Figure 22-2 Estimating Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426
Figure 22-3 Learning Curve - Normal Coordinates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427
Figure 22-4 Learning Curve - Log-Log Coordinates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427
Figure 22-5 Learning Curve Showing End of Production Inefficiencies . . . . . . . . . . . . . . . . . . . . . 430

Chapter 23 Cost Risk Assessment

Figure 23-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 436
Figure 23-2 Estimating Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436
Figure 23-3 Other Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438
Figure 23-4 Uniform Probability Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438
Figure 23-5 Triangular Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438
Figure 23-6 Actual Risk Simulation Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438
Figure 23-7 Cumulative Probability Curve 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439
Figure 23-8 Increased Iterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439
Figure 23-9 Right Skewed Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 440
Figure 23-10 Kurtosis Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 440
Figure 23-11 Other Considerations Example 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441
Figure 23-12 Other Considerations Example 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441
Figure 23-13 Other Considerations Example 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 442

Chapter 24 Estimate Review

Figure 24-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 446
Figure 24-2 Estimating Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446

Chapter 25 Tracking the Estimate

Figure 25-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 454
Figure 25-2 Estimating Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454
Figure 25-3 Estimate Traceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456
Figure 25-4 Estimate History Form ($ x 1000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456
 List of Figures xix

Chapter 26 Automating the Estimating Function

Figure 26-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 466
Figure 26-2 Estimating Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466

Chapter 27 Earned Value

Figure 27-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 480
Figure 27-2 Budget Plan vs. Actuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481
Figure 27-3 Overrun or Ahead of Schedule? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 481
Figure 27-4 Planned Accomplishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 482
Figure 27-5 Earned Value of a Task . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 482
Figure 27-6 Planned vs. Actual Accomplishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 482
Figure 27-7 What’s Been Accomplished? What did it Cost? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483
Figure 27-8 Earned Value is a Good Approximation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483
Figure 27-9 Cost Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483
Figure 27-10 Schedule Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483
Figure 27-11 Cost and Schedule Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484

Chapter 28 The Brick Wall

Figure 28-1 Budget vs. Actuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489
Figure 28-2 Four Days of Bricking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490
Figure 28-3 Budget vs. Actual Day Five . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 490
Figure 28-4 Planning Using Earned Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491
Figure 28-5 Detailed Planning for Day One Using Earned Value . . . . . . . . . . . . . . . . . . . . . . . . . 491
Figure 28-6 Earned Value after Day One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 492
Figure 28-7 Earned Value Status Day One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 492
Figure 28-8 Earned Value Status Day Two . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493
Figure 28-9 Earned Value Status Day Three . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493
Figure 28-10 Earned Value Status Day Four . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493
Figure 28-11 Earned Value Status Day Five . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494
Figure 28-12 Earned Value Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494

Chapter 29 Measuring Accomplishment

Figure 29-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Figure 29-2 Incremental Milestone - Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
Figure 29-3 Incremental Milestone - Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
Figure 29-4 50% / 50% - Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505
Figure 29-5 50% / 50% - Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505
Figure 29-6 0% / 100% - Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506
Figure 29-7 0% / 100% - Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 506
Figure 29-8 Units Complete - Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507
Figure 29-9 Units Complete - Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507
Figure 29-10 Percent Complete - Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510
Figure 29-11 Percent Complete - Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510
Figure 29-12 Apportioned Effort - Planning and Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511
Figure 29-13 Level of Effort (LOE) - Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512
Figure 29-14 Level of Effort (LOE) - Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512

Chapter 30 Establishing the Performance Measurement Baseline

Figure 30-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 520
Figure 30-2 Performance Measurement Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521
Figure 30-3 Rolling Wave Example 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521
Figure 30-4 Rolling Wave Example 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 522
Figure 30-5 Reporting Structure Data Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 523
Figure 30-6 Total Project Cost Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 523
Figure 30-7 Elements of the Base and the Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 523
xx List of Figures

Figure 30-8 Management Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524

Figure 30-9 Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524
Figure 30-10 Work Authorization Document . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 526

Chapter 31 Collecting Actual Cost

Figure 31-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 532
Figure 31-2 Cost Element Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532
Figure 31-3 Data Source Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533
Figure 31-4 Accounting Subsystem Interfaces with Project Management . . . . . . . . . . . . . . . . . . . 534
Figure 31-5 Material Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537
Figure 31-6 Material Measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537
Figure 31-7 Matrix of Indirect Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538
Figure 31-8 Indirect Analysis - An Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539

Chapter 32 Performance Measurement Calculations and Estimates at Completion

Figure 32-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 546
Figure 32-2 Mixing Variances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 547
Figure 32-3 Graphical Schedule Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 547
Figure 32-4 Trend Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 548
Figure 32-5 Trend Analysis with Percentage Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 548
Figure 32-6 Estimate at Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549
Figure 32-7 “To Complete” Performance Index (TCPI)EAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551
Figure 32-8 Performance Indices Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551
Figure 32-9 Range of Estimates at Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554
Figure 32-10 Performance Measurement Data Concern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555
Figure 32-11 Combining SPI and TF Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555
Figure 32-12 Combining SPI and CPI (Labor Accounts) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556
Figure 32-13 Performance Report - Work Breakdown Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . 557
Figure 32-14 Performance Report - Project Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557
Figure 32-15 Material Variance Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 558
Figure 32-16 Labor Cost Variance Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559
Figure 32-17 Cost and Schedule Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559

Chapter 33 Variance Analysis and Corrective Action

Figure 33-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 574
Figure 33-2 Data Traceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575
Figure 33-3 Variance Analysis Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 578
Figure 33-4 Corrective Action Log . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580

Chapter 34 Baseline Revisions and Change Control

Figure 34-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 586
Figure 34-2 Change Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 588
Figure 34-3 Effect of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589
Figure 34-4 Control Account 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589
Figure 34-5 Control Account 1 Closeout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589
Figure 34-6 Control Account 1A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590
Figure 34-7 Contract Budget Base Log . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591
Figure 34-8 Baseline Change Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593
Figure 34-9 Internal Replanning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594
Figure 34-10 Rubber Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594

Chapter 35 Subcontract Management

Figure 35-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 604
Figure 35-2 Subcontract Risk Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 605
Figure 35-3 Relationship of Risk to Contract Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 605
 xxi

Figure 35-4 Subcontract EVM System and Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . 606

Figure 35-5 Prime Contract/Subcontract Integration (1 of 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607
Figure 35-6 Prime Contract/Subcontract Integration (2 of 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608
Figure 35-7 Planning the Definitized Subcontract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
Figure 35-8 BCWS Time Phasing for Prime Control Accounts (1 of 2) . . . . . . . . . . . . . . . . . . . . . 610
Figure 35-9 BCWS Time Phasing for Prime Control Accounts (2 of 2) . . . . . . . . . . . . . . . . . . . . . 610
Figure 35-10 Allocation Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610
Figure 35-11 The Subcontractor’s MR and UB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611
Figure 35-12 Prime Contractor Establishes BCWS Based on Subcontractor Submittals . . . . . . . . 612
Figure 35-13 Factoring Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614
Figure 35-14 Badgeless Organization RAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616
Figure 35-15 Class I Change Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617
Figure 35-16 Class II Change Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 618
Figure 35-17 Over Target Baseline and Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619

Chapter 36 Implementation of the Project Management Process

Figure 36-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 638
Figure 36-2 Implementation of the Project Management System . . . . . . . . . . . . . . . . . . . . . . . . . 639
Figure 36-3 Baseline Schedule Development Flowchart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 640
Figure 36-4 Performance Measurement Flowchart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 643
Figure 36-5 Implementation Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 646
 xxiii

Preface
This book is about project management. It is not about all aspects of project management but it
includes some of the most important aspects. This book is about how the planning, control, and man-
agement of projects can be improved through the use of the concept called Earned Value.
This book is intended for anyone who desires to know more about project planning and control and
how to improve these processes through the use of Earned Value. Intended readers include project
and program managers, project control personnel, project technical personnel, procurement activity
personnel and the stakeholders and owners of projects. While it is intended for a wide range of read-
ers, each is assumed to have a basic familiarity with the requirements and the disciplines of project
management. Readers new to this arena would be well advised to supplement this reading with a
basic but general work on Project Management.
The material in this book as been drawn from the collective experiences of the author and many of the
professional personnel of Humphreys & Associates, Inc., consultants in project and program manage-
ment for over forty years. This material has been presented in seminars, workshops and successfully
used assisting our clients in the United States and around the world. While introductory theory is
explained, time tested samples are provided. Samples are presented from specific industries. Please
do not conclude that a sample does not apply to those of you in the construction, software, or other
industries.
To facilitate the learning experience, the topics covered are linked together in a process flowchart.
This flowchart is displayed at the beginning of each chapter and the elements of the flowchart
addressed in that chapter are highlighted. In addition, the chapters have been grouped into Sections.
Each Section represents a major activity in the planning and control process, Organization, Schedul-
ing, Estimating, and Earned Value. These are supplemented by a Section on Implementation (of proj-
ect planning and control) and by a Conclusion and an Appendix.
To further aid the reader, a series of questions about chapter content are found at the conclusion of
each chapter. The answers are provided in the Appendix. In addition, at the end of each Section there
is a Section Quiz. Again the answers are provided in the Appendix. Finally, the majority of chapters
contain one or more Case Studies. These are practical exercises that have been drawn from our con-
sulting experiences and presented in Humphreys & Associates, Inc. seminars and workshops. The
Case Studies have been found to reinforce the participants learning. Suggested solutions to these
Case Studies can be found on our website at: www.humphreys-assoc.com.
 31

Chapter

PROJECT MANAGEMENT USING EARNED VALUE

Objectives of this Chapter:
1. Define “project” and project management.
2. Describe the performance-oriented approach using an Earned Value Management System and
explain why it is superior to actual versus budget comparisons.
3. Discuss factors affecting the appropriate level of detail for Earned Value implementation.
4. Introduce the process flowchart for the Earned Value Project Management process.

What is a Project? cient information flow for office communication, or

managing a home improvement.
Before delving into the intricacies of the Earned
The Project Management Institute (PMI) defines
Value Management process, projects and Earned
a project as:
Value Management need to be defined first. A
project consists of a defined objective to develop A project is a temporary endeavor under-
or produce a new product, capability, or to taken to create a unique product, service,
expand capacity within a specified time frame or result. The temporary nature of proj-
and budget. Examples of projects include large ects indicates a definite beginning and
capital-intensive efforts such as highway con- end. The end is reached when the proj-
struction, new commercial buildings, power ect’s objectives have been achieved or
plants and petrochemical plants, water treatment when the project is terminated because its
plants, flood control, dams, bridges, hospitals, objectives will not or cannot be met, or the
schools, prisons, and churches. These are the need for the project no longer exists.1
obvious, highly visible projects.
A well conceived project could also be character-
They are not the only types of projects; however, ized as any endeavor that has a well-defined
as new product development is also a project. A scope of work and optimistic yet achievable
new automobile, engine, or communication satel- schedule and cost objectives.
lite is a project. Other projects include research
and development, definition of new information The words “project” and “program” are some-
systems, design and installation of communica- times used interchangeably in industry, resulting
tion systems, creation of new software programs, in some confusion. A program is made up of indi-
and computer hardware advances. vidual projects to be accomplished. For example,
the inertial guidance system for an aircraft may
Projects are so widespread that it is difficult to get be a separate project on a program. Because
through the day without being involved in some
way with a project, whether it is sitting in traffic 1. Project Management Institute. A Guide to the
while road work continues, finding a more effi- Project Management Body of Knowledge (PMBOK),
Fourth Edition. Newton Square, PA: Project
Management Institute, 2008, 5.
32 Section 1 Earned Value Project Management and Organization

projects and programs share the same character- project. To achieve these, a separate “project
istics they can be treated in a similar manner. For team” is typically assembled for accomplishing
that reason, throughout this text, the term “proj- the project’s scope of work. This team is orga-
ect” will be used generically to refer to both proj- nized using individuals from various disciplines
ects and programs. such as accounting, purchasing, engineering,
manufacturing, testing, operations, finance, con-
Now that project has been defined, what is
tracts, construction, project controls, and may
Earned Value Management? It is the process of
also include subcontractors. Some people pro-
defining and controlling the project so that
vide part time support to a project. These might
defined objectives are met. The controlling
include any of those mentioned above and others
aspect includes scope control, schedule control,
such as the legal department, record retention,
and budget control. It also includes the process
financial services, and executive management.
of identifying and minimizing risk. There are
many aspects involved in Earned Value Manage- The job of managing all of these organizations
ment, including development of the Earned Value and people is typically assigned to a full time
Management System. An Earned Value Man- senior individual who is designated as the project
agement System is a set of processes and tools manager. A project manager should meet sev-
used to facilitate the management of a project. eral specific qualifications: many years of experi-
ence in the type of project being managed to be
technically qualified; a degree to be academically
Managing Projects qualified; and stamina to be physically qualified.
Many projects result in highly successful comple- In addition, project managers must have good
tions. Successful projects contain many common processes and tools to effectively manage the
characteristics: they were well defined and orga- people and the project.
nized, had a closely monitored work scope, had The project manager must orchestrate the entire
optimistic yet achievable schedule and budget project to achieve the technical, schedule, and
from the time of initiation, and were closely moni- cost objectives. If a project is an internal
tored and managed. Many projects have been endeavor, then a project manager’s role is to
successful for another reason: they benefited manage the internal departmental interfaces and
from mistakes on other projects. The primary contractors, and possibly other owners and cus-
factor observed on successfully managed proj- tomers, in addition to all of the internal staff.
ects is managing performance. The common
thread throughout all of the topics in this textbook Unlike normal functional organizations, a project
is exactly that. has a specific duration. Even as a project is initi-
ated, its purpose is to accomplish defined objec-
The approaches and techniques that will be dis- tives and disband. A project team’s job is to
cussed have a performance measurement orien- quickly accomplish the technical scope of work,
tation, because the better something can be resource as efficiently as possible, and then
measured, the better it can be managed. move on to the next project. The project man-
In a performance measurement system, cost and ager’s job is, therefore, inherently complex and
schedule targets are assigned to each activity challenging. Besides the interfaces that must be
planned in a project and to the project itself; prog- managed on a daily basis, he or she must often
ress (performance) is measured against these be a motivational expert since the many players
targets. Deviations from the activity targets and involved may have different goals. For many rea-
the causes of the deviations are identified and sons, a project manager has a great need for
action is taken to minimize adverse conse- accurate status information. Only with reliable
quences to the project. indication of project status can concerns be sur-
faced early enough to allow corrective action,
Projects require expertise from many disci- preventing potential concerns from becoming real
plines. Close coordination and communication concerns that adversely impact technical, sched-
are essential parts of successful execution of a ule, and cost objectives.
 Chapter 1 Project Management Using Earned Value 33

Examples used throughout this text are extracted The human aspects of Earned Value Manage-
from actual experiences. Frequently it is easier ment must not be forgotten either. As mentioned
to illustrate a concept by showing what can or will before, the project manager needs to be a moti-
happen if certain fundamentals are ignored than vational expert. The project manager also needs
what happens if they are followed. If the princi- a strong supporting staff. No single person can
ples in this text are followed, there is a good prob- successfully perform all of the work involved in a
ability of executing a well-managed project. If major project. He or she must rely on the support
they are ignored, unpleasant, career-limiting, of many others. This makes the project a team
unsuccessful experiences can occur. effort. Even the best systems will be less effec-
tive in the hands of individuals who do not coop-
Depending on project risk, project duration, and
erate with each other and do not work towards a
cost, (technical, schedule, and cost), certain
common goal. An underlying assumption is that
aspects may be implemented less stringently.
effective management tools will facilitate better
The principles do not change. It is still necessary
management of a project and minimize the confu-
to define the scope of work, have a plan for
sion that results from a project that is not well
accomplishing the work, and to manage the plan.
defined and planned.
However, the level of detail of the implementation
can vary. Unsuccessful applications of these
principles have also happened when organiza- Background
tions went overboard on the level of detail of
implementation. If common sense is forgotten, it In the past few decades, many large projects in
is possible to create a management system that numerous industries experienced significant
requires so much effort that it requires and exten- schedule delays and cost overruns. Nuclear
sive staff just to provide the production and distri- power projects stretched for years beyond their
bution of data. The cost of the management original schedule and more than tripled in cost.
system is then not worth the additional insight Software development projects in most compa-
received regarding project status. nies required so much lead-time that the intended
users had to find alternative ways of accomplish-
The Earned Value Management tools that are ing their goals. In other cases, competitors beat
recommended in this book have been effectively software development firms to the marketplace
used to improve management on numerous proj- and millions of dollars were wasted. Water treat-
ects. By selectively employing tools, the practi- ment and sewer treatment plants soared in cost,
tioner will improve management on current and with immediate impact on the consumer’s water
future projects and thus, the prospects for project bill. Research and development projects and mil-
success. itary projects were cancelled because of continu-
There are several other topics related to Earned ally escalating schedule and cost projections.
Value Management that are not directly cov- The U.S. auto industry suffered from a perceived
ered. These include contract administration, proj- lack of quality and unit prices increased. Many of
ect administration, and material and subcontract these cases became highly visible to a large
management. These are, however, incorporated number of people.
within the discussions of related subjects gener- For the project managers, the owners, and cus-
ally performed by these functions. tomers of these projects, this was not the objec-
The contract type has an impact on the extent of tive envisioned in the project plan. How did this
Earned Value Management implementation, but happen?
all of the basic information is still necessary to Causes were both internal and external. Scope
ascertain project status regardless of the con- changes occurred without being recognized and
tracting arrangement. Experience shows that too incorporated into a revised plan for accomplish-
much attention is placed on the type of contract ing the work. Customer needs changed, some-
rather than incorporating all of the information, times because of a delay in finishing a product,
but at a different level of detail. thus resulting in obsolescence. Delays in mate-
34 Section 1 Earned Value Project Management and Organization

rial delivery occurred without properly reflecting mize its impact. The result was shocking sur-
the impact to other work activities. Regulations prises.
changed, frequently affecting the time needed to
This scenario occurred often enough that there
acquire permits or authority to proceed. Lack of
was a heightened awareness of the technical,
coordination between contributing groups meant
schedule and cost risk associated with projects.
delays because of missing information, design or
Because of this risk, many organizations reacted
otherwise. When these and other disruptions
by creating better management systems. These
occurred, resulting schedule slippage had large
systems provided the capability of integrating all
cost impacts because of high rates of escala-
of the available data into a cohesive form so that
tion. Every delay was penalized with a significant
better visibility would result. One of the greatest
negative economic consequence.
challenges for these systems was timeliness. If
Typically a domino effect is observed. First, a information were not available until after the fact,
technical problem occurs. This is followed by a all that would be accomplished from its use was a
negative schedule variance and ultimately a neg- well documented history of what went wrong
ative cost variance. Sometimes the dominos fall rather than an effective tool for management dur-
very fast, but problems could evolve over ing the life of the project. This improved visibility
months. must allow for earlier identification of trends so
that situations like the one pictured in Figure 1-1
Regardless of the source of difficulty, the underly-
can be prevented.
ing problem was that impacts were not recog-
nized quickly enough when conditions changed. Most projects develop a time phased plan to
In some cases, project managers were ignoring accomplish the work. This resembles an S-curve
variances from the plan and failing to take action shape. In the early stages, staffing and progress
because they did not believe the variances were may be slow. In the middle part of the curve, both
real. In others, they were not informed well staffing and progress should be at their peak. At
enough about the variances. The situation was the end of the curve, progress slows while actual
much like that shown in Figure 1-1. staffing may still be at peak or near-peak levels.
The implications are obvious: identify and
address the problems earlier in the project life
and there is a much greater chance of avoiding
schedule slips and large cost overruns. Early in
the project, it takes very few additional resources
%XGJHW to accelerate and resolve variant conditions. At
 %DVHOLQH the peak of the project activity, it takes enormous
(VWLPDWH$W resources just to stay even with the progress
&RPSOHWLRQ ($& curve, making catch-up very difficult. Even
worse, at the end of a project, even great cost
expenditures may do little to accelerate technical
and schedule progress. Improved early visibility
7,0(
is a primary objective of any project management
Figure 1-1 Shocking Surprises system.

In Figure 1-1, the Estimate at Completion (EAC) The Performance-Oriented

is below budget throughout most of the life of the
project. While challenges were faced daily in the
Approach
management process, there was no way to quan- Every company has some sort of tracking system
titatively assess the impact in a timely manner. to indicate how it is performing. Unfortunately, in
By the time a schedule slip or an overrun was many cases, the tracking may have been no
forecast, it was too late to do anything to mini- more sophisticated than what is shown in Figure
1-2, Budget Plan versus Actual Cost. This was
 Chapter 1 Project Management Using Earned Value 35

the traditional approach used for many years in A budget versus actual comparison is shown in
companies and is still used in too many organiza- Figure 1-4. This may appear to indicate that a
tions. cost underrun is occurring. However, there is no
basis for projecting what status will be at project
7LPH1RZ completion. It may be that the project is incurring
a cost underrun, but it may also be that the proj-
7RWDO%XGJHW ect is behind schedule and future expenditures
W will accelerate significantly. This is shown in Fig-
GJH ure 1-5.
%X
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& RV
DO 7LPH1RZ
WX
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7,0( 
Figure 1-2 Budget Plan vs. Actual Cost
$FWXDO&RVW

Actual costs are collected and compared with

budgeted costs. This is done in the only common
denominator available for resources - dollars in 7,0(
the U.S., Canada, and Australia, or the corre-
sponding local currency in other countries. Does Figure 1-4 Underrun or Behind Schedule?
this approach provide improved visibility?
A good system must provide status and, there- 7LPH1RZ
fore, the necessary visibility into progress. The $FWXDO
graph shown in Figure 1-2 at least allows com- &RVW
parison of expenditures with what was planned to
be spent. However, there is no assurance that %XGJHW
project status is known. Actual cost to date is
higher than planned, but does that indicate a cost 
overrun or is the project ahead of schedule? This
situation is shown in Figure 1-3.

7LPH1RZ
7,0(
7RWDO%XGJHW
W Figure 1-5 Significant Overrun or Accelerated
$KHDGRI
G JH
6FKHGXOH" %X Schedule?

 2YHUUXQ" What is missing from the comparison shown in

V W Figures 1-4 and 1-5? There is no measure of
O&R
XD what has actually been accomplished for what
W
$F has been spent. The fact that money was being
spent slower than planned could mean that there
would be a cost underrun. It could just as easily
7,0( mean that the project is behind schedule, or both,
or neither.
Figure 1-3 Overrun or Ahead of Schedule?
36 Section 1 Earned Value Project Management and Organization

The key to knowing what the true progress and the work scheduled to be accomplished, the
status actually are requires the addition of a third value of the work accomplished, and how much
line to the curve that reflects the dollar value for the accomplished work actually cost. Actual
the work that has been completed. costs to date are still below the budget line, but
the value of work accomplished is even less. In
This third line results from a “performance-ori-
other words, cost is not underrunning, but in fact
ented” approach. This approach shifts the
is overrunning relative to the value of the work
emphasis from expenditures to work accomplish-
accomplished. Similarly, a behind schedule con-
ment. The project objective should be to accom-
dition is apparent. The various methods for mea-
plish all of the work rather than to spend all of the
suring the accomplishment of work will be
money.
presented in later chapters of this text, but the
When using a performance oriented approach, important point is that it can be measured and
work scope and associated responsibilities must compared with an approved plan.
be defined in the initial planning phase of the
With this type of information, it is possible to proj-
project. This is a far better approach than defin-
ect schedule slippage and cost overrun in early
ing responsibility in some form of finger-pointing
stages of the effort. This early warning feature is
exercise of guilt determination after a crisis
one of the most important advantages of includ-
occurs. It allows the person responsible for an
ing a measure of work accomplished. Figure 1-7
emerging variance to take action before it
illustrates how these projections might be repre-
becomes a problem. The entire organization
sented.
benefits from this approach. If action cannot be
taken in time to entirely avoid a problem, at least
the impact can be accurately assessed if there 7LPH1RZ
(VWLPDWHDW
&RPSOHWLRQ
($&
were an objective method of measuring progress.
By setting variance standards or “thresholds”, the 3URMHFWHG&RVW2YHUUXQ

system can be used as a high level Management

by Exception indicator. A result is the ability to %XGJHW

3URMHFWHG6FKHGXOH6OLS
develop improved forecasts of technical perfor-  $FWXDOV
mance, scheduled completion, and final cost ear-
lier in the project. The third line that represents $FFRPSOLVKPHQW
work accomplishment has been added to Figure
1- 6.
7,0(
7LPH1RZ
Figure 1-7 Cost and Schedule Impacts
%XGJHW

 Summary Implementation
$FWXDO&RVW Concerns
$FFRPSOLVKPHQW The Earned Value Management process con-
cepts are appropriate in any single project or
7,0( multi-project environment. On any type of project
in any industry, regardless of how small it is, a
project must be effectively defined to be effec-
Figure 1-6 A Performance Oriented Approach
Provides Better Visibility tively accomplished. A project cannot be com-
pleted if its scope is not understood. Individuals
or organizations must be identified with responsi-
Now there is a completely different picture of the
bility for completing the work, and a time frame
project status. This graphic depicts the value of
must be established for accomplishing that work.
 Chapter 1 Project Management Using Earned Value 37

Budgets and other resources that are allocated to Because of the complexity of long duration, high
the project need to be identified. In other words, cost projects, it is not surprising when it takes six
a plan for accomplishing the work is needed. months to develop a detailed plan for accom-
Then progress must be measured against that plishing the project objectives. Smaller projects
plan. When variances are identified, corrective often do not have a total of six months duration.
action should be identified, evaluated, and imple- This does not suggest that the smaller project
mented in the most cost effective manner. These needs no plan, but rather that it will have a less
are standard techniques that apply in any situa- detailed plan featuring the same general require-
tion. ments. Similarly, it will not make sense to set up
an elaborate monthly reporting scheme with vari-
Experience shows small, short duration projects
ance analysis reports and corrective action plans
are often managed far worse than the large proj-
since the project will be completed before such a
ects that have high visibility. Because small proj-
program can even be properly established. Vari-
ects are considered less significant towards the
ances still need to be identified and actions taken
overall profit picture, they are sometimes over-
to correct them, but it will be a far less formal pro-
looked with very unfavorable results. When small
cess, probably involving little documentation.
projects ignore basic management concepts,
they commonly miss their budgets by 100 to 300 Risk is another important consideration and
percent. The accumulation of absolute dollars relates to maturity of the technology involved. If
may be more than a large project that misses its the project were the tenth in a long series of simi-
budget by 10 percent. The point is that the sum- lar products or services, some simple indicators
mation of many poorly managed small projects of progress over time may be all that is required.
could exceed the impact of a large project. But if it were the development of a new technol-
ogy, greater detail will be needed for monitoring
A convenient aspect of the performance oriented
and managing progress against the goal.
approach is that it works in all environments
including research and development, manufac- The project contract environment may impact the
turing, testing, construction, procurement, soft- emphasis of controls. On a firm fixed price con-
ware development, and design. It also works on tract, cost monitoring and evaluation is typically
all types of contracts, regardless of whether they not emphasized by the customer. However, the
are firm fixed price, cost plus, or some other type contractor will be very cost conscious, since it is
between these two extremes. However, these responsible for any overruns when this contract
factors play an important part in deciding on the type is used. From a customer’s perspective,
level of detailed implementation to be used. technical and schedule considerations are also
very important for firm fixed price contracts with
its support contractors, especially on a multiple
Factors Affecting System contractor program as the interfaces between
Implementation Detail contractors and projects must be managed. Pro-
ductivity may still be a concern since it will relate
Among the factors that will impact the selection of to whether the schedule can be met. In a cost
project controls for a particular application, are reimbursable environment, cost controls are a
the following: paramount consideration since the contractor can
• Project size and duration. maximize income by increasing the hours
required to complete the work. The level of detail
• Technical, schedule and cost risk. for cost and schedule control systems will vary in
• Project contract environment. detail accordingly.
• Management involvement level. The level of management involvement is another
contributing factor to decisions regarding imple-
The size and duration of a project are critical con- mentation detail. In many cases, both owner/cus-
siderations when making key decisions on tomer and contractor will have their own systems
desired management system characteristics. for determining project status. The contractor
38 Section 1 Earned Value Project Management and Organization

responsible for accomplishing the work will need stood statement of work and optimistic, yet
a detailed system. However, the owner/customer achievable, schedule and cost targets. An
should need a far less involved reporting system Earned Value Management System is a tool set
and could track progress on a higher level. There used to facilitate management of a project. There
are exceptions to this as well. If the owner/cus- are many considerations in this complex disci-
tomer were hiring the labor for the project and pline. A series of flowcharts are used throughout
operating in a hands-on management situation, the text to exhibit how the various chapters inter-
then detailed controls may be needed in the relate.
owner’s/customer’s organization.
The master flowchart is shown in Figure 1-8,
Common sense and reason must be used when “Earned Value Project Management: The Pro-
developing and implementing Earned Value Man- cess”. This chart is repeated at the beginning of
agement Systems. Implementing systems at too each chapter to show where that chapter fits in
low a level of detail and with unnecessary com- the overall process. Individual blocks will be
plexity has probably caused nearly as many expanded as necessary into lower level, more
problems as having no system at all. While that detailed flowcharts for the more involved topics.
may be a slight exaggeration to make a point, the This will help assure that a proper understanding
objective of improved visibility can be clouded of each concept is achieved.
just as easily by too much data (and not enough
The fundamental concept of this entire book is
information) as it can by lacking enough input.
that the Earned Value Management process
should be logical, well-defined, and integrate all
Earned Value Management of the pertinent information relating to a project’s
status into a comprehensive picture. Every orga-
System Recognition nization implements many of the concepts; few of
The techniques developed and explained them integrate those concepts into a unified sta-
throughout this text were implemented widely tus. That is the primary challenge: to use all of
only after it became apparent that they were nec- the tools in the tool box in a coordinated manner
essary. They have not always been enthusiasti- so that they meet the objective of improved proj-
cally embraced by all project participants for ect visibility, allowing earlier management deci-
various reasons. Some do not want extra visibil- sions based on accurate information. This
ity into the status of their work if that same infor- provides a project manager the best opportunity
mation is in the hands of their boss and/or their to meet project schedule and cost objectives
customer. Typically, managers prefer to attempt while achieving the technical requirements.
resolution of problems before they are discovered The following is an overview of the process steps
by others. While this is understandable from a in Figure 1-8.
human nature standpoint, it is entirely unaccept-
able from a project manager’s viewpoint. If prob-
lems are hidden and not satisfactorily resolved, The Process Steps
they will later have increasingly substantial
impacts to project cost and schedule. It is essen- Step 1 – Project Objectives
tial that the project manager has the information The first step in the process is definition of the
and tools to assess status accurately, allowing project objectives. These objectives include a
more rapid, effective management decisions. general description of the technical requirements
of the project, its budget, and the time frame for
The Earned Value Management the work to be completed. A targeted starting
date and a completion date are included in this
Process description. There may even be some guidance
provided as to whether this is a technical, sched-
Successful management of a project involves
ule and/or cost critical project. These can be crit-
many concepts and implementation concerns. A
ical pieces of information: as an example, at one
project is any endeavor that has a well under-
 Chapter 1 Project Management Using Earned Value 39

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Figure 1-8 Earned Value Project Management: The Process

of the major auto manufacturers a project to The project plan is the set of documentation and
design a new bumper system was being initiated. directives that formalize the entire management
The time for this product to reach the market was process described in this text, including project
critical, with a goal of eight and a half months. objectives, general scope, project organization,
However, the contractor’s project manager desired schedule/cost goals, and a description of
assumed that the project was more cost critical management systems and procedures to be used
than schedule critical. This resulted in the project in completing the project. The project plan
plan being stretched to 18 months to lower the reflects the project specific internal as well as
peak cost requirements. customer management, reporting, and analysis
requirements. The approach used to code and
When the owners and customers reviewed the
organize the project data is an important up front
contractor’s plan, they realized that the primary
activity to establish a standard approach to inte-
objectives had not been explained clearly
grate the technical, schedule, cost, and risk data
enough. The contractor was sent back to com-
to generate reliable information for effective man-
pletely redo the plan to support the eight and a
agement, reporting, and analysis for the life of the
half-month requirement. If this project had been
project.
managed to the 18-month plan, it would have lost
much of its commercial appeal.
40 Section 1 Earned Value Project Management and Organization

Step 2 – Work Scope Definition, Risk Earned Value Management process must be
Assessment and Management developed. These include the functions of
scheduling, estimating, budgeting, and perfor-
Once the project objectives have been defined,
mance measurement. These elements must all
the next function that must be fulfilled is to delin-
be performed and integrated for the baseline plan
eate, capture, and define the entire scope of the
to be developed.
project. This is the best opportunity to assure
understanding among the various project partici- Step 5 – Planning and Scheduling
pants. It also is the best chance to avoid later
nightmares with numerous scope changes and The scheduling process is defined as what must
possible litigation. The work breakdown structure be done, and when it must be done, to accom-
(WBS) and work breakdown structure dictionary plish the project objectives on time.
are the tools used to segregate the work into
Step 6 – Estimating
manageable components and to define each
component. The estimating process is defined as a forecast of
how much it will cost to perform the work.
A risk assessment of the technical goals is an
important part of this process. Risks are identi- Step 7 – Definition of Earned Value and
fied and mitigation plans are developed. After the Earned Value Techniques
organization is assigned in Step 3, additional
risks may be identified and the risk plans Determining performance measurement is
updated. accomplished through the use of Earned Value
techniques, which is the key concept of the entire
Step 3 – Responsibility Assignment, Work Earned Value Management process. While this
Teams definition has been given earlier, it is important
enough to repeat here. It provides a critical ele-
Once the scope is crisply defined, the next step is
ment of information when project status is
to document who is responsible for the work.
assessed by providing insight to what has actu-
Each component of work defined in the work
ally been accomplished for the money that has
breakdown structure will have one individual
been spent. This can also be compared with
assigned who will be responsible for the scope,
what was planned to be accomplished to allow an
schedule and budget for that work.
accurate picture of the current cost and schedule
It takes an entire project team working together to position.
make the project a success, but only a single
Earned Value is determined through numerous
individual to cause it to fail. This explains some
techniques. The techniques selected for a project
of the reason for the growing popularity of work
will depend on each application, but objective
teams that help break down the traditional barri-
guidelines are available to help the selection pro-
ers between functional work areas (i.e. depart-
cess.
ments which can also include subcontractors)
and encourage a team spirit. Step 8 – Schedule and Cost Risk Assessment
Work teams are composed of the functional ele- A topic of growing importance is that of risk
ments necessary to develop or produce the end assessment. This Earned Value Management
product. This work team structure has advan- process includes three components: technical
tages in that fewer management accounts are risk, schedule risk, and cost risk. Each of these
needed, there is improved communication and has its own considerations and impacts. Like the
efficiency, and potential risks often are surfaced overall Earned Value Management process,
earlier. these are also interrelated. There has been
some tendency over the years for managers to
Step 4 – Planning
ignore the possibilities of identifying and espe-
Once the work definition and organizational con- cially quantifying risk because the results may be
cerns have been addressed, the particulars of the disconcerting. However, ignoring risk does not
 Chapter 1 Project Management Using Earned Value 41

lessen its impact, and will most likely increase its Step 11 – Collecting Actual Costs
effects. As profit margins become slimmer in a
All projects will have a system for collection of
highly competitive environment, the topic of risk
actual costs. Regardless of how unsophisticated
assessment must be addressed.
a system may be this component must be
Step 9 – Integrated Baseline Plan and Work included. The challenge in this area is to define
Authorization Development account structures that can be used for consis-
tently comparing budgets, actuals, and perfor-
Next we come to the center of the flowchart for a mance. This could mean modification to existing
concept that is central to the overall process: per- accounting structures. Actual costs are neces-
formance measurement baseline development. sary so that they can be compared with progress,
The performance measurement baseline is the and this comparison, in turn, provides the cost
official, documented plan that shows in detail how variance.
the project objectives are to be achieved. All of
the activities described thus far and the pro- Step 12 – Performance Measurement
cesses displayed on the Figure 1-8 flowchart are Calculations
needed to achieve a well-planned performance
After progress is measured against the plan and
measurement baseline. At the completion of this
the actual cost is entered, the three points neces-
step, the technical, schedule, and budget base-
sary for data analyses are available. There are
lines have been established and integrated; the
many calculations that aid in assessing the proj-
schedule reflects the time frame where all of the
ect status and assist the manager in targeting
detailed work scope is planned to be performed
problem areas for corrective action. These calcu-
and the budgets are time phased based on the
lations also assist in the Estimate at Completion
schedule requirements. The work is authorized
and Variance Analysis reporting.
to the responsible manager and the technical
work commences. Step 13 – Estimate at Completion and
Subcontract management is a critical element for Schedule Forecasting
many projects. The subcontractor’s technical, Organizations are very concerned with bottom
schedule, and budget baseline must be inte- line performance. One of the essential pieces of
grated with the prime contractor baseline. Since corollary information needed to evaluate an
the integrated baseline must include this element, ongoing project is, “When is it going to finish and
a separate chapter on subcontract management what is it finally going to cost?” This answer will
(Chapter 35), is included in this step. be used for many purposes, ranging from reward
of project participants with better positions on
Step 10 – Establishing the Baseline Plan,
new projects to project cancellation. The “Esti-
Measuring Progress
mate at Completion” is so important that it can
At this point, there is a shift from the planning become a highly political number. A well-defined
phase of baseline establishment to the control Earned Value Management System will have
phase of the Earned Value Management process. objective means of determining and evaluating
Once the performance measurement baseline estimates at completion to improve their accuracy
has been established, the main concern from that even in the early stages of a project. This can
point on is the determination of progress. Prog- only be achieved with defined performance fac-
ress is measured using the same earned value tors that provide an accurate picture of what has
techniques that were established as part of the happened to date and what is forecast to happen.
planning process. The techniques used when
the performance measurement baseline (PMB) Step 14 – Variance Analysis and Corrective
was established must be applied consistently Action
when progress is determined. Progress is com- Variance analysis and corrective action are very
pared with the plan, and this comparison, in turn, important to the overall process. Much time and
provides the schedule variance. effort are invested in baseline establishment, and
42 Section 1 Earned Value Project Management and Organization

now the baseline information can be used as a

basis for determining the course of the project.
Conclusion
The tools defined in the previous two Steps A project is any endeavor that has a scope of
directly feed variance analysis and corrective work and optimistic yet achievable schedule and
action. By comparing earned value to budget, cost targets. A project is typically managed by a
schedule variances can be determined. By com- single individual known as a project manager,
paring earned value to actual cost, cost variances who must be able to coordinate a multi-functional
can be determined. The second element, correc- team towards the achievement of all of the proj-
tive action, is a critical part of the control phase. ect objectives. One of the greatest needs of the
At this point in the process, there is a strong basis project manager is accurate, reliable, and timely
for determining the project’s true position versus information to enable effective management deci-
the approved plan so that exceptions can be sions. The information needs to include a valid
addressed. The carefully defined system will pro- assessment of project progress and status. Proj-
vide immediate feedback as to whether the cor- ects were historically monitored by comparing
rective action was successful. planned expenditures against actual expendi-
tures.
Step 15 – Baseline Revisions and Change
Control This approach lacks the most important element
of status: a measure of work accomplished. This
An essential aspect of the Earned Value Manage- shortcoming can be overcome by including a
ment process is managing change. After all of third data element that determines an objective
the effort that goes into developing the baseline value of work completed. This is known as the
plan and determining current status, it is always a performance oriented approach. The perfor-
disruption to change that plan. Nevertheless, mance oriented approach allows early identifica-
changes are a part of every project and must be tion of trends that indicate if a project’s objectives
addressed as to how they will be reviewed, are in jeopardy. This “early warning system”
approved, and incorporated into the plan. Proce- allows a timely response on the part of manage-
dures are required to manage the change control ment to mitigate unfavorable outcomes by mak-
process or, over time, the project’s reports will ing informed decisions.
relate less and less to the current scope, sched-
ule, and budget as well as the true status. One It is important that the tradeoff between adequate
guideline stipulates that as much attention is project status visibility and excessive data collec-
needed for processing baseline changes as was tion be recognized and addressed. This is
used in developing the original baseline plan. accomplished by setting an appropriate level of
detail in the implementation process. Factors
Step 16 – Implementation of the Project that affect level of detail include project size and
Management Process duration, risk (technical, schedule and cost), type
of contract, and desired level of management
Now that the system design is complete, there involvement.
are still some ways to streamline the information
flow. These include topics such as paperless The entire process of managing projects must be
systems and electronic data integration. There a logical one. Each of the steps of the Earned
are also programs available for automating much Value Management process is illustrated by the
of the data reduction and analysis, with built-in flowchart in Figure 1-8 and will be discussed in
sanity checks to catch obvious errors. These top- detail in subsequent chapters.
ics are discussed in the final chapter of this book.
 Chapter 1 Project Management Using Earned Value 43

Chapter 1 Review Questions

1-1. Explain the difference between a project and a program.
1-2. What aspects of a project are managed during the controlling phase of Earned Value Man-
agement?
1-3. How is a project organized differently from a functional organization?
1-4. What are some frequent causes of project delays?
1-5. Why is a comparison of actual costs to date versus budgeted costs not adequate from an
Earned Value Management standpoint?
1-6. List at least three factors that will affect the level of detail appropriate for implementation of
earned value on a project.

True or False
1-7. The Earned Value Management process is only applicable for large projects.
1-8. The fact that more money has been spent at a point in time than was planned to be spent
means that an overrun in final cost is indicated.
1-9. A program may be made up of multiple projects.
1-10. Performance measurement can be successfully applied in engineering, construction, manu-
facturing, and software development applications, among others.
1-11. Using a measure of performance allows earlier indication of potential increases in final cost.
1-12. From the customer’s viewpoint, a firm fixed price contract suggests the need for tight cost
controls.
The answers to these questions can be found in Section 6, Solutions.
 737

Index risk, 329, 341, 437

schedule network, 297–298
subcontract, 619
variance, 573
ANSI/EIA-748, 135, 363, 411, 603
A apportioned effort, 511, 523
accounting calendar, 535 arrow diagramming method (ADM), 145, 153
activity, 224
change B
future duration, 285 backward pass, 166–168
in progress duration, 285 badgeless organizations, 615
critical, 302 baseline
duration changes, 589
status impact, 270 over target, 258, 524, 619
example statused, 269 rubber, 594
grouping, 209 schedule, 253, 259, 283, 285, 288
hammock, 209 changes, 258, 288
level of cost collection, 535 establishment process, 254
level of effort (LOE), 319–320 establishment timing, 257
missed baseline dates, 225 versus current, 298
out of sequence, 272 baseline change request, 252, 592
relationships, 155 baseline execution index (BEI), 225
finish-to-finish (FF), 155 budget
finish-to-start (FS), 155 See also budgeted cost for work scheduled
lag, 212 (BCWS)
lead, 212 values, 536
metrics, 222 versus funds, 536
parallel finish-to-finish, 318 budget at completion (BAC), 536
parallel start-to-start, 318 budget plan
start-to-finish (SF), 156 See performance measurement baseline (PMB)
start-to-start (SS), 156 budgeted cost for work performed (BCWP), 477, 481,
summary, 209 536, 546
actual cost (AC) calculating, 499
See actual cost of work performed (ACWP) consistent with baseline, 503
actual cost of work performed (ACWP), 477, 531, 536, determining when earned, 512
546 equipment, 536
accuracy, 540 material, 513, 536–537
data sources, 533 purchased services, 536
labor hours verus labor dollars (reporting), 542 rates, 539
level of cost collection, 535 schedule as basis, 365
minimizing incorrect charges, 541 budgeted cost for work scheduled (BCWS), 477, 536,
rates, 539 546
time lag, 539 and work authorization, 527
actual finish date, 267 estimate as basis for, 398
actual start date, 267 rates, 539
analysis schedule as basis, 257, 365
critical path method (CPM), 165 See also performance measurement baseline
float trends, 295, 302 (PMB)
formulas, 545–559 budgeted cost of work remaining (BCWR), 551
formulas (list of), 713
funding, 536
C
labor cost variances, 558 cash flow, 536
material variances, 558 change control, 585, 587
performance measurement, 545 and the PMB, 588
reporting, 556 program, 587
changes
738 Section 6 Conclusion, Solutions, and References

baseline, 589 critical path, 165, 169

causes of, 585 characteristics, 172
directed, 617 length index (CPLI), 225
documenting, 286, 456 test, 225
duration critical path length index (CPLI), 225
future activity, 285 critical path method (CPM), 145, 165
in progress activity, 285 estimate validity, 332, 335
external, 585 fundamentals, 163
formal reprogramming, 619 risk approach, 330
how to control, 587 schedule traceability, 252
internal replanning, 586, 592, 618 current
schedule, 283, 286 schedule, 259, 283, 285, 288
schedule baseline, 258, 288 versus baseline, 298
See also change control
subcontract, 616
D
tracking, 590 direct costs, 531, 534
tracking original estimate, 453 directed changes, 617
types of, 585 directed date, 171, 216, 222, 307–316
charge number, 522 hard constraint, 309
and work authorization, 527 imposed, 307
commitments, 536 not earlier than, 307
time lag, 536 not later than, 307
constraint risk analysis impact, 337
See directed date soft constraint, 309
Constructive Cost Model (COCOMO), 416 discrete effort, 501, 523
contract budget base (CBB), 522–524 0/100 technique, 506
log, 590–591 50/50 technique, 505
Contract Performance Report (CPR), 556, 603 equivalent units technique, 507
control account, 523 incremental milestone technique, 503
and planning packages, 499 milestones, 501
and summary level planning package (SLPP), 522 percent complete technique, 509
and work packages, 499 units complete technique, 506
baseline changes, 589 distributed budget, 523
dollar value, 99 E
duration, 99 early finish (EF), 166
establishment, 97 early start (ES), 166
examples, 97–99 earned value (EV)
identification, 96 See budgeted cost for work performed (BCWP)
level of cost collection, 535 earned value management
level of detail, 97–98 benefits, 485
management responsibilities, 98 defined, 32
subcontract, 609, 613 fundamentals, 34, 479–484
corrective action log, 580 illustrated (the brick wall), 489–495
corrective action plan, 579 implementation
Cost Accounting Standards (CAS) Disclosure concerns, 36
Statement, 411, 531 level of detail, 33, 37
cost baseline process, 38, 484
See performance measurement baseline (PMB) relationship to risk management, 85
cost elements, 392 schedule applications in, 363
cost performance index (CPI) schedule contract requirements, 366–369
combined with SPI, 556 earned value management system
efficiency concept, 550 continuous improvement, 644
performance concept, 550 defined, 32
cost risk assessment, 435–443 description, 363, 640
cost variance (CV), 483, 546 design, 638
 739

dollar values for compliance, 605 software, 416

guidelines, 135, 363, 366, 603, 605 function points, 416
implementation, 637 lines of code, 416
process, 645 templates, 391–392
schedule, 645 traceability, 455
interface with accounting system, 534 tracking, 453–459
procedures, 644 type
storyboard, 642 conceptual, 397
training material, 644 definitive, 398
earned value techniques, 509 detailed, 398
0/100, 506 preliminary, 397
50/50, 505 estimate at completion (EAC), 536
apportioned effort, 511 comprehensive, 549
consistency with baseline, 503 detailed, 549
discrete effort, 501 development, 548
equivalent units, 507 estimate as basis for, 398
functions, 499 independent, 551
incremental milestone, 503 justification, 580
level of effort (LOE), 511 range of, 553
milestone, 501 estimate to complete (ETC), 536, 549
other, 512 estimated completion date (ECD), 554
units complete, 506
escalation factors, 411–415
F
estimate fast track, 244, 338, 399
automating, 465–469 finish-to-finish (FF), 155
basis for BCWS, 398 finish-to-start (FS), 155
basis for EAC, 398 float, 163, 169
changes, 453 analysis, 295, 302
compared to actual negative, 223, 295
variance sources, 453, 455 monitoring, 301
cost flow development, 411–414 resolving, 295, 300
cost risk analysis, 440 secondary, 316
defaults, 407 status impact, 270
defined, 389 formal reprogramming, 619
development inputs, 406 forward pass, 166–168
documenting assumptions, 447 fourteen point schedule health check, 221
escalation factors, 411–415 activities with lags, 222
fast track impact, 399 activities with leads, 221
fundamentals, 387 baseline execution index (BEI), 225
guidelines, 390, 408–410 correlation with GASP, 226
input sources, 407 critical path length index (CPLI), 225
level of detail, 410 critical path test, 225
manufacturing costs, 415 hard constraints, 222
method high duration, 224
analogy, 406 high float, 223
engineering build-up, 406 invalid dates, 224
parametric, 406 missed activities, 225
operating costs, 415 missing logic, 221
prerequisites, 390 negative float, 223
process, 387, 401 no assigned resources, 224
review relationship types, 222
external, 447 free float (FF), 170
other factors, 448 freeze period, 522
team, 448 funding, 524
role of WBS, 391–392 analysis, 536
740 Section 6 Conclusion, Solutions, and References

profile, 536 M
funds versus budget, 536 management reserve (MR), 523–524
log, 590
G
subcontract, 610–611
GAO Best Scheduling Practices, 135, 251, 325
milestone, 153, 251–252, 501–503, 522, 608
GAO Cost Estimating and Analysis Guide, 406
examples, 503
Generally Accepted Scheduling Principles (GASP),
monte carlo, 345, 437
134, 212, 226, 251, 365
N
H
negative float
hammock, 209
See float
high duration, 224
nonrecurring costs, 415
I
O
independent estimate at completion (IEAC), 551
organization breakdown structure (OBS)
indirect costs, 411, 531, 534, 537
and work authorization, 527
indirect pools, 534
chart definition, 91
integrated master plan (IMP), 205, 251
intersection with WBS, 91
accomplishment, 206
types, 92
coding, 207
out of sequence logic, 272
criteria, 207
progress override, 272, 275
defined, 206
retained logic, 272
event, 206
total float impact, 276
IMS and WBS cross reference, 207
over target baseline (OTB), 258, 524, 619
integrated master schedule (IMS), 205–206
over target schedule (OTS), 258, 301, 619
coding, 207, 252, 368
IMP and WBS cross reference, 207 P
Integrated Master Schedule (IMS) Data Item percent complete, 509
Description DI-MGMT-81650, 165, 216, 252, 325, 365 earned value technique, 509
integrated product team (IPT) physical, 269–270
See work team project, 554
internal replanning, 592, 618 schedule, 269–270
International Function Point Users Group (IFPUG), 417 percent spent, 554
performance indices, 550
L
performance measurement baseline (PMB), 499, 519,
lag, 212–215
522
late finish (LF), 166
changes, 585, 588, 590
late start (LS), 166
development steps, 520
latest revised estimate, 549
establishment timing, 525
latin hypercube, 437
structure, 522
lead, 212–215
performance measurement calculations
learning curves
See analysis formulas
cumulative average method, 427
period of performance, 527
impacts, 429
planned value (PV)
selecting method to use, 428
See budgeted cost for work scheduled (BCWS)
slope, 425, 427–428
Planning and Scheduling Excellence Guide (PASEG),
unit method, 427
134, 366
unit values, 428–429
planning package, 500
level of effort (LOE), 511, 523
converted to work packages, 285, 521
activities, 319–320
precedence diagramming method (PDM), 145, 153
leveled finish, 194
price variance (PV), 558
leveled start, 194
Program Evaluation and Review Technique (PERT),
logic network
145, 342
See schedule network
progress override, 272, 275
logs, 524, 590
project
characteristics of successful, 32
 741

defined, 31 reasons for, 440

objectives defined, 45–46 tools, 342
percent complete, 554 attributes, 78
percent spent, 554 classification, 78
scheduling, 137 contract type, 605
versus program, 31 cost, 435
cumulative likelihood curves, 333
R cumulative probabilities, 333
rate variance (RV), 558 defined, 77
recurring costs, 415 identification, 80
remaining duration, 267, 270 latin hypercube, 437
resource management
availability constraint, 192 fundamentals, 77
curves, 194–195 plan, 79–80
defined, 189 process, 79
early start curve, 194 relationship to earned value management, 85
float, 195 strategy, 84
late start curve, 194 model definition, 435
leveled dates, 194 monte carlo, 345, 437
leveled start curve, 194 PERT, 342
plan, 189 probability distributions, 437
profiles, 191 qualitative, 83
reallocation, 287 quantitative, 83
requirements, 191 schedule, 219, 327
time constraint, 192 bias, 336
usage curve, 192 directed dates impact on, 337
resource leveling, 217 fast track impact on, 338
considerations, 193 See also schedule risk assessment (SRA)
process, 192–193 subcontract, 605
resource loading, 217 threat or opportunity, 77
considerations, 193 rolling wave planning, 258, 285, 288, 500, 521
objective, 191 root cause analysis
process, 191 cost impact assessment, 559
requirement, 224 float deterioration, 298
responsibility assignment matrix (RAM), 91, 95–96, schedule impact assessment, 299, 559
524 See also variance analysis report (VAR)
level of detail, 96
retained logic, 272 S
review question answers schedule
See solutions and earned value management, 363
revisions and work authorization (period of performance),
See changes 527
risk approach
analysis, 329 aggressive, 218
output, 341 conservative, 217
path duration, 332 organizational, 218
pitfalls, 339 project, 218
sampling techniques, 437 audit, 220
and variance thresholds, 576 baseline, 253, 283, 285, 288
assessment, 329 changes, 258
benefits, 329 establishment process, 254
conducting, 442 establishment timing, 257
developing useful mitigation strategies, 329 basis for BCWP, 365
implementation, 340, 345 basis for BCWS/PMB, 257, 365
outputs, 438–439 calendar, 321
742 Section 6 Conclusion, Solutions, and References

changes, 283, 286 types

documenting, 286 bar chart, 143
duration, 285 combination chart, 143
current, 259, 283, 285, 288 flow process chart, 144
current status, 259, 271 gantt charts, 141
definition, 139 line of balance, 144
development data requirements, 140 milestone chart, 142
earned value contract requirements, 366–369 modified gantt or milestone chart, 143
fast tracking, 244 network diagrams, 145
focused work, 244 set back chart, 144
fourteen point health check, 221 update process, 267, 271
fundamentals, 137 visibility task, 310
integrating subcontract, 608 what if, 285, 287
level of detail, 219, 256 work scope crosscheck, 57
margin, 216, 300 schedule finish, 298
baseline finish variance method, 217 schedule network
buffer activity method, 216 acceleration, 235
over target, 258, 301, 619 other techniques, 244
percent complete, 269–270 activity relationships, 155
physical percent complete, 269–270 analysis, 297–298
purpose, 141 backward pass, 166
quality, 220 calculated dates, 166, 270
reconcilation calculations, 166, 170, 269
progress and performance, 365 coding, 207, 252, 368
time phased budgets, 365 components, 153
reserve, 216 CPM analysis technique, 165
risk, 219, 327 crashing, 235
analysis output, 341 example, 237–244
and cost overrun, 329 process, 237
and early start scheduling, 339 development concerns, 208
and late start scheduling, 338 development technique
at path convergence, 336 bottom-up, 206
bias, 336 IMP/IMS, 206
CPM approach, 330 top-down, 205
directed dates impact on, 337 directed dates, 171
duration validity, 338 display techniques, 157
fast track impact on, 338 forward pass, 166
highest path, 335 out of sequence logic, 272
merge bias at path convergence, 336 resource leveled dates, 194
other issues, 341 resource loading, 191
path duration, 332 resource loading requirement, 224
probabilistic approach, 330 templates, 209–212
See also schedule risk assessment (SRA) schedule performance index (SPI), 303, 551
routine updates, 285, 288 and schedule status, 216, 555
status, 252, 259, 286 combined with CPI, 556
and SPI, 216 schedule risk assessment (SRA), 325–346
considerations, 272 schedule variance (SV), 303, 483, 546
data, 267 converted to time variance, 547
float analysis, 295, 302 dollar versus time, 484
streamlining, 244 secondary float, 316
traceability, 249, 251 slack, 163, 169
achieving, 252 solutions
historical, 252, 285 chapter 1, 653
horizontal, 251, 365 chapter 2, 654
vertical, 251, 363 chapter 3, 655
 743

chapter 4, 656 EVMS flowdown requirements, 604

chapter 5, 657 impact on RFP, 605
chapter 6, 660 EVMS reviews, 620
chapter 7, 662 factoring budget and earned value, 614
chapter 8, 663 formal reprogramming, 619
chapter 9, 664 integrating
chapter 10, 665 BCWS/PMB, 609
chapter 11, 668 schedule, 608
chapter 12, 669 WBS, 607
chapter 13, 669 inter-divisional work authorization (IDWA), 615
chapter 14, 671 internal replanning, 618
chapter 15, 672 major versus non-major, 603
chapter 16, 673 management reserve (MR), 610–611
chapter 17, 674 price versus fee, 609
chapter 18, 676 risk, 605
chapter 19, 682 schedule milestones, 608
chapter 20, 684 surveillance, 620
chapter 21, 684 time lag (data), 613
chapter 22, 686 undistributed budget (UB), 610–611
chapter 23, 687 VAR, 619
chapter 24, 688 WBS, 610
chapter 25, 689 summary activity, 209
chapter 26, 691 summary level planning package (SLPP), 521
chapter 27, 694 surveillance, 620
chapter 28, 695
chapter 29, 696
T
chapter 30, 697 thresholds, 574
chapter 31, 698 time now, 267, 269
chapter 32, 699 to complete performance index (TCPI), 551
chapter 33, 702 total allocated budget (TAB), 524
chapter 34, 703 total float (TF), 166, 169
chapter 35, 704 analysis, 295, 297
chapter 36, 710 and SPI, 555
section 1 quiz, 658 directed date impact, 310–311
section 2 quiz, 677 out of sequence logic method impact, 276
section 3 quiz, 691 traceability
section 4 quiz, 706 estimate, 453
start-to-finish (SF), 156 historical, 455
start-to-start (SS), 156 vertical, 455
subcontract, 610 schedule
badgeless organization, 615 achieving, 252
change control, 616 historical, 252, 285
classification, 535 horizontal, 251, 365
contract type vertical, 251, 363
cost plus, 612 work scope, 365
firm fixed price, 612 U
Incentive, 612 undistributed budget (UB), 523
selecting, 606 log, 590
technical services, 613 subcontract, 610–611
time and materials, 613 usage variance (UV), 558
control accounts
impacts on, 609, 613 V
data analysis, 619 variance, 298
defined, 603 analysis, 573
directed changes, 617 at completion, 546
744 Section 6 Conclusion, Solutions, and References

cost, 483, 546 dictionary example, 54

duration, 298 examples, 48–51
labor cost, 558 IMP/IMS cross reference, 207
material, 558 integrating subcontract, 607
price, 558 intersection with OBS, 91
rate, 558 level of detail, 48
schedule, 303, 483, 546 role in estimating, 391
schedule converted to time, 547 work scope crosscheck, 57
schedule start, 298 work definition
thresholds, 574 process, 45
usage, 558 work package, 499–500, 523
variance analysis report (VAR), 549, 577 characteristics, 499
approval, 580 examples, 501
corrective action plan, 579 level of cost collection, 535
describing the problem, 578 work scope
EAC justification, 580 and schedule development, 140
impact, 579 and WBS elements, 47
subcontract, 619 and work authorization, 527
variance at completion (VAC), 546 defined, 45
traceability, 365
W verification, 57
what if schedule, 285, 287 work team
work authorization, 525, 527 advantages, 111, 113
inter-divisional, 615 alignment examples, 114
requirements, 526 application examples, 116
work breakdown structure (WBS), 610 defined, 111
and work authorization, 527 lead role, 119
contract, 57 work-around plan
defined, 47 strategies, 287
development considerations, 48, 54
dictionary, 53, 590
 745

About the Author

Mr. Gary C. Humphreys has over 35 years of program management experience in both government
and commercial environments, specializing in earned value management systems (EVMS) design,
development, and implementation. He was the first US Army Team Director to conduct an EVMS Tri-
Service Demonstration. As both a Team Member and Team Director, he has assisted, evaluated, and
directed review teams leading to successful system acceptance.
He has developed a successful consulting practice operating out of Orange, California. As the premier
consultant in this field he has provided assistance in all phases of project management to over 800 cli-
ents from aerospace firms to utility companies, England's Inland Revenue Service (IRS), and Ship-
building companies in North America, Australia, and Europe. Within the industry, no one has
performed more on-site earned value cost/schedule performance work.
He was elected to the Nine Man Committee for Increasing the Cost Effectiveness of earned value and
led the Fifteen Man Industry Committee to modify traditional documentation and interpretation of
earned value to be more compatible with efficient, economical production management control tech-
niques. As a member of the Integrated Program Management Initiative Joint Team, Mr. Humphreys
received the DOD's highest acquisition award, the 1998 David Packard Excellence in Acquisition
Award. He is also a recipient of the Whitey H. Driessnack Award for Outstanding Contributions to the
Advancement of Performance Management.
He has served as Vice-Chair and Chair of the National Defense Industrial Association (NDIA) Program
Management Systems Subcommittee (PMSC). As a direct result of his tenure as Chair, he took a
fledgling committee and developed it into an influential, policy impacting committee with membership
growing to over one hundred people. He was also instrumental in opening the lines of communication
between the DOD’s Performance Measurement Joint Executive Group (PMJEG) and industry by
establishing the first dialogue interchange meetings between the two groups. It was through the NDIA
PMSC that he orchestrated the first ever survey on EVMS. As a direct result of this survey's findings,
the US Government conducted their own survey. These two independent surveys formed the genesis
for subsequent revisions to numerous guides and reference material on EVMS.
Under his leadership, the Performance Management Association (PMA) (now the Project Management
Institute’s College of Performance Management) achieved importance as a policy-influencing group.
He initiated international Chapters in Australia and new US Chapters. He served as leader of the Total
Quality Management (TQM) Process Action Team (PAT) for streamlining business system descriptions
for performance measurement and management applications.
He has been a guest and keynote speaker on a variety of performance measurement related subjects
at the Air Force Institute of Technology (AFIT), Association for the Advancement of Cost Engineering
International (AACE International), Certified Public Accountants (CPA) Government Contracts Confer-
ence, Defense Acquisition University (DAU), National Computer Conference (NCC) of American Fed-
eration of Information Processing Societies (AFIPS), PMI, CPM National and International Chapter
meetings, and numerous software user groups.
Mr. Humphreys is a graduate of the University of California at Berkeley, with a Masters Degree in Busi-
ness Administration from the University of Southern California.
He authored the first edition of Project Management Using Earned Value published in 2002. He was a
co-author of Project and Production Scheduling, published in 1987. He has also written numerous arti-
cles on subjects related to project management and earned value.