Primavera EVMS

Earned Value Analysis
Presented by: Shuja Ali
IPECC Consultants
Project Management, Training & Contract
1
Workforce
What Is It ?
Why Do I Need It ?
How Do I Do It?
Today’s Situation
Need for accurate and consistent status

information
Numerous complex (and interrelated)
projects
 Projects with many WBS activities
 Virtual offices
 Diverse technology platforms
Shuja Ali:[email protected] 3
There’s Room For Improvement
70% of projects are:

•Over budget
•Behind schedule
52% of all projects finish at

189% of their initial budget
And some, after huge

investments of time and
money, are simply never
comple
How to answer the
question: “Have we done what
we said we’d do?”
% complete
estimating % of
Budget spent % of
work done % of
time elapsed
 subjective, incomplete
 draws false
conclusions
Enter Earned Value
Analysis
“Earned Value Analysis” is:
• an industry standard way to:
• measure a project’s progress,
• forecast its completion date and final cost,
and
• provide schedule and budget variances
along the way.
By integrating three measurements, it provides

consistent, numerical indicators with which you
can evaluate and compare projects.
What’s more Important?
Knowing where you

are on schedule?
Knowing where you

are on budget?
Knowing where you

are on work
accomplished?
EVA Integrates All Three
It compares the PLANNED amount of

work with what has actually been
COMPLETED, to determine if COST ,
SCHEDULE, and WORK ACCOMPLISHED
are progressing as planned.
Work is “Earned” or credited as it is

completed.
Earned Value needed
because...
Different measures of progress for

different types of tasks
Need to “roll up” progress of many

tasks into an overall project status
Need for a uniform unit of measure

(dollars or work-hours).
Earned Value needed
because...
Provides an “Early Warning” signal for

prompt corrective action.
 Bad news does not age well.
 Still time to recover
 Timely request for additional funds
And One More
Reason
Why You Need EVA
?
So, Is This Stuff New ?
It’s been around since the sixties.
“Cost/Schedule Control Systems

Criteria”
(C/SCSC)
Examples of informal Earned Value
Analysis
It’s done informally without realizing it.

•30% time used,
•30% $$ spent
•So, if 30% of the work is done, I must be
OK ??
•Shop floor estimates
•Cost comparisons
Budget vs. Actual
How’s this project doing?
120000
100000
80000
Projected
60000
Actual
40000
20000
0
Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03
But First! - We gotta get
organized
EVA works best when work is

‘compartmentalized’.
Compartmentalization is best achieved with

a well-planned Work Breakdown Structure.
So, how do I create a WBS for a really

complex project?
How am I gonna eat this
elephant?
Obviously in small
bites.
Proper WBS Design
One WBS per program

• Deliverable-oriented
• Work not in the WBS is out-of-scope
• Each descending level represents more
detail
Full (and accurate) definition is key
• Defined deliverable(s)
• Timeframe for delivery of product
• Total cost (direct and indirect) to deliver
product
A sample Work Breakdown
Structure
Serve Pizzas to Customers
Provide the Cook the Serve (Others)

Place Food Customers
Make the Cook the Build the Pizza

Dough Sauce
WBS Units are “Work Packages”
Lowest level WBS elements
Have an accompanying narrative
Have three measurable components

• Scope of work to be accomplished
• Total (direct and indirect) cost
• Timeframe for completion
Control Account Plans
A CAP is essentially a Work Package with some

added features:
 Assignment of responsibility
• Organization
• Individual
 Division (if necessary) into lower-level Work
Packages.
 Metrics for measuring EV performance
• Milestones
• % complete
• Other
 The sum of the CAPs constitutes the Performance

Measurement Shuja
Baseline
Ali:[email protected] 20
Enough With the WBS Stuff
Already !
We came here to talk about Earned

Value.
Some New Terms
BCWS - Budgeted Cost of Work

Scheduled
ACWP - Actual Cost of Work

Performed
BCWP - Budgeted Cost of Work

Performed
Earned Value Definitions
BCWS: “Budgeted Cost of Work

Scheduled”
Planned cost of the total amount of work

scheduled to be performed by the milestone
date.
BCWS - Budgeted Cost of Work
Scheduled
120000
100000
80000
60000 BCWS
40000
20000
Nov-03
Jul-03
Jan-03
Jun-03
Mar-03
Apr-03
Oct-03
Feb-03
May-03
Aug-03
Sep-03
Dec-03
(cont.)
ACWP: “Actual Cost of Work

Performed”
Cost incurred to accomplish the work that has

been done to date.
ACWP - Actual Cost of Work Performed
120000
100000
80000
56000 BCWP
60000
ACWP
49000
40000
20000
Nov-03
Jun-03
Jul-03
Jan-03
Feb-03
Mar-03
Apr-03
May-03
Aug-03
Sep-03
Oct-03
Dec-03
(cont.)
BCWP: Budgeted Cost of Work Performed
The planned (not actual) cost to complete the

work that has been done.
BCWP - Budgeted Cost of Work
Performed
120000
100000
80000
55000 BCWP
60000
49000 BCWS
40000
20000
Nov-03
Jul-03
Jan-03
Jun-03
Oct-03
Dec-03
Feb-03
Mar-03
Apr-03
May-03
Aug-03
Sep-03
The Whole Story
120000
100000
80000
56000 BCWS
60000 BCWP
55000
49000 ACWP
40000
20000
Nov-03
Jul-03
Jan-03
Jun-03
Feb-03
Mar-03
May-03
Aug-03
Sep-03
Dec-03
Apr-03
Oct-03
Some Derived Metrics
SV: Schedule Variance (BCWP-BCWS)

 A comparison of amount of work performed
during a given period of time to what was
scheduled to be performed.
 A negative variance means the project is
behind schedule
CV: Cost Variance (BCWP-ACWP)

 A comparison of the budgeted cost of work
performed with actual cost.
 A negative variance means the project is over
budget.
Schedule Variance & Cost Variance
Schedule Variance = BCWP-BCWS

$49,000
- 55,000
SV = - $ 6,000
Cost Variance = BCWP-ACWP

$49,000
56,000
CV = - $7,000
Some More Derived Metrics
SPI: Schedule Performance Index

SPI=BCWP/BCWS SPI<1
means project is behind schedule
CPI: Cost Performance Index
CPI= BCWP/ACWP CPI<1
means project is over budget
CSI: Cost Schedule Index (CSI=CPI x SPI)

The further CSI is from 1.0, the less likely project
recovery becomes.
Performance Metrics
SPI: BCWP/BCWS
49,000/55,000 = 0.891
CPI: BCWP/ACWP
49,000/56000 = 0.875
CSI: SPI x CPI

.891 x .875 = 0.780
Making Projections
Once a project is 10% complete, the
overrun at completion will not be less
than the current overrun.
Once a project is 20% complete,

the CPI does not vary from its current
value by more
than 10%.
The CPI and SPI are statistically accurate

indicators of final cost results.
Source: Defense Acquisition University

Making Projections
120000
103865
100000 102000
90882
80000
BCWS
60000 Today BCWP
ACWP
40000
20000
Nov-03
Jan-03
Jun-03
Jul-03
Oct-03
Dec-03
Feb-03
Mar-03
Apr-03
May-03
Aug-03
Sep-03
Estimate to Complete
140000
120000 116,571
100000 102000
BCWS
80000
Today BCWP
60000
ACWP
40000
20000
0
03
03
04
3
4
3
03
3
-0
-0
l-0
-0
v-
n-
n-
p-
ar
ar
ay
Ju
No
Ja
Ja
Se
M
M
M
A New Criteria
Activities “earn value” as they are completed.

The value earned is the WBS budgeted cost of
the activity completed to date.
Value of Earned Value
Schedule Status
Reporting
Cost Status Reporting
Forecasting
But How Do I Do All This Stuff
?
With an Earned Value Management System

Requirements of Earned
Value
Proper WBS Design

Baseline Budget Control Accounts
Baseline Schedule
Work measurement by Control
Account
 work-hours, dollars, units, etc.
Good Project Management
Practices
Shortcomings of Earned Value
Quantifying/measuring work
progress can be difficult.
Time required for data

measurement, input, and
manipulation can be considerable.
Summary
EVA & EVMS will help reduce guesswork in:
 Measuring performance
 forecasting
Need to get beyond misleading measures of
progress.
Reasons to use EVA and EVMS:
 Good project management practice
 OMB requirement
Incorporate into contracts
Questions/Discussion

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Earned Value Analysis

Presented by: Shuja Ali

Need for accurate and consistent status

70% of projects are:

52% of all projects finish at

And some, after huge

By integrating three measurements, it provides

Knowing where you

Knowing where you

Knowing where you

It compares the PLANNED amount of

Work is “Earned” or credited as it is

Different measures of progress for

Need to “roll up” progress of many

Need for a uniform unit of measure

Provides an “Early Warning” signal for

 Bad news does not age well.

 Still time to recover

 Timely request for additional funds

“Cost/Schedule Control Systems

It’s done informally without realizing it.

•Shop floor estimates

EVA works best when work is

Compartmentalization is best achieved with

So, how do I create a WBS for a really

One WBS per program

Provide the Cook the Serve (Others)

Make the Cook the Build the Pizza

Lowest level WBS elements

Have an accompanying narrative

Have three measurable components

A CAP is essentially a Work Package with some

 The sum of the CAPs constitutes the Performance

We came here to talk about Earned

BCWS - Budgeted Cost of Work

ACWP - Actual Cost of Work

BCWP - Budgeted Cost of Work

BCWS: “Budgeted Cost of Work

Planned cost of the total amount of work

ACWP: “Actual Cost of Work

Cost incurred to accomplish the work that has

BCWP: Budgeted Cost of Work Performed

The planned (not actual) cost to complete the

SV: Schedule Variance (BCWP-BCWS)

CV: Cost Variance (BCWP-ACWP)

Schedule Variance = BCWP-BCWS

Cost Variance = BCWP-ACWP

SPI: Schedule Performance Index

CSI: Cost Schedule Index (CSI=CPI x SPI)

CSI: SPI x CPI

Once a project is 20% complete,

The CPI and SPI are statistically accurate

Source: Defense Acquisition University

Activities “earn value” as they are completed.

With an Earned Value Management System

Proper WBS Design

Time required for data

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