Transcript Using PMPlan 4 Enterprise as an EVMS

Using PMPlan® as an EVMS
“Earned Value Management System”
by
AlNik Solutions
Copyright 2010-2011 ©
Agenda for ‘Using PMPlan as an EVMS’
• Project Management for EVMS
• Developing the Project Plan
• Managing project using Earned
Value Methodology
– What is EVM and how it is used
– Using the EVM features of
PMPlan
– EVM Reports from PMPlan
Using the Earned Value Methodology
• For the Earned Value Method to work properly,
the project will need to broken-down into
measurable units. In PMPlan, that measurable
unit is at the activity level, not at an upper level
work package.
• The recommendation is, that control accounts
(where the actual costs are accumulated) be one
or two levels above the activities (where the
earned value is measured).
Agenda for ‘Using PMPlan as an EVMS’
• Project Management for EVMS
• Developing the Project Plan
• Managing project using Earned
Value Methodology
– What is EVM and how it is used
– Using the EVM features of
PMPlan
– EVM Reports from PMPlan
Good WBS Design Principles for EVMS
• The 100% Rule
– The WBS defines 100% of the work of the project
– Anything that isn’t defined in the WBS is outside the scope of the project.
– The work content on any item is the sum of what is included under that
work item
• The WBS must be consistent with the way the project will
be performed and controlled
• Upper Levels are planned project outcomes not planned
actions, or the work effort
• Milestones are the objectives of the work effort, but are not
the work effort
• Activity Levels are the project work effort, and are where
the budget effectiveness (EVM) of the effort is measured
Scheduling for EVMS
• Scheduling forces the:
– Quantification of a discrete work effort
– Placement of the work effort in its proper
relationship to that of another work effort
– Setting the parameters of time by which the
work effort can be measured (EVM)
Agenda for ‘Using PMPlan as an EVMS’
• Project Management for EVMS
• Developing the Project Plan
• Managing project using Earned
Value Methodology
– What is EVM and how it is used
– Using the EVM features of
PMPlan
– EVM Reports from PMPlan
An Earned Value Management System
• Can:
– Provide early (Difficult to ignore) performance
problem identification
– Improve financial Reporting
• Does not:
– Recognize Critical Paths
• Can not:
– Take management action
Time-Phased Spend Plan
• This shows the time-phased spend plan if the
project proceeds as planned.
Typical Approach of Tracking of Actual versus Planned
• The chart tells us we have spent less than
planned to date, but
• We cannot tell if we are behind schedule, nor if
the cost for work completed matches the actual
costs.
Measurement Terminology
•
Budget at Completion (BAC)
– The sum of the total budget for a work package, major task, or project.
•
Planned Value (PV)
– The scheduled cost based on the allocation cost items such resources and material
during the timeline of an activity
– Also called Budgeted Cost for Work Scheduled (BCWS)
•
Earned Value (EV)
– The value of the work performed to-date using any reasonably accurate, mutually
acceptable methodology for determining value (i.e.; 0/100%, 50/50%, 30/40/40, ratio
of units completed versus total units, manager estimate, level of effort, being some
examples).
– Also called Budgeted Cost for Work Performed (BCWP)
•
Actual Cost (AC)
– Total incurred costs charged to a work package by the company’s accounting
system, which can include labor costs, direct costs (overhead), and indirect costs
(material, travel, and etc.)
– Also called Actual Cost for Work Performed (ACWP)
These values are used to calculate performance.
Performance Terminology
• Cost Variance (CV)
– CV = EV – AC = BCWP – ACWP
• Cost Performance Index (CPI)
– The cost efficiency ratio of earned value to actual costs (CPI = EV/AC)
– In PMPlan, the CPI is used to calculate Estimate at Completion (EAC)
(EAC = BAC/CPI)
• Schedule Variance (SV)
– SV = EV – PV =BCWP – BCWS
• Schedule Performance Index (SPI)
– The schedule efficiency ratio of earned value accomplished against
planned value (SPI = EV/PV). The SPI describes what portion of the
planned schedule was actually accomplished.
• Variance at Completion (VAC)
– The predicted magnitude of possible underrun or overrun at completion of
work package, major task, or project (VAC = BAC – EAC)
Graphic of the EVM Terminology
TAB
VAC
EAC
AC Curve
SV
EV Curve
Time
CV
Planned Completion
PV Curve
Forecasted Completion
BAC
Status Time
Cost
Management Reserve
Review of Earned Value Concept
• Will
– Describe a simple project and its progress
– Define earned value and related terms
– Show how earned value defines project
performance
Note: Sample tables and graphics shown in following slides are from PMPlan
Schedule
• This shows a sample project schedule
Planned Budget
• The sample project is loaded with resources
which results in an allocated spend plan.
Using Earned Value Method
• For the Earned Value Method to work well you
need to breakdown the project into measurable
activities (Note: in PMPlan, Cost Budgeting is
done at the activity level not Control Account).
• It is recommended that your Control Accounts
(where you accumulate actual costs) be one or
two levels above the activities.
• The following five slides show different
performance results of our sample project.
Example PMPlan Earned Value Worksheet
•
•
•
•
•
The project manager or task leader enters either an earned percentage or a $
value.
Actual Cost is also entered. In this worksheet, actual cost can also include
open commitments such as unpaid invoices for material and equipment.
The ‘Threshold’ is a percent of the AC to the BAC, which determines when the
application uses the CPI to calculate VAC. If AC is less than the ‘Threshold’,
the VAC equals CV.
Based on the data entered, this project is both behind schedule and over
budget. Even though the current CV = -$4,000, the VAC indicates a potential
overrun of $5,517.
The next slide shows two other views of this data.
Project Status with a; Negative SV and CV
• In the lower half of the graph,
the EV is below both the PV
and AC indicating problems
with cost and schedule.
• The upper half of the graph
shows both CPI and SPI
relative to a value of 1. It is
showing that progress is being
made to improve the schedule,
but cost problem remains.
• The black EV bars in the Gantt
schedule at the right shows that
the ‘Design’ and ‘Prototype’
activities are behind schedule.
Project Status with a; SV and zero (0) CV
• The EV and AC are
equal, thus actual
costs are inline with
accomplishments.
• Even though the
project is behind
schedule, the
schedule variance
trend shows a strong
improvement in
schedule.
Project Status with a; zero (0) SV, + CV
• This project is on
schedule and
should be
completed under
budget.
• The status of the
scheduled project
tasks show that the
earned bars are
aligned within the
green status line.
Why 50% Complete may not be half the schedule status bar!
•
•
•
In the above example, all three activities have earned values of 50% of BAC, but the black earned
bars are not the same length even though the planned bars are the same.
Task A is behind schedule because, instead of 50%, 75% of the budget was scheduled to be
spent by end of December.
Task B is ahead of schedule because, instead of 50%, only 25% of the budget was scheduled to
be spent by end of December.
In Summary – an Earned Value System
• Can:
– Provide early (Difficult to ignore) performance
problem identification
– Improve financial Reporting
• Does not:
– Recognize Critical Paths
• Will not:
– Take management action
Agenda for ‘Using PMPlan as an EVMS’
• Project Management for EVMS
• Developing the Project Plan
• Managing project using Earned
Value Methodology
– What is EVM and how it is used
– Using the EVM features of
PMPlan
– EVM Reports from PMPlan
Project Information
Required for EVM
Project Information – EVM Related Data
Project Title
Project Start Date
Project Finish Date (Calculated)
Project Cost Control Number
Contractor Information
Project Type
Client Information
Project Fee
Project Contract Number from Client
Project Appropriations
Management Reserve
Fiscal Month
PMPlan Tracking Setup Tab
Earned Value Set-Up Table
Key to CPR Header Information
In relation to a row in the Project Information Data
8
12
1
2
22
10&11
3
14
23
25
21
24
Controlling EV Color Codes, ETC
Controls
calculation of the
independent EAC
Controls which
Control Accounts
require analysis
Controls Color
Codes
Agenda for ‘Using PMPlan as an EVMS’
• Project Management for
EVMS
• Developing the Project Plan
• Managing project using Earned
Value Methodology
– What is EVM and how it is used
– Using the EVM features of
PMPlan
– EVM Reports from PMPlan
Status Tab – Performance Reporting
Variance Analysis Report - Input
Project Information – EVM Related Data
Project Title
Project Start Date
Project Finish Date (Calculated)
Project Cost Control Number
Contractor Information
Project Type
Client Information
Project Fee
Project Contract Number from Client
Project Appropriations
Management Reserve
Fiscal Month
Cost/Schedule Status Report
Earned Value reporting.
Graphic Performance Report
The Variance Trend graph provides a
better indication of performance issues.
CPR Lite Sheet One
Slide generated by PMPlan.
CPR Format 1
CPR Format 2
CPR Format 3
CPR Format 4
CPR – Format 5 (Cover Sheet)
Variance Analysis Report - CPR Sheet 5
Variance Report
Baseline, Earned, and Actual Graph
SPI and CPI Graph
Bull's-eye Chart
Estimated Future SPI\CPI
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