Transcript Basic EVMS - EVM Library

EVMS
CPM 300 Principles of Earned Value Implementation
CPM 300B – Management Use
of EV Data
Eleanor Haupt
Aeronautical Systems Center
[email protected]
+1-937-656-5482
Lloyd Carter
MTC AustralAsia Pty Ltd
[email protected]
+61(0)3 5754 1010
1
EVMS
Training Objectives
• Basic concepts of measuring performance
– Examples
• EVM guidelines for project execution
• Basic concepts of reporting progress
• Basic concepts of analysis
– Examples
2
EVMS
Budgeted Cost for Work Performed
(BCWP)
the EARNED
VALUE concept
We’re at the end of the second month, but
only 1 section of track is complete.
Earned value of work completed = $1,000
• Assess progress on recurring basis
• There are different methods of
earning value
• You earn value the same way as it
was budgeted in baseline
3
EVMS
General Principles of Measuring
Performance (BCWP)
• Establish valid metrics as you establish the time phased
baseline
– Relate true work status
– Objective and quantifiable
• Should be a quantitative and discrete way to measure the work
• May tie in with success criteria or technical measure
– Example: successful completion of a specific test
• Must be consistent in following established metric as work
progresses
• BCWP value drives both cost and schedule variances
– If overstated or understated, it will distort variances
– Can impact estimate at complete calculations
4
Three Basic Methods of
Earning Value
EVMS
• Discrete
– Physical, tangible end product
– Common techniques: milestone, % complete, 0/100, 50/50, units complete
• Apportioned
– Discrete, but dependent on another discrete work package
• Example: quality assurance (depends on assembly labor)
– Planned as historical estimating factor (e.g., 7%)
• Level of Effort
–
–
–
–
–
No tangible end product
Basis of measurement: time
When clock starts ticking, you automatically accumulate earned value
Results in no schedule variance (BCWP will always equal BCWS)
Example: management personnel
5
EVMS
Be Discrete!
• Discrete EV Techniques:
Method
How Value is Earned
0/100
no EV at opening, 100% EV at close of WP
50/50
50% EV at opening, 50% EV at close of WP
Units Completed
same budget value for identical units
Equivalent Units
planned unit standards, allows partial credit
Weighted Milestone
each milestone weighted based on planned
resources
ideal to have a milestone each month
Percent Complete
should be based on some quantitative assessment
may be somewhat subjective
6
EVMS
Earning BCWP on Material
• Material and Subcontracts
– Earned Value: taken no earlier than receipt or progress
payments to subcontractors
define
order
receipt or progress payments
payment
to inventory
usage
– accurate cost accumulation and assignment to contract
– should perform price and usage variances
– should plan earned value to match expected payment period
• BCWP and ACWP should occur in same period to avoid artificial cost variance
• option: may report “estimated actuals” based on invoice
7
EVMS
Examples of BCWP
Calculations
8
EVMS
Different EV Methodology Yields Different Results!
WBS 1.1.2 (Workpackage)
MONTH:
Jan
Feb
Mar
Total
BCWS (Original Budget)
100
120
100
320
50
120
180
350
BCWP
(Earned Value)
ACWP
(Actual Cost)
Assume that costs overran and work was
completed behind schedule for all methods
9
EVMS
Example: Milestone Technique
Jan
Feb
Mar
BCWS (Original Budget) 100
120
100
320
BCWP (Earned Value)
100
220
320
0
100
Milestone 1 Planned: 100
120
Milestone 2 Planned: 120
100
Milestone 3 Planned: 100
SCHEDULE VARIANCE
-100
-20
+120
ACWP (Actual Cost)
50
120
180
350
-50
-20
+40
-30
COST VARIANCE
0
10
EVMS
Example: Level of Effort Technique
Jan
Feb
Mar
BCWS (Original Budget) 100
120
100
320
BCWP (Earned Value)
100
120
100
320
SCHEDULE VARIANCE
0
0
0
0
ACWP (Actual Cost)
50
120
180
350
+50
0
-80
-30
COST VARIANCE
11
EVMS
Example: 50/50 Technique
Jan
Feb
BCWS (Original Budget) 160
160
BCWP (Earned Value)
Task – Baseline
Task - Actual
160
50%
0
Mar
320
160
320
50%
50%
50%
SCHEDULE VARIANCE
0
-160
+160
0
ACWP (Actual Cost)
50
120
180
350
+110
-120
-20
-30
COST VARIANCE
12
EVMS
Example: Percent Complete Technique
Jan
Feb
Mar
BCWS (Original Budget) 100
120
100
320
BCWP (Earned Value)
100
160
320
Task 1 (100)
60
60%
40%
50%
Task 2 (120)
50%
100%
Task 3 (100)
SCHEDULE VARIANCE
-40
-20
+60
0
ACWP (Actual Cost)
50
120
180
350
COST VARIANCE
+10
-20
-20
-30
13
EVMS
Which Technique Accurately
Reflects Work Progress?
Jan
Feb
Mar
Total
Milestone
SV
CV
-100
-50
-20
-20
+120
+40
0
-30
LOE
SV
CV
0
+50
0
0
0
-80
0
-30
50/50
SV
CV
0
+110
-160
-120
+160
-20
0
-30
% Compl
SV
CV
-40
+10
-20
-20
+60
-20
0
-30
14
EVMS
EVM Guidelines for Project
Execution
15
EVMS
Work Packages
Work Package (closed)
Work Package (open)
Work Package (open)
Work Package (open)
Work Package (not open)
Time Now
16
EVMS
Authorizing the Work
• Can only work on work package if it has been
opened
– Charge costs to open work packages only
– Contractor system sets procedure
• Contractor maintains baseline log which tracks:
– Distribution of budget
– Additions of authorized work
– Total equals value of contract at cost
• Contract changes incorporated in disciplined
manner
– Cannot start work without authorization and budget
– Baseline changes are controlled
17
EVMS
more rules of the road...
• cannot move budget and work independently
• cannot use management reserve budget to cover overruns
• may replan open work packages as necessary
• contractor sets internal policy
• maintain valid performance information
• cannot change budgets or costs for completed work
• except to fix errors
18
EVMS
Project Control
• So, your project has been baselined and work has
started
• Is everything going according to plan?
• Next step in the process:
–
–
–
–
figure out your status
figure out the problems
figure out what you need to do to fix them
figure out what the impact might be
BCWS
BCWP
$
time
19
EVMS
Status Reporting
• Report on periodic basic
– weekly
– monthly
• Tailor the data to match how you’re managing
• Provide performance reports to:
– Senior management
– Customer
• Based on contract terms
• Use data in reports and variance analysis to
manage and control project
20
EVMS
Contractor Reports
(Example of data item from U.S. Department of Defense)
• Cost Performance Report (CPR)
– Format 1: cost and schedule progress by WBS
(specified reporting level usually at level 3)
– Format 2: cost and schedule progress by organization
– Format 3: changes to performance measurement baseline
– Format 4: manpower forecast
– Format 5: variance analysis
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EVMS
•
Formats 1 and 2
Contents
– header:
• basic contract information (target, ceiling, name of contractor, etc.)
• range of final estimates
– body
• performance data
• variances
• budget at completion, estimate at completion
CURRENT
BCWS BCWP ACWP
SV
ELEMENT
ELEMENT
ELEMENT
ELEMENT
ELEMENT
ELEMENT
CV
CUMULATIVE
BCWS BCWP ACWP SV
CV
AT COMPLETION
BUDGET ESTIMATE VARIANCE
WBS or ORGANIZATION
TOTAL
UB
PMB
MR
TOTAL
22
EVMS
Variance Explanations
• Format 5 variance analysis should
address:
–
–
–
–
–
–
–
separate discussion of CV, SV (current and cum) and VAC
clear description of reason for variance
quantity variances (e.g., price vs. usage)
be specific
discuss needed corrective action
A big hammer for
technical, schedule, and cost impacts
a big variance!
impact to estimate at completion
– should be written by CAM!
23
Cost Variance (Current CV: -43.4, Cum CV: -130.8)
Significant Reasons for Variance:
Current CV:


Additional manhours expended in preparation for Critical Design Review than planned,
due to effort expended to resolve safety issue with APG-23 (Risk Item: 3200-10,
Hypercritical Torsion of APG-23 Moment Arm) (-58K)
Application of new FPRA labor rates (+18K)
Cum CV:

Sample of
Variance
Analysis

Ongoing issue of software coding for APG-23 CSCI 019. Amount of software re-use was
overestimated at beginning of effort and new code (approximately 65K SLOC) must be
written (-162K).
Application of new FPRA labor rates (+32K), beginning in November
Impacts on Immediate Task:
o
o
Cost variance due to safety issue of Moment Arm is not recoverable, but issue has been
resolved and no further variances are expected.
Increased software coding is expected to result in a variance at complete of -1,032K,
based on detailed EAC completed in December.
Impact to Program:
o
Increased software coding requirements may also result in a five week slip to First Flight
and may impact WBS 3600 PCC final integration, assembly and checkout.
Corrective Action Taken or Planned:
o
IPT is reviewing all aspects of software functionality and has identified 3 potential
candidates for scope vs. cost tradeoffs. Preliminary analysis indicates that the reduction
in functionality will still be within specifications; and a technical analysis is being
completed and will be briefed during the next technical interchange meeting.
EVMS
Basic Concepts of Analysis
or
figuring out where the problems are
25
Looking Forward
EVMS
PAST
PRESENT
Are we on schedule?
Are we on cost?
What are the significant variances?
Why do we have variances?
Who is responsible?
What is the trend to date?
What risks have been reduced or
added?
FUTURE
What is the “to go” plan?
How is it resourced?
When will we finish?
What will it cost at the end?
How can we control the tre
How do we adjust for risk?
We analyze the past performance………to help us control the future
26
EVMS
Basic Analysis Techniques
• Find significant variances
– eliminate almost complete, just starting, etc.
• Graph and analyze trends
• Look at comparative data
– e.g. cumulative performance vs. projected performance
• Examine written analysis by contractor
– does it answer why?
– adequacy of corrective action plans
• Analysis of schedule trends, critical path
• Analysis of EAC realism
what are the drivers?
what can we do about them?
27
EVMS
Types of Variances
•
Values can be expressed as either current period or cumulative
–
–
•
current tends to be more volatile
use cum data to show trends
Easy rule of thumb:
negative value = BAD
index < 1.0 = BAD
•
Absolute
–
–
•
expressed in terms of dollars or hours (e.g., -$1,000)
may not be able to tell significance from this amount
Percent
–
–
•
positive value = GOOD
index > 1.0 = GOOD
relates absolute variance to a base (e.g., -35%)
shows significance
Index
–
–
compares one value to another in a simple ratio
if you are on plan, index = 1.00
28
EVMS
Where are the significant problems?
sorted by CV $
WBS
DE SCRIP TION
CP I
CV
Zepka
28.99
34.09
0.850

-296.2 -17.62

-187.2
Tideman
34.63
41.03
0.844

-130.8 -18.49

-87.0
33.67
36.11
0.932

-45.2
-7.26

-36.8
Pric e
85.04
94.35
0.901

-26.4
-10.95

0.0
Troop
35.40
37.08
0.955

-24.2
-4.75

-24.8
Brown
45.70
48.51
0.942 
-17.4
-6.16

-3.2
Pric e
71.62
75.23
0.952

-17.4
-5.03

-30.8
5200 MA NA GE ME NT DAT A Simmons
84.18
98.10
0.858

-13.2
-16.54

-16.0
3100 SE NS ORS
Smith
20.87
21.49
0.971

-10.6
-2.94

-21.6
Blair
17.87
18.90
0.945

-7.8
-5.78

-6.2
Hall
60.82
61.66
0.986

-5.6
-1.38

-2.0
Novak
38.51
52.80
0.729

-4.6
-37.10

0.0
0.00
0.00

0.0

439.2

0.0

0.0

0.0
1
3600 PCC
2
3200 COMMUNICAT IONS
3
G& A
4
2200 SY S E NGINEE RING
5
3800 I & A
6
2100 PROJ MA NA GEMENT
7
2300 FUNC INTE GRA
8
9
Proj Ofcr % Comp % S pent
GE N & A DMIN
10 4000 SP ARES
11 6200 SY ST EM TES T
12 5100 ENG DAT A
13 MR
MGT RES ERV E
14 UB
UNDIS T BUDGET
15 COM
COST OF MONEY

0.0

0.0

0.0
2.0
1.98

0.0
3.4
3.87

-1.4

4.2
2.10

0.0

12.6
5.02

4.6

78.2
11.73

8.4
41.13
41.13
1.000 
18 6100 TE ST FA CILIT IE S
Smart
100.00
98.02
1.020 
19 3500 COMP PROGRAMS
Pino
46.46
44.66
1.040

20 6300 PCC T ES T
Bond
23.13
22.64
1.021
21 3400 ADPE
Zepka
41.89
39.79
1.053
Tideman
27.57
24.33
1.133
17 OV

OV ERHE AD
22 3300 AUX E QUIP
CV % VAC VAC
0.00
Troop
16 3700 DA TA DISP LA Y
CV
0.0
0.0
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EVMS
Graphing Techniques
Percent of Dollars
MEG A HERZ ELEC & VEN Cost/Schedule Variance
F 04695-86-C-0050 MO H-2 RDPR F PI PO P: 01 MAR 1992 - 15 SEP 1993
1992
1993
MAY JUN JUL AUG SEPO CTNO VDEC JAN
30.0
20.0
Overall cost and schedule trend
10.0
0%
0.0
-6%
-7%
-10.0
-11%
-20.0
-30.0
BCW S
BCW P
ACW P
CV
SV
7.3
6.9
7.3
-0.5
-0.4
At Completion
KT R
PO
20.8
20.8
20.8
20.8
20.8
23.0
0.0
-2.2
PMB: 20.4 % CO MP: 32.9
MR: 0.4
KT R MR LRE: 0.0 PO MR LRE: 0.0
CO ST VARIANCE CURRENT F UNDING : 10.0
AS O F : JAN 93
SCHEDULE VARIANCE
PO EPC: 24.0
O PR: MR B. T ECH
PRO J F UNDING : 23.0 PRO G RAM: Mohawk Vehicle
EAC realism
MEG A HERZ ELEC & VEN F 04695-86-C-0050 RDPR F PI
Element: 3600
Estimates at Completion
Name: PCC
1992
1993
APR MAY JUN JUL AUG SEP O CT NO V DEC JAN
8.0
Dollars In Millions
Dollars In Millions
0.3 0.6 1.0 1.4 2.2 2.5 4.2 5.6
0.2 0.5 0.9 1.4 2.2 2.7 3.8 5.3
0.2 0.5 0.9 1.5 2.2 3.0 4.2 5.6
0.0 -0.0 -0.0 -0.1 0.0 -0.3 -0.5 -0.3
-0.1 -0.1 -0.1 -0.0 -0.0 0.2 -0.4 -0.3
Cost Drivers, Cause
7.0
graphs show overall trend...
are you getting better,
or worse?
6.0
5.0
BAC
5.1
LRE
5.4
CUM CPI5.1
5.1
5.4
5.7
5.1
5.4
5.9
5.1
5.4
6.0
5.1
5.5
6.3
5.1
5.5
5.8
5.1
5.5
6.5
5.5
5.7
7.6
5.5
5.7
6.8
5.8
6.0
6.8
30
EVMS
Analysis of Variances
CURRENT OR CUM TO DATE
Schedule Variance
Cost Variance
SV ($)
=
BCWP - BCWS
SV (%) =
BCWP - BCWS
BCWS
CV ($)
=
BCWP - ACWP
CV (%) =
BCWP - ACWP
BCWP
x
100%
x
100%
31
EVMS
Performance Indices
“GOOD”
COST PERF INDEX (CPI) = BCWP
ACWP
1.2
SCHED PERF INDEX (SPI) = BCWP
BCWS
1.1
TIME
“BAD”
1.0
CPI
.9
SPI
.8
32
EVMS
•
Past and Present Cost Efficiency
IS THE CONTRACTOR'S EAC REASONABLE?
Compare the CPI to the TCPI-LRE
TCPI-EAC = Efficiency necessary to complete at the contractor’s estimate
= BAC-BCWP
EAC-ACWP
WORK
= REMAINING =
ESTIMATE
REMAINING
$5000 - $1000
$6400 - $2400 =
Cumulative performance to date (CPI)
$4000
$4000
=
1.00
reasonable?
=
.42
Contractor has been performing at 42% efficiency, but expects to
complete remaining work at 100% efficiency!
33
EVMS
Schedule Status
% scheduled = BCWS x 100%
BAC
compare
% completed = BCWP x 100%
BAC
example: I should have completed 60% of the work (% scheduled),
but I only completed 42%
34
EVMS
Budget Status
budget status
% spent = ACWP x 100%
BAC
compare:
% spent
vs.
% complete
example:
60% spent vs. 50% complete
35
EVMS
Mutual Goal: Effective Variance Analysis
• Make it meaningful
– avoid routine explanations
• Make it timely
• Make it streamlined
make this a
mutual goal
between contractor
and
customer
– significant variances
• Make it right
– work with contractor to get the information we need
• Get the information to the managers
• Use the information to control the project
36
EVMS
What will be the final cost?
• Estimate at Completion (EAC)
– defined as actual cost to date + estimate to complete
– contractor develops comprehensive EAC at least annually
• reported by WBS in cost performance report
– should examine on monthly basis
– consider the following in EAC generation
•
•
•
•
performance to date
impact of approved corrective action plans
known/anticipated downstream problems
best estimate of the cost to complete remaining work
EAC = ACWP + ETC
37
EVMS
Need to Estimate Costs for
Remaining Work
• Budgeted Cost for Work Remaining (BCWR)
– Budgeted, baseline value for remaining work
• Update estimate of costs for BCWR
– Can be detailed estimate
– Can calculate with performance factors (CPI or SPI)
• Assumes performance will continue at same level of efficiency
• Basic formula: BCWR / performance factor
• Example:
– CPI = .9
– BCWR = 1,000
– Estimate to complete = 1,000 / .9 = 1,111
38
EVMS
Common EAC Formulas
• Common EAC Formulas:
EAC =
BAC
CPI
=
ACWPcum + Budgeted Cost of Work Remaining
CPI3
=
ACWPcum + Budgeted Cost of Work Remaining
.5(CPI) +.5(SPI)
=
ACWPcum + Budgeted Cost of Work Remaining
CPI * SPI
39
EVMS
Other methods of EAC calculation
• “Grass Roots” or formal EAC
– detailed build-up from the lowest level detail
– hours, rates, bill of material, etc.
• Average of statistical formulae
• Statistical regression
• Complete schedule risk analysis for remaining
work, estimate work remaining
40
EVMS
Past vs. Projected Efficiency
Efficiency needed
to achieve EAC
1.0
CPIcum = .42
41
EVMS
Earned Value Enables Realistic Forecasts
CONTRACT BUDGET BASE
$24M
BUDGET
20M
16M
SCHEDULE VARIANCE
COST
VARIANCE
AT
COMPLETE
FORECASTED ACTUALS
FORECAST SCHEDULE
SLIP
Cost Var
12M
FORECASTED EARNED VALUE
8M
4M
2
4
6
8
10
TIME PERIODS
12
14
TIME
NOW
16
18
20
22
PROGRAM IS BEHIND SCHEDULE AND OVERRUNNING COST
42
The “Box of Uncertainty”
EVMS
(courtesy Swedish Defense Material Administration)
$24M
POTENTIAL
COST
OVERRUN
20M
POTENTIAL
SCHEDULE
SLIP
16M
12M
8M
4M
2
4
6
8
10
TIME PERIODS
12
14
TIME
NOW
16
18
20
22
BOX OF UNCERTAINTY SHOWS POTENTIAL RANGE OF
COST OVERRUN AND SCHEDULE SLIP
43
EVMS
Managing with Earned Value Data
44
EVMS
Program Manager Responsibilities
• Assign integrated responsibility to teams
• Demand accountability
• Ask tough questions
– project office
– contractor
• Look ahead – manage the risks
• Integrated analysis and reviews
• EVMS
• Integrated Master Schedule
• Risk Plan
• Manage to the baseline
– Control statement of work growth
– Lead assessment of baseline realism
• Integrated Baseline Review (IBR)
• Call for realistic estimates
45
EVMS
Quotes from Project Managers
“Are we looking good, or are we in
trouble? And, how do we know?”
CAPT Joe Dyer, US Navy
F/A-18E/F Program Manager
“It forces you to plan, and then to
manage to the plan.”
Lt Col Paul Vancheri, US Air Force
JSTARS Production Program Manager
46
EVMS
Additional References
http://www.cpm-pmi.org
http://www.acq.osd.mil/pm
47
EVMS
Summary
• Be careful to establish correct value for reported
BCWP (earned value)
• Set up and maintain system discipline
• Maintain a realistic baseline
• Analyze earned value data
• Calculate a realistic estimate at completion
• Manage with earned value data
48