Transcript Earned Value management

Earned Value management
• This presentation is just a short introduction to a few terms
and concepts. I am sure there will be training sessions in
the next few months.
• Lyn Evans is introducing this technique for the LHC as
soon as it can be implemented.
• Intended for projects (rather than exploitation), especially
pluri-annual ones.
• There will be BHT-style tools provided.
• Uses Microsoft Project.
• Used widely in the US by DOE, in particular for managing
the US contribution to LHC (spread over 3 national labs,
each with its own ideas on project management).
Earned Value management
• Currently, the tools we use for project
management are
 a time planning of the jobs
 the yearly budget allocation
 the information from BHT about what is paid
 the information from BHT about what is committed
Earned Value management
CHF
budget
committed
paid
time
Earned Value management
Job planning
time
Earned Value management
• What is new is the evaluation by the technical
responsible of the % completion of each current
item of each work package in each evaluation
period (month); this is then translated into an
earned value for that job.
• This enables a much more precise evaluation of
where the project is with respect to cost and
schedule, and enables a moving update of the cost
to completion.
Earned Value management
Why use this system?
• early and accurate identification of trends
and problems
• accurate picture of project status (cost,
schedule, technical)
• allows early course correction
• is apparently popular with those who use it
Earned Value management: Example
• Work package
 budget:
 time allowed:
 the job:
100,000 CHF
12 months
produce 10 units
• Status today
 spent to date:
 time elapsed:
 result to date:
65,000 CHF
6 months
4 complete units produced, 2 partial
• How is this part of the project doing? How do I
know how it is doing?
• How far along am I? 65%, 50%, >40%?
Earned Value management
Course corrections are easier
when you have time to make
small adjustments
It’s too late when you’re this
close to the iceberg!
Earned Value management
• BCWS= budgeted cost of work scheduled (cumulative).
This is the budget profile as a function of time.
• BCWP=budgeted cost of work performed (cumulative).
This is the budgeted cost for the fraction of the work really
performed in the time interval concerned (e.g. month).
• ACWP=actual cost of work performed, cumulative
This is the actual cost of what was done in the time interval
concerned.
Earned Value management
• Cost variance= CV= BCWP-ACWP
• Schedule variance= SV= BCWP-BCWS
Positive is favourable, negative is bad
• Cost index (efficiency)=CPI=BCWP/ACWP
• Schedule index (efficiency)=BCWP/BCWS
Favourable is >1, bad is <1
• BAC=budgeted cost at completion
• EAC=estimate at completion
Earned Value management
• The contractor establishes a management control system
– May be required to show that system meets 32 criteria
• An integrated baseline plan is established
– work is defined, scheduled, and resources are allocated
• Work and resources are driven down to lowest level for execution
• A work authorization system is set up that controls changes to the baseline
• Budgets are “earned” as work is completed = EARNED VALUE
• Status provided against baseline
– schedule and cost variances are isolated
• Problem assistance
– early warning
– corrective plans
• Early insight provided into final estimated cost
Earned Value management
Job planning
time
Earned Value management
EAC
CHF
BAC
SV
CV
BCWS
ACWP
BCWP
Time
now
Time
Earned Value management
• Could be used by us for PIL, CTF3, LHC-PS cavities
But we need some training, especially in setting up the work
packages, milestones, etc.
It will only work if it is set up correctly and if the managers at all
levels believe in it.
• Some difficult points
Need to integrate staff costs and material costs.
Delays in accounting so that the actual spending does not correspond
to the work done.
Treatment of contracts with down payments that don’t correspond to
work done.