earned schedule: principles and practice alex davis earned ... · earned schedule: principles and...

Earned Schedule: Principles and Practice

Alex Davis

Earned Value SIG

The idea is to determine the

time at which the EV accrued

should have occurred.

…

$

5

? PV

? EV

Time Now

71 2 3 4 6 8 9 10

A

B

SV c

SV tES AT

Introduction

What is Earned Schedule?

– History and background

What are the benefits of using Earned Schedule?

How does Earned Schedule work?

What are the similarities and differences between

Earned Value and Earned Schedule?

How can Earned Schedule be integrated with other

Project Management techniques?

Sanitised examples:

Playing Devil‟s Advocate

Why do I need another project management tool?

I‟ve already got a link between cost and schedule!

Does this technique REALLY provide better decision

making?

I‟ve heard this technique is used on development

projects…but does it work for ongoing operations?

Are you saying that Earned Value doesn‟t work!?

It‟s good as a Project management technique

…however…

– „Classical‟ schedule indicators are not accurate for late finish projects

– Schedule performance analysis is limited in some areas

– Some EVM practitioners pay attention to Cost – not always the schedule

– EVM has, in some areas, become focused in financial management

– Indicators are not directly connected to deliverables

– EV is not required to be synchronous with the schedule

– EVM offers a limited decision-making guidance for project schedule control

Playing Devil‟s Advocate (2)

Earned Schedule – a brief history

The original phrase “Time is money” was first posed by Antiphon

– Greek writer and educator

– Around 430 BC

– “The most costly outlay is time”

This statement was ahead of its time!

In 2006, Dr. Steve Gumley, CEO Defence Materiel Organisation (Australia) stated…

“We need to maintain our attention on schedule delivery. Data tells us that since July 2003, real cost increase in projects accounted for less than 3 percent of the total cost growth. …Therefore, our problem is not cost, it is SCHEDULE.”

Earned Schedule – a brief history

Earned Schedule papers first published in USA

– in 2003

“Schedule is different”, Measurable News

Concept was verified with actual project data

Continued development from 2003 to present

Benefits of using Earned Schedule (1)

You only need PV, EV and AT to perform calculations!

Improves decision making – part of Project, Programme

and Enterprise Management toolset

Integrates and supports risk management activities

Connects EVM to the project schedule

Project Managers have a schedule analysis tool that

improves the confidence in forecasting delivery dates

Adds to trend analysis


ES can be applied to any level of the WBS, to include task groupings such as the Critical Path

– Requires creating PMB for the area of interest

– EV for the area of interest is used to determine its ES

Enables comparison of forecasts, total project duration (TP) to Critical Path (CP) duration

– Desired result: forecasts are equal

– When TP forecast > CP forecast, CP has changed

– When CP > TP, possibility of future problems


Earned Schedule works!

How do we know?

Evidence from a number of projects

IEAC(t) & SPI(t) studies by K. Henderson, Dr. Vanhoucke & S. Vandevoorde (2003 – present)– Henderson & Vandevoorde validated ES concept with real data

– Using simulation Vanhoucke & Vandevoorde showed ES to be a better schedule predictor than other EVM-based methods

“The results ..confirm ..that the ES method outperforms, on average, the other forecasting methods” - Vanhoucke & Vandevoorde

Takes Earned Value Management into a new dimension

Why use Earned Schedule? Schedule Variance (SV) and Schedule Performance

Indicator (SPI) behave erratically – especially for projects behind schedule

SPI improves and concludes at 1.00 at end of project

Why is this?

EV=BAC at completion

PV=BAC at completion

Hence SPI(£)=1 and SV(£) = 0

Classical Schedule Variance is measured in money –

not time!

Comparison of Schedule Variances

Commercial IT Infrastructure Expansion Project Phase 1

Cost and Schedule Variancesat Project Projection: Week Starting 15th July xx

-160

-140

-120

-100

-80

-60

-40

-20

0

20

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

Elapsed Weeks

Do

lla

rs (

,00

0)

-16

-14

-12

-10

-8

-6

-4

-2

0

2

We

ek

s

CV cum SV cum Target SV & CV SV (t) cum

Copyright Lipke 2008

Earned Schedule Calculation ES (cumulative) is the:

Number of complete PV time increments EV equals or exceeds PV + the fraction of the incomplete PV increment

ES = C + I where:

C = number of time increments for EV PV (BCWP BCWS)

I = (EV – PVC) / (PVC+1 – PVC)

EVM & ES Duration Forecasting

£

5 71 2 3 4 6 8 9 10

Earned

Schedule

Time Periods

PVcumEVcum

Actual

Time.

Time based schedule performance efficiency: SPI(t) = ES / AT


SV c

SVt

The ES idea is to determine the

time at which the EV accrued

should have occurred

Calculating the Increment I

MONEY (£)

5 6

Time Periods


PV C+1PV C

EV – PV C

PV C+1 – PV C

I - expressed as a fraction of time

Calculating Earned Schedule (1)

Denominator is difference between

two successive PV data points

1st value EV < PV


180>105

Hence number of

periods =1

Variances – which would you believe?Cost & Schedule Variances

-450

-400

-350

-300

-250

-200

-150

-100

-50

0

Time

Mo

ney (

£)

-3.5000

-3.0000

-2.5000

-2.0000

-1.5000

-1.0000

-0.5000

0.0000

SV

(t)

mo

nth

s

SV(£) cum

target SV

SV(t) cum

Note how the “Classical”

SV tends to zero!

Earned Schedule variance

tells a different story!

Variances – which would you believe?Cost & Schedule Variances

-450

-400

-350

-300

-250

-200

-150

-100

-50

0

Time

Mo

ney (

£)

-4.0000

-2.0000

0.0000

2.0000

4.0000

6.0000

8.0000

10.0000

12.0000

14.0000

16.0000

18.0000

SV

(t)

mo

nth

s SV(£) cum

target SV

SV(t) cum

IECD(t)

Delivery Date

Independent Estimate At

Complete (IEAC)

Comparison between EV and ES (1)

Status Earned Value (EV) Earned Schedule (ES)

Actual Costs (AC) Actual Time (AT)

Schedule Variance SV SV(t)

Schedule Performance

Indicator

SPI SPI(t)

Future Work Budgeted Cost for Work

Remaining (BCWR)

Planned Duration for Work

Remaining (PDWR)

Estimate At Complete EAC

(supplier)/(customer)

EAC(t)

Independent EAC

(IEAC)

IEAC(t)

To Complete

Performance Index

TCPI TSPI

Comparison between EV and ES (2)

Status Earned Value (EV) Earned Schedule (ES)

Schedule Variance SV = EV-PV SV(t) = ES-AT

Schedule Performance

Indicator

SPI = EV/PV SPI(t) = ES/AT

Future Work BCWR = BAC-EVcum PDWR= PD-EScum

Estimate At Complete EAC1=AC+(BAC-EV)/CPI EAC(t) = PD/SPI(t)

EAC(t)(2) = AT+(PD-ES)/SPI(t)

To Complete

Performance Index

TCPI = (BAC-EV cum)/(EAC-

ACcum)

TSPI = (PD-ES)/(PD-AT)

TSPI= (PD-ES)/(ED-AT)

Management Report using ESTo Complete Performance Index (time)

The change in the level of efficiency

needed to meet the milestone completion

date as contracted

This is the estimated

completion date

IF PERFORMANCE DOES

NOT CHANGE

This is the milestone

completion date as

contracted

SPI and SPI(t) trend lines

Prediction of Project Completion (1)

Equivalent to an error

tolerance

Milestone tracking – ES and PM‟s estimates

Independent Estimate of

Completion Date – Earned

Schedule

Independent Estimate of

Completion Date – PM‟s

estimate

Earned Schedule & RiskStatistical Prediction

from Earned

Schedule

P10, P50 and P90

dates from Schedule

Risk Analysis

It works for cost – not just time!

Earned Schedule & Benefits – an

example A new auto engine is designed

One measurable benefit - 10% fuel saved for each mile travelled

The customer has 100 vehicles and wishes to fit the new engine to the entire fleet (over time)

As part of the business case, each new engine will be measured for the 1st 1000 miles

The average fuel saving per mile can be calculated against the new running cost

The fleet manager can also calculate the Return On Investment (ROI)

27

ES and Benefits - terminology

Status Earned Value (EV) Benefits Value

Planned Value (PV) Planned Benefit (PB)

Earned Value (EV) Earned Benefit (EB)

Actual Cost (AC) Actual Benefits (AB)

Actual Running Costs (ARC)

Earned Schedule and Benefits

Project planned to

finish here

Project

actually

finished here

Planned

Benefit

delivery starts

here

ES and Benefits

Earned Benefits – accruals and reverse

logic? When can you measure Actual Benefits?

When you actually measure them?

Or do you accrue them and reconcile later?

And another thing…

CPI = EV/AC

Applying the same to benefits

Benefits CPI (BCPI) = EB/AB

In this example BCPI = 1.11 (unfavourable!?)

Schedule Adherence


Figure 3. Earned Schedule - Bridges EVM to Schedule (Actual)

£

Time

PV

BAC

PD

EV

ES AT

SV(t)

1

3

2

4

5

6

7

8Introduces the use of

the “p-factor”

Potential rework?

ES helps identify

SCHEDULE

ADHERENCE issues

Real Data Results

0.8

0.9

1.0

1.1

1.2

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percent Complete

Ind

ex V

alu

e

CPI SPI(t) P- Factor P Curve Fit

SPI(t) is good ~0.98CPI is good ~1.05

P @ 20% ~0.93 – high early

P increases to 1.0

ES for short duration projects

ES has been found to give misleading

answers in specific situations

For short duration projects where either

down-time or work-stop are scheduled

Project Completion – with & without

„work stop‟

Earned Schedule research work…

Thank you to… Walt Lipke and Kym Henderson

– for use of Earned Schedule training material

The Protected Mobility Team

– For use of sanitized data

Energy and persistence conquer all things

Benjamin Franklin

Available Resources

PMI-Sydney http://sydney.pmichapters-australia.org.au/

– Repository for ES Papers and Presentations

Earned Schedule Website

http://www.earnedschedule.com/

– Established February 2006

– Contains News, Papers, Presentations, ES Terminology, ES Calculators

– Identifies Contacts & Training to assist with application

Wikipedia references Earned Schedule

http://en.wikipedia.org/wiki/Earned_Schedule

http://sydney.pmichapters-australia.org.au/



http://www.earnedschedule.com/

http://en.wikipedia.org/wiki/Earned_Schedule

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