Earned Schedule: Principles and Practice

Alex Davis Project Controls Manager

F t R id Eff t S t (FRES)Future Rapid Effects System (FRES) Integrated Project Team (IPT)

The idea is to determine the time at which the EV accrued should have occurred.

$

? PV

Time Now

A SV c

? EV B

SV tES AT

For the above example, ES = 5 months … that is the time associated with thePMB at which PV equals the EV accrued at month 7.

5 71 2 3 4 6 8 9 10

Introduction

• What is Earned Schedule?Hi t d b k d– History and background

• What are the benefits of using Earned Schedule?• How does Earned Schedule work?

What are the similarities and differences bet een Earned Val e• What are the similarities and differences between Earned Value and Earned Schedule?

• What behaviours need to be embedded in the organisation for successful Earned Schedule Implementation?p

• How can Earned Schedule be integrated with other Project Management techniques?

• Sanitised examples:– Design and development project– In-service (operations) project

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?q p g• 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!?• Are you saying that Earned Value doesn t work!?

So what’s wrong with Earned Value, then?

• It’s good as a Project management technique• It s good as a Project management technique …however…

– Schedule indicators are flawed for late projects– Extremely limited for schedule performance analysis– EVM practitioners pay attention to Cost – not 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 does not offer management guidance for project control andEVM does not offer management guidance for project control and

schedule control

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”– The most costly outlay is time

• This statement was ahead of its time!• In 2006, Dr. Steve Gumley, CEO Defence Materiel Organisation

(A t li ) t t d(Australia) stated…“We need to maintain our attention on schedule delivery. Data tells us that since July 2003, real cost increase in projects

t d f l th 3 t f th t t l t thaccounted 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• Concept was verified with actual project data• Continued development from 2003 to present

Benefits of using Earned Schedule (1)

• Converting money into time• Connects EVM to the project schedule• Connects EVM to the project schedule• Project Managers have a schedule analysis tool that improves the

confidence in forecasting delivery dates• Improves decision making • Adds to trend analysis• Integrates and supports risk management activities

– Schedule indicators are flawed for late projectsExtremely limited for schedule performance analysis– Extremely limited for schedule performance analysis

– Practitioners pay attention to Cost - only– EVM has become focused in financial management– Indicators are not directly connected to deliverablesIndicators are not directly connected to deliverables– EV is not required to be synchronous with the schedule – EVM does not offer management guidance for project control

Benefits of using Earned Schedule (2)

• ES can be applied to any level of the WBS, to include task groupings such as the Critical Pathgroupings 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• 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 , g– When CP > TP, possibility of future problems

Benefits of using Earned Schedule (3)

• Earned Schedule works!• Earned Schedule works!• How do we know?• Evidence from a number of projects

IEAC(t) & SPI(t) t di b K H d D V h k &• 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– 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 & Vandevoordeg

• 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) 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(£) = 0Hence 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 Variances

at Project Projection: Week Starting 15th July xx

0

20

0

2

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

-60

-40

-20

0

(,000

)

-6

-4

-2

0

eks

-120

-100

-80

Dol

lars

-12

-10

-8 Wee

-160

-140

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

-16

-14

Copyright © Lipke 2008

Earned Schedule Calculation

• ES (cumulative) is the:N b f l t PV ti i t EV l dNumber of complete PV time increments EV equals or exceeds PV + the fraction of the incomplete PV increment

• ES = C + I where:• ES = C + I where:C = number of time increments for EV ≥ PV (BCWP ≥ BCWS)

I = (EV – PVC) / (PVC 1 – PVC)I = (EV PVC) / (PVC+1 PVC)

EVM & ES Duration Forecasting

The ES idea is to determine the time at which the EV accrued

should have occurred

PVcumEVcum

Actual Time

.

£ SV c

SVt

EarnedSchedule

t

5 71 2 3 4 6 8 9 10Time Periods

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

Copyright © Lipke 2008

Calculating the Increment I

PV C+1PV C

MONEY (£)

EV – PV C

PV C+1 – PV C

EV – PV C

5 6

Time PeriodsI expressed as a fraction of time

Copyright © Lipke 2008

I - expressed as a fraction of time

EVM and Earned Schedule – the Missing LinkSCHEDULE:

costs/times/resources allocated to deliver KPIs and Critical ? milestones?

Produce reports, EVM charts,

Options for corrective ti

Baseline the Schedule

action

Analyse EV data using y gavailable tools/techniques

Collect Performance Data (EV & AC)

Calculating Earned Schedule (1)

1st value EV < PV

Denominator is difference between two successive PV data points

Calculating Earned Schedule (2)

180>105Hence number of

periods =1

Calculating Earned Schedule (3)

Calculating Earned Schedule (4)

Variances – which would you believe?Cost & Schedule VariancesCost & Schedule Variances

-50

0

0 5000

0.0000

-150

-100

-1.0000

-0.5000

-250

-200

Mon

ey (£

)

-2.0000

-1.5000

SV (t

) mon

ths

SV(£) cumtarget SVSV(t) cum

Note how the “Classical” SV tends to zero!

-350

-300

-2.5000

-450

-400

Time -3.5000

-3.0000

Earned Schedule variance tells a different story!

Variances – which would you believe?Cost & Schedule Variances

0

16 0000

18.0000

-100

-50

12.0000

14.0000

16.0000

-200

-150

ney

(£)

8.0000

10.0000

) mon

ths SV(£) cum

target SVSV(t) cum

Independent Estimate At Complete (IEAC)

-300

-250Mon

2.0000

4.0000

6.0000

SV (t

)

IECD(t)Delivery Date

-400

-350

-2.0000

0.0000

-450

Time -4.0000

Management Portfolio ReportTo Complete Performance Index (time)To Complete Performance Index (time)

The change in the level of efficiency needed to meet the milestone completion

date as contracted

This is the estimated l i dcompletion date

IF PERFORMANCE DOES NOT CHANGE

SPI and SPI(t) trend lines

This is the milestone completion date as

contracted

Prediction of Project Completion (1)

Equivalent to an error tolerance

Use of ES in Operations (1)

Partially complete activity

Acceptance of KPI triggers a quarterly payment

Use of ES in Operations (2)

Hours booked to the task are < baseline:

CAUSED BY: diversion activity

Schedule assumes that next milestone MUST benext milestone MUST be

met: SPI=1

KPI cannot be met without additional resources

Milestone tracking – seeing is believing!

Independent Estimate of Completion Date – Earned

Schedule

Independent Estimate of Completion Date –

contractor’s estimate

Integration of ES, risk and deadlines

Risk Management C fid D t

Trend analysis: is the delivery affected by:

Schedule?Risks?Both?

Confidence Dates

Contract Deadline Date

Earned Schedule Predicted Delivery Date

Schedule Adherence – are you doing it right?

Potential rework?

1

3

2

4

5

7

8Introduces the use of

the “p-factor”

£PV

BAC

EV

68p

ES helps identify

PDES AT

SV(t)p y

SCHEDULE ADHERENCE issues

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

PDES AT

Copyright © Lipke 2008

Real Data Results

1.2CPI SPI(t) P- Factor P Curve Fit

1.1

e

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

1.0

ndex

Val

ue

0.9

In

P increases to 1.0

0.810% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percent Complete

P @ 20% ~0.93 – high early

Percent Complete

Thank you to…

• Walt Lipke and Kym Henderson– for use of Earned Schedule training material

• Project FALCON and Special Projects Team– For use of sanitized data– For use of sanitized data

Available Resources

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

– Repository for ES Papers and Presentations• Earned Schedule Website• http://www.earnedschedule.com/

– Established February 2006– Contains News, Papers, Presentations, ES p

Terminology, ES Calculators– Identifies Contacts & Training to assist with

application• Wikipedia references Earned Schedule• http://en.wikipedia.org/wiki/Earned_Schedule

Earned Schedule References

• “A Case Study of Earned Schedule to do Predictions,” The Measurable News, Winter 2007-2008: 16-18 [Hecht]

• “A Simulation and Evaluation of Earned Value Metrics to Forecast Project Duration,” Journal of Operations Research Society, j p yOctober 2007, Vol 58: 1361-1374 [Vanhoucke & Vandevoorde]

• “Measuring the Accuracy of Earned Value/Earned Schedule Forecasting Predictors,” The Measurable News, Winter 2007-g , ,2008: 26-30 [Vanhoucke & Vandevoorde]

• Earned Schedule Website: www.earnedschedule.com