Earned Value Management

How do we get started?

What is it?

• A planning process

• An internal policy

• A contract requirement

• A way to measure performance

• A way to identify problems

• A forecasting tool

• A way of doing business

What is it?

A way to integrate scope, schedule, and resources all at once!

How is it used?

• A reporting tool– Satisfy the contract reporting requirements– “filling the square”

• As a decision-making tool– To evaluate project planning– To communicate status– To forecast resource needs

Language of EVM

• Budgeted Cost of Work Scheduled (BCWS)– The plan to spend budget

• Actual Cost of Work Performed (ACWP)– The costs of the work that has occurred

• Budgeted Cost of Work Performed (BCWP)– What was performed (what it should have cost)– This is EARNED VALUE

Language of EVM

• Schedule Variance SV = BCWP – BCWS– On/Off plan in dollars (>0 is ahead, 0 is on target, <0 is behind)

• Schedule Performance Index SPI = BCWP/BCWS– On/off plan as a ratio (>1 is ahead, 1 is on target, <1 is behind)

• Cost Variance CV = BCWP – ACWP– Over/under running (>0 is underrun, 0 is on target, <0 is overrun)

• Cost Performance Index CPI = BCWP/ACWP– Return on actual costs (>1 is under, 1 is on target, <1 is over)

Language of EVM

• Budget Authority for unknowns– Management Reserve

• Budget at Complete, BAC– The budget to do the work

• Estimate to Complete, ETC– Estimate of the cost to do the remaining work

• Estimate at Complete– Best guess of cost of entire cost of project

• Latest Revised Estimate– Contractor’s best guess of cost of entire cost of project

In a Picture

Management Reserve

Cost VarianceSchedule Variance

ACWP

BCWP

BCWS

$

EAC

TimeNow

Completion Date

PMB

BAC

time

How do we do this?

• Performance Measurement Baseline– Scope

• Identify the scope of work• WBS• Extend to Work package level

How do we do this?

• Performance Measurement Baseline– Schedule

• Arrange work packages in order• Schedule start and finish• Classify work and choose EV technique

How do we do this?

• Performance Measurement Baseline– Budget

• Identify needed resources (budget)• Spread budget• Calculate Cumulative BCWS

How do we do this?

• Performance measurement baseline

Graph Cumulative BCWS

Example

Task Cost Start End

WP1 9 1 3

WP2 12 3 7

WP3 28 3 4

WP5 8 6 9

WP5 10 1 10

Example

1 42 53 76 98 10

WP3

WP2

WP5

WP4

WP1

Monthly BCWS

Cumulative BCWS

Next time

• New cost spreading techniques– 0/100%– 50/50%– % complete– Balanced Level of Effort– Directed Milestone

Organizational Chart

President & CEOVickery

President & CEOVickery

VP Construction

VP Construction

Senior VPOperationsSenior VPOperations

VPDesign

VPDesign

VPFinance

VPFinance

VP Espionage

VP Espionage

VPEngineering

VPEngineering

VPMaterials

VPMaterials

Vickery’s Egg Delivery Company

Organizational Chart

• Organizational chart glossary– What kind of organization do you have?– What is your decision-making paradigm?

• How do you resolve conflict?

– Who has what responsibilities?• What do they do?• Who do they report to?• What do they cost?

– How will you track it?

Organizational Chart

Rest of Class is part one of your project

• Organizational Chart– Corporation Name– Team Members– Positions– Responsibilities– Charge Track