time centric earned value
DESCRIPTION
A earned value idea based on starts and finishesTRANSCRIPT
Copyright Square Peg Consulting 1999-2010 1
Earned Value - The �ext
Generation - A Practical
Application for Commercial
ProjectsBy:
John Goodpasture
Jim SumaraPresentation to the 28th PMI Seminar & Symposium
Chicago, September 29, 1997
Square Peg Consulting, LLC
Copyright Square Peg Consulting 1999-2010 2
Introduction
�“Earned Value systems are one of the most meaningful and useful tools to status, report, and analyze project cost, schedule, and performance”
Copyright Square Peg Consulting 1999-2010 3
Introduction
�“The compelling reason to employ earned value is to stimulate project improvement”
Copyright Square Peg Consulting 1999-2010 4
Accomplishment & Prediction
�Earned value measures accomplishment and
predicts outcome
�Traditionally cost-centric, reflecting cost priority in cost-reimbursable contract environments
Copyright Square Peg Consulting 1999-2010 5
Earned Value Measurements
�Three main measurement elements:
�A plan for accomplishment
�A claim of performance against plan
�A cost of performance
Copyright Square Peg Consulting 1999-2010 6
Traditional Earned Value
�Measures “core” value of project� When money is the “core value”, cost is management focus
� Both cost and schedule expressed in $’s
� Historical [look back] and Predictive [look forward]
�May be hard to apply; requires:� Time card or time accounting system
� Time card compliance
� Overhead and direct cost allocation system
� Ledger for associating cost with project work
packages
Copyright Square Peg Consulting 1999-2010 7
Motivations for an alternative Earned Value
� For many commercial projects, cost has lower priority than time
or performance.
� Focus of earned value must be on the core value of the project
� Must be practical to apply
*(Shiba, Graham, Walden 1993, 10)
Copyright Square Peg Consulting 1999-2010 8
Time is valuable
�Time is the new dimension of Quality; it has become one of the most important elements in modern business practice.
�We present an earned value system for time-centric or time-constrained
projects
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Earned Start-Finish Earned Value
� “Earn” the time elements of the project plan means:
� Answering two questions: [1] are tasks starting on time; [2] are they finishing on
time?
� Retain most important features of cost-centric approach
� Plan for performance;
� Measurement of performance against plan
� Predictive outlook on completion
Copyright Square Peg Consulting 1999-2010 10
Definitions are key to success
Rule Definition or Application
A Finish is: Valued as 1 or 0. Task hascompleted its scope; scheduledsuccessors can begin.
A Start is: Valued as 1 or 0. Predecessor tasksare completed, task is staffed,resources are in place, andmeaningful effort has begun
Copyright Square Peg Consulting 1999-2010 11
Credit is given for Earnings
Rule Definition
No Partial credit A task is either started or it is not;it is finished or it is not;
Un-weighted Credit All tasks are weighted equally, 1 or0, for start and finish
Weighted Credit There are multiple methods forapplying weight. For instance,weight heavily the tasks that areon the critical path, or “nearcritical”.
Copyright Square Peg Consulting 1999-2010 12
Process Steps
� Construct WBS of deliverables; write tasks for achieving deliverables
� Construct schedule network; evaluate schedule risk with Monte Carlo analysis; find “near critical”and critical paths
� Establish earning rules
� Evaluate credit claims; analyze for future performance
Copyright Square Peg Consulting 1999-2010 13
Example Project Plan
02468101214161820
1st
Qtr
2nd
Qtr
3rd
Qtr
4th
Qtr
Planned TaskStarts
Planned TaskFinishes
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“Performance” results of example
Project Plan
0
5
10
15
20
25
30
35
1st
Qtr
2nd
Qtr
3rd
Qtr
4th
Qtr
Cum PlannedStarts
Cum AcutalStarts
Cum PlannedFinishes
Cum ActualFinishes
Pln Start
Start Performance
Pln Finish
Finish Performance
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Process-2000 Plan+a real project
0
510
15
20
2530
35
40
3-O
ct-
96
31-O
ct-
96
12-
Dec-96
23-Jan-
97
14-M
ar-
97
Period Start Plan
Period Start Acutal
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Somehow, tasks always “start”
0
100
200
300
3-
Oct-
96
14-
Nov-
96
23-
Jan-
97
Cum Start
Plan
Cum Start
Actual
Copyright Square Peg Consulting 1999-2010 17
“Start Performance Index” ratio’s
plan to actual
0.80
0.85
0.90
0.95
1.00
3-
Oct-
96
14-
Nov-
96
23-
Jan-
97
Cum Start
Performance
Index
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Here’s the plan for “Finishes”
0
5
10
15
20
25
30
3-Oct-
96
31-
Oct-96
12-
Dec-96
23-
Jan-97
14-
Mar-97
Period Finish Plan
Period Finish Acutal
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“Finish Performance Index” for
Process-2000
0.00
0.20
0.40
0.60
0.80
1.00
3-O
ct-
96
31-O
ct-
96
12-
Dec-96
23-Jan-
97
14-M
ar-
97
Cum Finish
Performance
Index
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Lessons Learned
� Using a high degree of granularity in scheduling improves predictive results
� Predicting outcome is another form of analyzing project risk.
� Schedule problems imply cost and performance problems
� Focusing on Start/Finish stimulated improved project performance
� Understanding earned value achieved without cost collection systems
from Henry Wadsworth Longfellow: “Great is the art of beginning,
but greater the art of finishing”
Copyright Square Peg Consulting 1999-2010 21
Questions?
John C. Goodpasture
Jim Sumara
info@sqpegconsulting