earned value in five easy pieces
DESCRIPTION
A simple introduction to the principles of Earned Value ManagementTRANSCRIPT
Earned Value in
Five Easy Pieces
Not that Earned Value can be
made that easy, but this is the start of getting our mind
around the concepts of project performance
measurement
1
1. Using a credible schedule, define the planned value of the work 2. Measure the Physical % Complete for each period of performance 3. Calculate Earned Value = Planned Value x Physical % Complete 4. Using the Earned Value variables ,calculate the performance indices 5. With the performance indices take corrective actions
2
Using a credible schedule, define
the planned value of the work
3
1
Create Work Packages for the
activities that produce physical
outcomes
I
1
4
Define the planned value (PV)(BCWS) spreads for each
Work Package
I
1
5
Measure Physical Percent Complete of Work
Package Outcomes
2 6
Define 0/100 or
50/50 activities
within each Work
Package.
You’re either
done or not done.
There is no
“partial” done for
a Work Package.
2 7
Define Apportioned
Milestones that
describe the
incremental
progress of the Work
Package in units
meaningful to the
customer
II
2
8
Use evidentiary materials
for each measurement.
These are the only
measures of progress.
Not the passage of time
or the consumption of
resources.
“Show Me the
Outcomes”
II 9
2
Calculate the Earned Value 3
10
11
The Value that is Earned - the Earned Value - is the percent of the Planned Value that was delivered at the end of the period of performance.
The percentage assessment is always measured by some physical assessment, some evidence that this percentage was actually achieved
EV= PV Physical Percent Complete
3
Using the Earned Value variables (BCWS, BCWP, ACWP), calculate Performance Indices
4 12
The To Complete Performance Index (TCPI)
13
EAC
BAC BCWPTCPI
EAC ACWP
4
The Independent Estimate At Completion (IEAC)
14
1
2
3
4 1 2
5 ( )
cum cum
cum cum
cum cum
cum cum period
EAC BAC CPI
EAC ACWP BAC BCWP SPI
EAC ACWP BAC BCWP SPI CPI
EAC ACWP BAC BCWP wt SPI wt CPI
EAC ACWP BAC BCWP CPI
Probably as Good
as it Gets
Probably as Bad
as it Gets
4
V
With the performance indices‘, take
corrective action for remaining
work
15
5
16
Earned Value must measure work
performance within a pre-defined
period of time – the period of
performance
At the end of a project, the Earned Value
always equals the Planned Value – since all
the work has been done.
What is different is how long it took and how
much money is cost.
Earned Value bounds the time period to the
Planned period
IV
17
Inattention to budgetary responsibilities Work authorization not always followed Budget and data reconciliation issues Lack of integrated management systems Baseline fluctuations and frequent
replanting Current period and retroactive changes Improper use of management reserve Earned Value techniques not reflecting
actual accomplishments Untimely and unrealistic Latest Revised
Estimates (LRE)
Progress not monitored in a regular and consistent manner
Lack of vertical and horizontal traceability (critical path)
Not capturing and using cost and schedule data for corrective action
Lack of predictive variance analysis Lack of internal surveillance and controls Managerial actions not demonstrated
using Earned Value
Failing to us discipline and
rigor can put you on the
beach. So remember…
A ship on the beach is a
lighthouse to the sea
– Dutch Proverb
Are You Doing Earned Value?
Do we know the value of
the planned work? Have we bounded the
period of performance for each work element?
Do we know how to measure Physical Percent Complete?
18 www.jack-nicholson.info
Earned Value is
fundamentally a
planning tool.
It will not “fix”
problems with
projects.
But it will make the
performance
problems visible in
analytical ways.
19 www.jack-nicholson.info
Glen B. Alleman
Niwot Ridge Consulting
4347 Pebble Beach Drive
Niwot, Colorado 80503
303.241.9633
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