measuring and predicting - pmi...• (in microsoft project, the status date is specified by clicking...

1© 2016 Project Masters, Inc. All Rights Reserved.

Presented by Project Masters, Inc.

© 2008 – 2011 Project Masters, Inc. All Rights Reserved. PMBOK® Guide, PMI®, and PMP® are registered marks of the Project Management Institute, Inc. and are used with permission.

Measuring and PredictingPerformance Using Earned Value and MS Project

2© 2016 Project Masters, Inc. All Rights Reserved.

MS Project & EVM

• Overview of EVM

• Using EVM and MS Project

• Sample EVM Reports in MS Project

• Four major pitfalls of using EVM

3© 2016 Project Masters, Inc. All Rights Reserved.

Overview of Earned Value Management (EVM)

• A methodology that combines scope, schedule, and resource measurements to assess project performance and progress.

(The PMBOK® Guide: Fifth Edition)

4© 2016 Project Masters, Inc. All Rights Reserved.

Earned Value

• The measure of work performed expressed in terms of the budget authorized for that work.

5© 2016 Project Masters, Inc. All Rights Reserved.

EVM

• In its most basic form, earned value represents nothing more than following fundamental project management, managing a project with a resource loaded schedule.

6© 2016 Project Masters, Inc. All Rights Reserved.

EVM

• Will the use of earned value on projects eliminate cost overruns?

• Answer: Never

• EVM will let the project manager know if the project is getting out of control

7© 2016 Project Masters, Inc. All Rights Reserved.

EVM

• Overruns are typically caused by three factors, (or some combination of these three factors)

– Too little budget authorized by management

– Poor technical performance from the project team

– Scope creep

8© 2016 Project Masters, Inc. All Rights Reserved.

EVM

• Earned value is for projects … its is not for continuous business operations.

9© 2016 Project Masters, Inc. All Rights Reserved.

Cost Variance

• Cost Variance only exposes deviations from budget, and provides no comparisons of work scheduled /vs/ work accomplished.

10© 2016 Project Masters, Inc. All Rights Reserved.

Schedule Variance

• The Schedule Variance compares planned work /vs/work that has actually completed

11© 2016 Project Masters, Inc. All Rights Reserved.

Earned Value Management

• Earned Value Management is a project management tool that measures the progress of complex and changeable projects against a baseline

12© 2016 Project Masters, Inc. All Rights Reserved.

Earned Value Management

• Define The Work (WBS is the key)

• Schedule and Resource the Work

• Baseline the Budget and Schedule

• Monitor and Status The Work

• Re-Plan the Work

13© 2016 Project Masters, Inc. All Rights Reserved.

Using EVM and MS Project

14© 2016 Project Masters, Inc. All Rights Reserved.

EVM Steps to Success in MS Project

• Enter WBS in MS Project• Enter activities and milestones for each work package• Enter links for each activity• Enter all resources in “Resource Sheet” with fully loaded:

– Name– Type of resource– Standard and overtime rate– Etc.

• Enter resources for each activity• Enter durations for each activity • Add risk reserve for duration and budget• Management Sign off• Baseline schedule

15© 2016 Project Masters, Inc. All Rights Reserved.

Sample EVM Reports in MS Project

16© 2016 Project Masters, Inc. All Rights Reserved.

17© 2016 Project Masters, Inc. All Rights Reserved.

18© 2016 Project Masters, Inc. All Rights Reserved.

19© 2016 Project Masters, Inc. All Rights Reserved.

20© 2016 Project Masters, Inc. All Rights Reserved.

21© 2016 Project Masters, Inc. All Rights Reserved.

22© 2016 Project Masters, Inc. All Rights Reserved.

23© 2016 Project Masters, Inc. All Rights Reserved.

24© 2016 Project Masters, Inc. All Rights Reserved.

25© 2016 Project Masters, Inc. All Rights Reserved.

Avoiding Common Pitfalls

26© 2016 Project Masters, Inc. All Rights Reserved.

Avoiding Common Pitfalls

• The four major pitfalls of using EVM are:

– Improper Structuring of the WBS

– Failure to Set the Project Status Date

– Failure to Baseline

– Failure to Reschedule Incomplete Work

27© 2016 Project Masters, Inc. All Rights Reserved.

Improper Structuring of the WBS

• A common error made by Project Managers new to the use of Earned Value Management is failure to properly structure the Work Breakdown Structure.

• Failure to use a Deliverables-Based hierarchical structure for the WBS results in improper rollup of the Earned Value measurements

28© 2016 Project Masters, Inc. All Rights Reserved.

Improper Structuring of the WBS

• Error is often a result of organizing activities on the basis of “project phases” or on the basis of “group responsible for the work” instead of organizing the work by deliverables.

• Improper indentation of Summary Tasks and Sub Tasks, when using software applications such as Microsoft Project

29© 2016 Project Masters, Inc. All Rights Reserved.

Failure to Set the Project Status Date

• Earned Value Measures are always measurements of performance captured at a particular point in time. Consequently, before calculating these measures, one must specify the Status Date on which the measures are taken.

• (In Microsoft Project, the Status Date is specified by clicking on the PROJECT menu and then selecting the Project Information command; then indicate the Status Date using the pull-down calendar for the Status Date field on the Project Information dialogue box.)

30© 2016 Project Masters, Inc. All Rights Reserved.

Failure to Set the Project Status Date

• Failure to properly set the Status Date will either result in incorrect data (the EVM measures will be based on an incorrect date – or will result in zeroes in the Earned Value fields in the Earned Value Tables).

31© 2016 Project Masters, Inc. All Rights Reserved.

Failure to Baseline

• Failure to baseline activities once they are added to the WBS.

• EVM requires that work be broken into discrete activities; that these activities be baselined; and that Actual Performance be measured against the baselined values.

• Requires proper Change Control System, these activities (and their cost and schedule estimates) must be baselined.

32© 2016 Project Masters, Inc. All Rights Reserved.

Failure to Baseline

• Project Managers who are new to EVM incorrectly assume that since the new activities were not included in the original baseline, they do not need to be baselined.

• Failure to baseline added activities results in zero values being recorded for the Planned Value and Earned Value Fields for these activities – and the calculations based on these values are therefore meaningless

33© 2016 Project Masters, Inc. All Rights Reserved.

Failure to Reschedule Incomplete Work

• Common error made by persons new to EVM is failing to reschedule all incomplete work to occur after the Current Status Date

34© 2016 Project Masters, Inc. All Rights Reserved.

Failure to Reschedule Incomplete Work

• Capturing the status of a project, it is necessary to track the current level of completion for all activities.

• All Incomplete Activities (and portions of Incomplete Activities) need to be re-scheduled to occur after the date on which the status is based

35© 2016 Project Masters, Inc. All Rights Reserved.

Failure to Reschedule Incomplete Work

• Failure to re-schedule incomplete work gives an erroneous impression of project performance.

• Work that is actually performed after its base-lined timeframe appears to have been accomplished on-time.

• Consequently the Earned Value Schedule Variance, Schedule Performance Index, and Estimated Date Of Completion will be misleading.

36© 2016 Project Masters, Inc. All Rights Reserved.

Earned Value Reporting

37© 2016 Project Masters, Inc. All Rights Reserved.

Earned Value Reporting

• Some of the different types of Earned Value Reporting are:

– Budgeted Cost of Work Performed

– Earned Value Report

– Variance Reports

– EAC Report

• Cumulative Performance Report

• Contract Budget Baseline Report

• Budget VS. Actual Report

• Etc.

38© 2016 Project Masters, Inc. All Rights Reserved.

Different Types of Charts, Graphs and Presentations used in EVM

Reporting

39© 2016 Project Masters, Inc. All Rights Reserved.

50

50BCWP = 100

50 – 50 Rule for WIP

50

50

50

50

Budget = 300

Budgeted Cost of Work Performed

40© 2016 Project Masters, Inc. All Rights Reserved.

Earned Value Reporting

• Below is an example of an Earned Value Report, which includes:

– Reported Variances

– Budgeted Cost of Work Performed (Earned Value)

– Budgeted Cost of Work Scheduled (Planned Value)

41© 2016 Project Masters, Inc. All Rights Reserved.

Earned Value Report Example

Budgeted CostActual Cost

of Work

Performed

At Completion

Work

Scheduled

Work

Performed

Budgeted

At Complete

Last

Revised

Estimate

BCWS BCWP ACWP BAC LRE

125 100 140 300 400

42© 2016 Project Masters, Inc. All Rights Reserved.

Reported Variances

SV = 100-125 = – 25CV = 100-140 = – 40VAC = 300-400 = – 100

Budgeted CostActual Cost

of Work

Performed

At Completion

Work

Scheduled

Work

Performed

Budgeted

At Complete

Last

Revised

Estimate

BCWS BCWP ACWP BAC LRE

125 100 140 300 400– 25 – 40 – 100

43© 2016 Project Masters, Inc. All Rights Reserved.

2011 2012 2013 2014 2015

0

100

200

300

400

NOW AT COMPLETION

Schedule Slip

EAC

BAC

Ove

rru

n

Earned Value Report

44© 2016 Project Masters, Inc. All Rights Reserved.

Earned Value Report

25

20

15

10

5

ETC

Contract Budget Baseline

Now

Period 1 Time Period 2

Cost Variance

Schedule

Variance

Actuals

Plan

Earned

Value

BAC

MR

45© 2016 Project Masters, Inc. All Rights Reserved.

Project Masters Inc.President

April Wennerberg

awennerberg@projmasters.com

888.250.4447 x111