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Association for Project Management

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The Earned Value Management Compass

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Earned value book cover.pdf 13/10/10 10:27:38

The Earned ValueManagement Compass

A product of the Association for Project ManagementEarned Value Management Specific Interest Group (SIG)


Ibis House, Regent Park

Summerleys Road, Princes Risborough

Buckinghamshire

HP27 9LE

© Association for Project Management 2010

All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system or transmitted, in any from or by any means, without the express

permission in writing of the Chief Executive of the Association for Project

Management. Within the United Kingdom exceptions are allowed in respect of

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Readers are responsible for the correct application of the information in this

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The Association for Project Management cannot accept legal responsibility or

liability for any errors or omissions in this publication or the consequences thereof.

All registered trademarks are hereby acknowledged and the publisher

makes no claim to these trademarks.

British Library Cataloguing in Publication Data is available

ISBN 10: 1-903494-33-8

ISBN 13: 978-1-903494-33-2

Cover design by Fountainhead Creative Consultants

Typeset by RefineCatch Limited, Bungay, Suffolk

ContentsForeword iv

Acknowledgements v

The EVM compass 1Introduction 1Fundamental concepts 1How is the compass used for assessment? 2What are the benefits? 2Assessment – the general process 3Assessment – presenting the results 5Implementation roadmap – EVM process maturity stages 7

Guidance information 9Introduction 9EVM foundations 9EVM basics 10Execute EVM 19EVM goal 25

EVM compass questions 26Conclusion 36Annex A – terminology and glossary 37Annex B – related documents 43

iii

ForewordMore and more companies are saying that they use earned value (EV) as partof their project control.However, use of earned value can run from full organisational US ANSI 748

accreditation to recognising that there is an earned value button available inyour personal copy of Microsoft® Project. This is potentially confusing and there is a very high risk of misunder-

standing and disappointed expectations between stakeholders.The APM Earned Value Specific Interest Group (SIG) recognises that EV

principles and the benefits they can bring to project control may be appliedin a variety of ways. In some cases the principles are being applied withoutknowing that they are part of earned value. The key is to understand howand where earned value principles are being applied and to encourage them.The earned value management (EVM) compass has been developed so that

a clear picture can be obtained of how earned value is being used currently.An assessment can then be made of how well that meets the actual require-ment for earned value; whether that is to meet a standard, a customer or aninternal organisational requirement. A route map to close the gap between asis and to be can then be plotted planned and managed.Now, when it is stated that earned value is in use, the compass can provide

a way for all involved to have a common understanding of what that reallymeans.The compass can be used in a variety of project control situations (not just

earned value). Here are some suggestions:

• Maturity model.• Audit tool.• Assurance tool.• Management tool.• As part of an external team’s review or as a personal self-assessment

exercise.

It is flexible. Please use it and let the SIG know how you get on.

Steve WakeChairman, APM Earned Value Specific Interest Group

iv

AcknowledgementsThe EVM compass was developed by a subgroup of the APM Earned ValueSpecific Interest Group (SIG), with contributions from Steve Wake (SIG chair-man), Mike Burke, Ewan Glen, John Flaherty, Paul Kidston, Simon Springate,Alan Bye, John Cox, Mick Higgins and Alex Davis. Review and testing of the compass has been completed by the wider APM

Earned Value SIG membership and cross-industry volunteers and we areextremely grateful to all the individuals who took part in this.

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The EVM CompassINTRODUCTION

How do you measure an organisation’s capability in implementing andapplying earned value management (EVM) across its projects? For example,what is the subset of the Earned Value Management: APM Guidelines (orANSI/EIA 748 requirements) that are sufficient to initiate an EVM system?How do you know your potential alliance partner or subcontractor has acompetent EVM system? How do you know whether its constituent ele-ments such as scheduling, cost collection and adequate supplier project con-trol are in place? The EVM compass maturity model provides a step-by-step means to under-

standing the as is EVM condition and referencing it against a to be condition.The model uses a common framework and can be used for the assessment ofa single project or to benchmark and compare the relative strengths of vari-ous projects across an organisation. It gives EVM system reviewers a consis-tent method of assessing projects.This document is intended to be used in conjunction with the Earned Value

Management: APM Guidelines.

FUNDAMENTAL CONCEPTS

The EVM compass is intended to provide a defined means of establishingand improving project control capability. The EVM compass is intended tosupport projects or organisations by improving their project control andEVM processes. The project control processes should be well understood throughout a

mature project or organisation, usually through documentation and training.The processes should be continually monitored and improved. As a projector organisation gains in EVM process maturity, it formalises its processes viapolicies, standards, and organisational structures. It also builds an infra-structure and a corporate culture that support the methods, practices andprocedures of the project/organisation so they continue to function longafter those who originally defined them have moved on.Working within this environment, the fundamental concepts of the EVM

compass are that it:

• provides a comprehensive and systematic review of project EVMmaturity;

• uses a common framework that supports either the assessment of a singleproject or allows organisations to benchmark and compare the relativestrengths of their various projects, identifying systemic problems andallowing sharing of best practice;


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• provides a defined means to support projects in establishing andimproving project control capability;

• allows projects to reference the as is EVM condition with the to becondition;

• gives EVM system reviewers a consistent method of assessing projects thatcan be repeated over a period of time, recognising that target performancelevels may change;

• allows organisations to establish their own target performance level(rather than define it for them);

• is open to a degree of customisation such that its application can betailored to the needs of an individual organisation, whether this is throughrevisions to the criteria or the application of weightings to the criteria.

HOW IS THE COMPASS USED FOR ASSESSMENT?

In the context of this framework, the EVM compass is a comprehensive andsystematic review of a project’s EVM maturity. This can be used to aidprocess improvement by identifying shortfalls against the target standard.The review is conducted using a maturity grid that outlines performance

levels against 25 attributes of an EVM system. A target standard should beestablished for the project or projects within an organisation at the outset andthe maturity at the time of review related to this target standard. The targetstandard to be achieved will typically be agreed with a customer of the proj-ect or within an organisation. It is for individual projects/organisations to settheir target standards. However, customers who require full ANSI 748 com-pliance are unlikely to be satisfied with maturity below level 3. When using the EVM compass, it is often beneficial to take a realistic and

pragmatic approach. Where an organisation doesn’t implement full EVM, asoutlined in ANSI 748, then the maturity level achieved will be less than ifthey did, with it being likely that several of the products identified will notbe available. This may be appropriate for that organisation.The assessment process allows the project to clearly discern its strengths

and weaknesses, and should culminate in planned improvement actionswhich are then monitored for progress.The frequency of reviews is a decision for the project or organisation.

WHAT ARE THE BENEFITS?

Using the EVM compass maturity framework for assessment should delivera range of benefits, including:

• identifying your organisation’s strengths and weaknesses;• providing a highly structured, fact-based approach to identifying and

assessing your project and measuring progress periodically;


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• creating a common language and conceptual framework for the way youmanage and improve EVM on your project and, if applicable, projectswithin your organisation;

• educating people in your project on the fundamental elements of EVM andhow they relate to their roles and responsibilities;

• involving people at all levels in process improvement;• ranking EVM project maturity within an organisation or across the supply

chain;• identifying and allowing the sharing of best practice across projects within

an organisation;• using it to assess and present the findings from a variety of EVM reviews

in a format that is easy to understand;• facilitating comparisons with other projects;• supporting the development of your business plan and strategy.

ASSESSMENT – THE GENERAL PROCESS

There is no single right way to perform the assessment using the maturitygrid; the primary factors that determine the right approach for your organi-sation are its current culture and the desired outcomes from the assess-ment exercise. Different approaches deliver different benefits. Whicheverapproach is used, the key point to remember is that assessment is about thecontinuous improvement of your project. Greatest value may be achieved from an assessment if it involves someone

who has a working knowledge of the implementation and operation of anEVM system. This ensures that the assessment can be completed with anunderstanding of the nuances between the different maturity levels for eachof the attributes that are scored.The assessment can be performed in a number of different ways:

• Self assessment – from within the project.• Peer assessment – by other teams within the organisation.• Independent assessment – by reviewers external to the project.

The steps involved in the assessment are outlined in the figure below.

Form team

Assess projectagainst the

maturity levelsdescribed in

matrix

Develop actionplan

Re-assess tomeasure

improvement

Figure 1: Four-step assessment method


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While the assessment is valuable, the most critical phase of the process isaction planning and implementation. Having completed the diagnosticphase, you may wish to consider your response to the following questions:

• What identified strengths must we maintain to maximum effect?• What identified strengths do we develop and exploit even further?• What identified areas for improvement do we acknowledge, but not

pursue because they are not key to our business?• What identified areas for improvement do we acknowledge and are vital

for us to address?• How are we going to monitor progress against the agreed improvement

actions?

The actions that are identified should be captured in a plan, with clearlydefined responsibilities and timescales for their implementation. To helpwith the prioritisation of the actions a grid such as that shown overleaf maybe of benefit.

0

1

2

3

4

5 Good practiceto share

Somethingto learn

1 2 3 4

Leve

l

Gap (target minus current level)

Figure 2: Action prioritisation

The grid may be used by taking your current score and identifying whereyou sit on the vertical axis. By then taking your current score away from yourtarget score you may identify your position on the horizontal axis. As theshade of blue darkens, the priority of actions increases.Where a project scores predominately light blue there is potential to share

learning with other projects in the organisation that may not be performing so well.


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ASSESSMENT – PRESENTING THE RESULTS

The presentation of results from the assessment may be tailored to meet theneeds of specific organisations. As a general rule, presentation of the full setof results for the 25 criteria lends itself to use by project control staff. Sum-marised results, such as at the level of maturity stages, tend to be moreappropriate for presentation to management staff.

Full set of results

Figure 3 provides examples of two presentation formats, (a) radar plot and(b) bar chart, for the full set of results. While detailed, they allow easy com-parison of current performance against the target performance level. Byincluding the results of assessments from multiple projects it becomes possi-ble with the bar chart to identify systemic problems that can be addressed ifdesired.

Figure 3(a): Presentation of detailed results (radar plot)

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3

2

1

0

1. Earned valuemanagement competencies

2. Sponsorship3. Project level authorisation

4. Work definition5. Detail workauthorisation and budgetassignment

6. Responsibility andaccountability

7. Materialmanagement

8. Basis of estimate

9. Managementreserve (cost and schedule)

10. Supplier budget integration

11. Schedule structure and content

12. Schedule resource allocation13. Objectivity of EV progress assessment

16. Actual cost collection

17. Scheduleprogress and control

18. Data integrity

19. Estimate atcomplete

20. Suppliermanagement and

reporting

21. Risk and opportunitymanagement

22. Baseline changemanagement

23. Senior management usage

24. Customerinvolvement

25. EVM as adecision support tool

14. Supplier scheduleintegration

15. Process documentationand consistency of application

As isTo be

Summarised resultsFigure 4 provides an example of a summarised results plot. Presenting theresults of assessments conducted across numerous projects becomes simplerat this level and differences between current and target performance levelsmay be highlighted.


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1. Earned value management competencies2. Sponsorship

3. Project level authorisation4. Work definition

5. Detail work authorisation and budget assignment6. Responsibility and accountability

7. Material management8. Basis of estimate

9. Management reserve (cost and schedule)10. Supplier budget integration

11. Schedule structure and content12. Schedule resource allocation

13. Objectivity of EV progress assessment14. Supplier schedule integration

15. Process documentation and consistency of application16. Actual cost collection

17. Schedule progress and control18. Data integrity

19. Estimate at complete20. Supplier management and reporting

21. Risk and opportunity management22. Baseline change management

23. Senior management usage24. Customer involvement

25. EVM as a decision support tool

EVM maturity assessment

To be

As is

0 1 2 3 4 5

Figure 3(b): Bar chart


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IMPLEMENTATION ROADMAP – EVM PROCESSMATURITY STAGES

The structure of the EVM compass aims to reflect the stages that a project willpass through when implementing an EVM system (Figure 5). An organisa-tion that has little experience of establishing an EVM system should focus onthe stages in the order outlined below to achieve the greatest benefit. Wherean organisation has more experience of using EVM it is likely that the initialstages will be established and focus may be on the latter ones. The stages are:

1. EVM foundations. The first step in establishing an effective EVM systemis to establish the correct foundations. Without appropriate sponsorshipand the development of the correct competencies EVM systems are morelikely to fail.

2. EVM basics. The attributes within the EVM basics stage form the buildingblocks of an effective EVM system. This maturity stage is concerned withensuring that these meet the needs of the project, formally controlling thescope of work and associated delivery schedule and budget within asystem that has defined processes.

3. Execute EVM. Having established the foundations and performance base-line it is possible to start to manage using EVM. This maturity stage is

4

5

Project A as is

Project B as isOrganisation to be

3

2

1

0

EVM fo

undations

EVM bas

ics - o

rgan

isatio

nEVM

basics

- budget

EVM bas

ics - p

roce

ssExecu

te EVM

EVM goal

EVM bas

ics - s

chedule

manag

ement

Figure 4: Presentation of summarised results (bar chart only)


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concerned with assessing the effectiveness of the processes followedthough the delivery stage of a project.

4. EVM goal. The ultimate aim of an EVM system is to establish theinformation generated by the system as a decision support tool.

Building up from the foundations it provides a logical path for EVM imple-mentation. The compass measures the maturity of the implementation attrib-utes as a project establishes the basics, before starting to execute EVM andfinally using EVM as a decision support tool (the goal). The attributes within each of the stages are outlined in detail in the guid-

ance text that follows.

Figure 5: The four maturity stages of the EVM compass

EVM as decisionsupport tool

Actual costcollection

Data integrityEstimate at completion

Senior managementusage

Supplier management and reporting

Customerinvolvement

Schedule progressand control

EVM goal

Execute EVM

EVM basics

EVM foundations

Baseli

ne ch

ange

man

agem

ent Risk and opportunity m

anagement

Organisation Budget Schedule Tools and processes

Project levelauthorisation

Workdefinition

Responsibility andaccountability

Materialmanagement

Detail work authorisation andbudget assignment

Basis of estimate

Managerial reserve(cost and schedule)

Supplier budgetintegration

Processdocumentationand consistencyof application

Schedule structureand content

Schedule resourceallocation

Objectivity of EVprogress assessment

Supplier scheduleintegration

Sponsorship

EVM competencies (including education, training, experience and CPD)

Time

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Guidance informationINTRODUCTION

This section aims to provide guidance to support the use of the EVM com-pass maturity assessment tables. For each of the four stages the followingexplanatory text is provided for the underpinning attributes. This text out-lines:

• The aim – the objective of the attribute;• The reason – why the attribute is important;• Guidance information – additional information to assist users who are less

familiar with the implementation and utilisation of earned valuemanagement systems.

EVM FOUNDATIONS

Attribute 1 – earned value management competencies

Aim:

• To ensure that the project team has the appropriate competencies toimplement and manage using an earned value management system.

Reason:

• EVM is often a new process to a project or business and requiresappropriate training and education for its implementation to be a success.Implementation and operation of an EVM system can be a complexexercise and can be facilitated by the use of experienced resources.

Guidance information:

It is important that training and support are provided during EVM imple-mentation and that on-going training is also available. The team membersshould be trained in EVM techniques appropriate to their role within theproject team. Implementation of EVM is best facilitated by using resources with previous

implementation experience. Learned experience from other projects is also avaluable source of information.


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Attribute 2 – sponsorship

Aim:

• To ensure that there is clear and visible EVM sponsorship for the projectfrom within the delivery organisation.

Reason:

• It is important that the implementation and execution of EVM is sponsoredat an appropriate level within the project/organisation.


The introduction of EVM may cause the need for a significant culturalchange, which must be led with senior management support and sponsor-ship. This should be communicated throughout the entire project structure.The understanding and commitment of the entire project team and organi-sational functional areas is vital for success, and hence there is a need forcomprehensive communication outlining the nature of EVM, the aim andobjectives of the implementation.

EVM BASICS

Attribute 3 – project level authorisation

Aim:

• To ensure that the project has been given appropriate approval andauthority to proceed.

Reason:

• The project should be formally approved by the responsible organisation.This approval should indicate the overall budget available and assigndelivery responsibility/authority onto the key individuals within theproject team. It should also indicate the sponsor within the organisation.


Prior to commencement of work on the project, the approval authorityshould formally sanction the project to proceed and assign the required levelof responsibility, authority and accountability (RAA) to the project manager.To further delegate this RAA to the team delivering the project, a responsi-bility assignment matrix (RAM) is used.The RAM process is principally concerned with defining the work to be

done, as a work breakdown structure (WBS), and assigning that work to


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specific parts of the project’s organisation via the organisational breakdownstructure (OBS). The WBS and OBS should be aligned and combined to pro-duce a concise RAM, an example of which is shown below.

CA

CA

CA

CA

Assignment of asingle work elementto a single team allows you to roll up the costs in either direction.

Workbreakdownstructure(WBS)

Organisationbreakdown

structure(OBS)

CA = Control account

Figure 6: Example responsibility assignment matrix

Within the RAM, each element of work is assigned to an organisational ele-ment and a single person within the organisation. This is regarded as an indi-vidual control account (CA). Each control account will be owned by a controlaccount manager (CAM) and will contain lower level, detailed work pack-ages (or near term work) and also summarised planning packages (or farterm work).

Attribute 4 – work definition

Aim:

• To ensure that the full scope of work associated with the project has beenbroken into manageable elements in a manner that supports performancereporting.


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Reason:

• The project scope of work should be broken into manageable elements ina manner that supports delivery of work and performance reporting.Failure to break down work appropriately can lead to difficulties withassigning a single point of accountability for delivery of the work and alsolead to confusing, conflicting and sometimes incomplete performancedata.


All work authorised to be performed under the contract must be formallyauthorised and defined within the framework of a logical breakdown ofwork, normally via a work breakdown structure (WBS) and will be assignedto individuals responsible for undertaking that work. The WBS provides a common management framework for all project activ-

ities, and so there must only be one WBS for any single contract. The WBSwill be cross-referenced with the contract statement of work or a statementof requirements to ensure the full scope of work has been covered.The level to which a WBS is broken down depends upon the complexity of

the contract and the level of detail required for effective management. Essen-tially, the breakdown should continue until all contract requirements andbusiness requirements can be attributed to meaningful packages of work.In any project the WBS is of critical importance because it defines not only

how the work of the project is broken down, but also provides the frame-work for collecting actual cost, reporting progress and measuring achieve-ment.

Attribute 5 – detail work authorisation and budget assignment

Aim:

• To ensure that all distributed work has an associated budget, has beenassigned to an individual with delivery responsibility, and that all work isauthorised before it commences.

Reason:

• Every package of work within the WBS should be assigned an agreedbudget for its completion that is commensurate with the scope of work tobe delivered (i.e. is sufficient to cover labour, material and other directcosts that will be incurred while delivering the work). Before workcommences, the associated budget and schedule must be authorised toindicate approval to proceed (typically this would open associated costbooking numbers).


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The detail work authorisation and budget assignment process ensures thatevery package of work within the WBS is assigned an agreed budget for itscompletion. This is part of the formal authorisation process that allows workto commence against the agreed schedule baseline for each control account -and therefore the project as a whole. These budgets may consist of a labourelement (resources) and/or materials element and will be assigned to allwork packages (WP) and planning packages (PP). However, it is recom-mended that the different cost types should be kept in separate WPs/PPswhere possible.To manage the completion of work against work packages they will usually

only be opened when they have been formally authorised (typically whenthey are due to commence in the next few months) and will be closed whenthey are completed. This also helps to ensure that full control is maintainedover the work package and no work is completed against it, either before itis authorised or after it has been deemed to be complete and full earnedvalue claimed.

Attribute 6 – responsibility and accountability

Aim:

• To ensure that identified staff within the project team have appropriatelydelegated and documented responsibilities and accountabilities and thatthese have been communicated.

Reason:

• It is important that staff within the project are clear on what they areresponsible for delivering, and that they have the necessary authority.Whilst achieving this it is also crucial that accountability rests with singleindividuals.


The project team (inclusive of control account managers) have responsibilityfor the delivery of the project. It is essential that individuals within the proj-ect have a clear definition and understanding of their terms of reference andthat these are clearly understood by those within the project and the associ-ated functional organisational areas. A control account manager (CAM) hasmanagement responsibility for ensuring that the defined scope of work for acontrol account is achieved to the budget, timescale and quality standards inaccordance with the project requirements. They manage the control accountas a contract between themselves and the project manager /project director.


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Typical CAM terms of reference are for someone:

• who is accountable for ensuring that the defined scope of work for a discretecontrol account is achieved to budget and timescales;

• with the delegated authority to manage the deployment and mix ofresources required to achieve budget and timescales;

• who is empowered to manage the internal contract between the project andthe organisation performing the work;

• who is experienced in project delivery/management and can strike thebalance between technical and business requirements;

• who can demonstrate adequate knowledge, commitment and ownership oftheir control accounts.

Attribute 7 – material management

Aim:

• To ensure that the material budget is included in the earned valuemanagement system (EVMS) to support accurate performance reporting.

Reason:

• To establish the complete project budget and enable material performancemanagement, it is essential to ensure that the material elements arecontained within the performance measurement baseline.


The management of purchased material/services covers the processes andactivities that directly affect the purchase of bill of material items or servicesfrom external suppliers. These elements should all be captured in the EVMSwith appropriate progress measurement and actual cost collection tech-niques.

Attribute 8 – basis of estimate

Aim:

• To ensure that the rationale for producing the estimates that underpin thebudget and schedule data are contained in a formal document.

Reason:

• The basis of estimate (BoE), accompanied with related assumptions,ensures that the project can demonstrate how it developed its budget andschedule. It aids future reviews of the budget, which is particularlyimportant if the staff involved in their original development are no longeravailable.


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In reviewing this area it is important to understand the CAM’s role in for-mulating the proposal estimate/budget for the effort. A number of questionsshould be asked:

a) How did they arrive at the proposed estimates? b) Are there backup worksheets to give more detail? c) Was there a negotiation process for the budgets after the contract was

awarded? d) Is the budget adequate and what risks are there in achieving the work

within budget?

The data justifying the responses to these questions should be formally doc-umented in the BoE file.

Attribute 9 – management reserve (cost and schedule)

Aim:

• To ensure that management reserve is identified, documented andapproved, and is subject to formal change approval when drawn upon bythe project.

Reason:

• Projects should have a separately identified management reserve budgetthat can be used for unplanned scope. The management reserve budgetwill typically be sized based upon the risk exposure of the project asrepresented in the risk register.


Management reserve (MR) is set aside for project management control pur-poses only. It is not a contingency that can be eliminated by the customerduring subsequent negotiations, nor can it be used by the customer to absorbthe cost of contract changes.MR is derived during the budgeting process. It is held separately for future

allocation to control accounts (using the project change process) and will beused, if required, to cover increased work-scope requirements for unforeseenchanges that fall within the overall scope of the contract. For more detail onthe interfacing of risk and EVM, reference should be made to the InterfacingRisk and Earned Value Management guide on this subject.


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Attribute 10 – supplier budget integration

Aim:

• To ensure that the suppliers budget is included in the EVMS to supportaccurate performance reporting.

Reason:

• To establish the complete project budget and enable supplier performancemanagement it is essential to ensure that the supplier budget elements arecontained within the performance measurement baseline.


The nature of budget integration will depend on the earned value approachprescribed for the supplier. This could be full EVM requirements floweddown to the supplier to report budgeted cost for work performed (BCWP)and actual cost of work performed (ACWP) periodically, milestone based EVmeasurement where a milestone payment plan linked to physical progress isagreed with the supplier and this forms the BCWS, or, for commodities andconsumables, a BCWS is established based on the planned receipt.The approach defined will depend upon the nature of the item being pro-

cured, the criticality and the risk/opportunities. Where full EVM is floweddown to the supplier, the contract should clearly define the requirement. For more guidance on the selection of the best approach reference should be

made to Earned Value Management: APM Guidelines.

Attribute 11 – schedule structure and content

Aim:

• To ensure that there is a robust, time-phased, logically-linked set ofactivities and milestones that show how products/outputs will bedelivered.

Reason:

• The critical objectives for any project are the delivery of the product totime, specification and cost. As such, a schedule or suite of schedules needsto be created to display the logic, durations and interdependencies of allproject activities.


The schedule should cover all work-scope and will include all master mile-stones (i.e. payment milestones, contract deliverables and key programmemilestones). There will be a clear link between the established control


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accounts and work packages created within the EVM system and the activi-ties within the schedule.The schedule should enable the critical path to be clearly visible. Supplier

schedules should be integrated at a level of detail dependent on the type ofscope or service being purchased. The amount of detail within the schedulewill be dependent on the nature and scale of the project.

Attribute 12 – schedule resource allocation

Aim:

• To ensure that the schedule is resourced, and that resource planning isundertaken.

Reason:

• The schedule should be resourced with the amount and type of resourcerequired to deliver the project, typically using a resource breakdownstructure to identify the skill types within an organisation. Resourcelevelling should be conducted to ensure that the resources required todeliver the project are available when required.


The schedule resource requirements should be understood within the con-text of the wider resource requirements of the organisation. Use of the sched-ule should allow proactive, flexible resource management to optimise theutilisation of the workforce within an organisation.

Attribute 13 – objectivity of EV progress assessment

Aim:

• To ensure that appropriate earned value techniques (EVT) are applied.

Reason:

• To accurately assess progress it is important to assign the most appropriateEVT to activities/work packages. Without this, the performance reportedmay fail to reflect actual performance achieved.


The EVT is the technique used to measure achievement; also known as thebudgeted cost of work performed (BWCP) or earned value (EV). The opti-mum EVT must be assigned to individual work packages. The vast majorityof work packages on a project should be a discrete type as these provide themost objective measure of the value of in progress work.


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The EVT chosen must best represent the effort to be accomplished and pro-vide the most appropriate method for planning, scheduling and evaluatingperformance. Work Packages should be identified as one of 3 types:

1) Discrete tasks – that have a specific end product or result.2) Apportioned – factored effort that can be directly related to other

identified discrete tasks.3) Level of effort (LOE) – support/management type of work which does

not result in a final product – performance/achievement cannot bemeasured since there is no tangible output.

The earned value techniques for each work package on a project should bedocumented, and the WBS should be structured such that the amount ofLOE on a project is capable of being reported. For more guidance on the selection of EVTs, reference should be made to

Earned Value Management: APM Guidelines.

Attribute 14 – supplier schedule integration

Aim:

• To ensure that project schedules reflect supplier activities and deliverables,giving visibility of the interaction between the schedules of all parties.

Reason:

• To enable supplier progress tracking and fully understand theinterdependencies, it is essential to ensure that the supplier schedules arecontained within the project master schedule.


The way in which subcontractor effort is integrated into the baseline will dif-fer according to its importance to the project. The distinction between majorand minor subcontractor should be based upon factors such as equipmentvalue, criticality, or risk to the project (e.g. single source supply) and/orwhether they are an ‘off the shelf’ supplier or not.It is essential to ensure that sub-contractors’ schedules are represented

within the project master schedule to an appropriate level of detail, and thatthere is a process for reporting and managing the sub-contracted effort. Therequirements for sub-contractor schedule provision and reporting should bedefined in their contract. In the event of progress payments being used, a definition of the method of

validating the supplier’s performance should be recorded in the purchaseorder (or contract).Schedules on a major project can be very large and complex; decisions have

to be taken as to the level of detail to be incorporated into the project’s mas-ter schedule. If there is too much detail, the maintenance of the plan becomes


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a burdensome overhead, whilst if there is insufficient detail, the exact statusof the project is difficult to ascertain. It is usually the key deliverables that need to be monitored and controlled

by the contractor. The focus of supplier schedules is typically:

• payment milestones (ideally one per period);• key events and/or way points (identified by period where possible);• deliverables into the contractor;• deliverables to other sub-contractors (interface milestones).

If milestone based EVM is being used, identified milestones will be allocateda budget/resource, based on the agreed payment to the sub-contractor – ideally following the agreed payment profile (refer to Attribute 10 – supplierbudget integration). Budgeted milestones will be time-phased to create aBCWS for the subcontractor.

Attribute 15 – process documentation and consistency of application

Aim:

• To ensure that the EVM processes are formally described and documentedto allow consistent application.

Reason:

• Documented processes can be communicated to all relevant stakeholders,ensuring consistent understanding and application.


Formal process documentation should be created and be in operational usefor all the EVM processes to an appropriate level of detail. It is important todocument processes and procedures to enable continued operation of theprocess as new people join the project. Where generic EVM processes are in use they may be tailored with guide-

lines to meet specific local requirements in the form of local project/processinstructions for different projects. A pragmatic balance should be reachedbetween any internal procedures and external contract-specified standards.Any local project instructions are under configuration control.

EXECUTE EVM

Attribute 16 – actual cost collection

Aim:

• To ensure that costs are collected at a level appropriate for performancereporting and that they can be reconciled with the accounting system.


20

Reason:

• It is important to ensure accuracy of cost collection and ensure that it isrelated to the correct activity within the activity/work package. Withoutthis information the project will not fully understand how much it has costto perform the authorised work.


The accounting processes ensure that complete and accurate cost informa-tion is collected in a timely manner, to enable the transfer of actual cost infor-mation into the project control system’s cost reporting tool (by period). Costs will be associated with the planned work and will be recorded at

activity, work package or control account level, and will be rolled-up to pro-vide actual costs across the control account(s) and at the summary projectlevel. The creation of booking or charge numbers, matched to the discreteaspects of the WBS, will also make it possible to measure progress/achievement in a meaningful manner (against the baseline plan). This willfacilitate effective financial control of the project by enabling the organisationto identify the full cost associated with the project activity and, through link-age with the recording of progress against ‘tasks’, to identify the estimatedcosts at completion for the planned work remaining. Direct costs are accumulated as labour man hours and non-labour pounds

against the relevant booking or charge numbers. Across the project, the proj-ect control system’s source collection systems will collect information andfeed it into the cost ledger. The appropriate charging rates will be applied tolabour hours to give a complete picture of the actual cost of the work per-formed. Indirect costs should also be captured at a level appropriate to allowtheir effective management.Once the actual spend is available, all CAMs are responsible for verifying

that they are both accurate and a true reflection of the actual costs of per-forming the work in that period. Material costs should also be collected in the same period as the earned

value is claimed. This may require the use of estimated actuals or accruals. A process to check the accuracy of the actual costs should be developed and

performed periodically. Corrections to actual costs should be appropriatelydocumented.If there are differences between the finance systems and the EVMS it should

be possible to identify and determine the reason for the differences.

Attribute 17 – schedule progress and control

Aim:

• To ensure that the schedule is updated and analysed to capture progress


21

and determine the performance against the baseline, enabling informedmanagement actions.

Reason:

• Establishing earned value performance requires the schedule progress tobe captured on a periodic basis.


Every period, schedule progress and achievement (i.e. earned value) are col-lected and processed. Schedule variances against the baseline should bedetermined and reported. Critical path analysis of the current schedule andbaseline schedule should be performed. Float should also be determined. Asa result of the analysis information, management actions (corrective actions)are determined and implemented. Schedule progress and control will also allow the impact to current resource

plans to be evaluated and an estimate to complete to be generated for theremaining work.

Attribute 18 – data integrity

Aim:

• To ensure that data is checked for accuracy.

Reason:

• To provide confidence that it is accurate enough to support managementdecisions.


Checking processes should be in place to identify errors in the EVM data set.Any adjustments required must be to correct errors. Any financial transfersthat are required should be made in the period following the error. Genuinecost variances should not be disguised through this process

Attribute 19 – estimate at complete (EAC)

Aim:

• To ensure that the project generates a valid estimate at complete (includingcost and schedule).

Reason:

• The EAC provides an indication of the final funding requirements for theproject, in addition to the likely completion date. (See also Attribute 17 –schedule progress and control)


22


There are two main types of EAC:

• a CAM estimate* of the resources over time required to complete the workpackage

• independent estimates based upon standard EV calculations.

When establishing an ETC the following aspects should be considered:

• Past performance (efficiency) and trends.• Costs incurred to date.• Commitments placed (to date and potential future).• Required efficiency to ‘recover’ variances.• Technical assessment of remaining activities.• Anticipated future efficiency (should relate to past performance).• Forecast of schedule (time) to complete activity.• Associated risks with remaining activity.• Future economic conditions, e.g. rate changes, escalation indices, revised

supplier contracts.• Previous ETC trend.

Independent estimate: there is a range of standard independent estimates atcomplete (IEAC) calculation formulae that can be used to identify the poten-tial project out-turn based upon performance to date. These are outlined inthe Earned Value Management: APM Guidelines.The CAM EAC should be compared to the standard IEAC calculations

that are based on previous performance to provide a check on their realism.

Attribute 20 – supplier management and reporting

Aim:

• To ensure that supplier performance reporting is aligned with therequirements of the project, to enable effective supplier management.

Reason:

• Significant areas of projects are often managed and delivered by suppliers.It is important that these suppliers report relevant, agreed progressinformation periodically.

*CAM estimate: this is typically done by determining the estimate to complete (ETC)for each work package and summing it with the actual cost to date to produce theEAC.


23


Sub-contractors should provide a periodic progress report which containsinformation relevant to the nature of the procurement (see Attribute 14 – supplier schedule integration). It is important that there is verification of theaccuracy of the supplier information. This may be achieved during perform-ance reviews with the supplier or by physical on site verification.

Attribute 21 – risk and opportunity management

Aim:

• To ensure that there is alignment between the risk management and earnedvalue management processes.

Reason:

• The risk management processes within a project overlap with the EVMprocesses, particularly around unplanned work-scope and estimate atcompletion.


Risk and opportunity management is an integral part of EVM and is con-cerned with managing threats to the baseline. The management of opportu-nity is concerned with improving performance against the baseline. Earned value and risk and opportunity management are fully integrated

into the project team’s project management and control processes, and regu-lar reviews which seek to maintain or improve this position are undertaken.Approved and budgeted risk mitigation or opportunity realisation activi-

ties should be included in the baseline project master schedule. The con-sumption of management reserve should be tracked in relation to theremaining risk exposure of the project.

Attribute 22 – baseline change management

Aim:

• To ensure that changes to the performance measurement baseline (the‘baseline’) are carried out in a timely and controlled manner.

Reason:

• The baseline should contain the complete, agreed scope of work. Asprojects progress change is inevitable; the introduction of these changesinto the baseline must be controlled.


24


To ensure that the project is managed in a controlled manner it is importantthat all changes are embodied into the PMB in an orderly, controlled and doc-umented manner. Change management addresses the controlled processwhereby the project incorporates formal change, conducts internal re-planning and adjusts past, present and future information to incorporatechanges. The baseline change process exists in order to ensure all requests for change

are recorded, progressed and tracked in a timely manner. Change can berequested through four sources: the project, CAM, customer or sub-contrac-tor. Where it impacts the baseline then the associated CAM must define theimpacts on work-scope, schedule, budget and product configuration. Thelevel of authority for approving PMB changes must be clearly defined ineither the project management plan or a project control plan and any changesthat are approved must be implemented within the PMB in a timely manner. Budgets should not be transferred without corresponding work-scope.

Change should also not be used to remedy or hide poor performance.

Attribute 23 – senior management usage

Aim:

• To ensure that EVM information is available to senior management toinform decision making during project, programme and portfolio reviews.

Reason:

• Senior management staff must have a basic understanding of EVM to beable to interpret the data that they receive. They may also need to beinvolved in providing project direction should variances becomesignificant.


Adopting the principle of management by exception, there may be timeswhen senior management need to become involved in the project decision-making process. It is important that the senior management team have aclear understanding of EVM in project management and are able to interpretthe information provided.

Attribute 24 – customer involvement

Aim:

• To ensure that EVM is operated in a manner that allows customerinvolvement.


25

Reason:

• To ensure that where the customer is involved, EVM is used in an open andtransparent manner.


The customer is typically the client or organisation that is funding the project. The nature of customer involvement may be largely shaped by whether the

customer has stated the requirement for EVM within the contract or if theproject is using EVM as part of its standard company policy. If the customerhas specified EVM, the expectation is that they have an active interest inEVM and would receive the relevant EVM reports. They would typically beinvolved in the decision-making process and be party to recovery planning.

EVM GOAL

Attribute 25 – EVM as a decision support tool

Aim:

• To ensure that EVM information forms a key component of project per-formance management reviews.

Reason:

• The value provided by EVM is achieved through using the data to makeinformed decisions. Producing EV data but not linking this to the decision-making process does not meet the aims of the process.


The purpose of EVM is to provide management information to make betterdecisions. The EVM data should be used during project performance reviewsto report the status of the project against the performance measurement base-line (PMB). Variance to include explanation, impact, actions, summary from last period

– so management can understand how this is affecting the project/programme and show what has previously been done (from summary) – giving continuity of the issue and showing closure.The requirement for a variance report is typically triggered by establishing

cost, schedule and EAC thresholds. Variance reporting facilitates manage-ment by exception.

26

EV

M c

omp

ass

qu

esti

ons

12

34

5C

omm

ents

As

isTo

be

EVM

foun

datio

ns

1.Ea

rned

val

ue m

anag

emen

t co

mpe

tenc

ies

Littl

e or

no

trai

ning

in th

e co

ncep

tsof

EV

M is

ava

il-ab

le a

nd ta

ke-u

pis

inco

nsis

tent

.

Form

al tr

aini

ng a

nd a

budg

et to

sup

port

its

roll-

out e

xist

s in

the

conc

epts

of E

VM

for

all k

ey ro

les

with

in th

epr

ojec

t org

anis

atio

nbu

t tak

e-up

is in

con-

sist

ent.

Ther

e is

littl

eor

no

prev

ious

exp

eri-

ence

of E

VM

sys

tem

impl

emen

tatio

n w

ithin

the

team

.

Coo

rdin

ated

, fun

ded

trai

ning

pro

vide

s co

n-si

sten

cy in

EV

Map

proa

ch a

nd a

ll te

amm

embe

rs h

ave

been

suff

icie

ntly

trai

ned

inEV

M to

fulfi

l the

ir ro

les.

Refr

eshe

r and

mor

ead

vanc

ed E

VM

trai

ning

is p

rovi

ded

to th

ose

that

requ

ire it

. The

team

is a

lso

able

to d

raw

upon

the

prev

ious

impl

emen

tatio

n ex

peri-

ence

of e

ither

team

mem

bers

or s

uppo

rtpe

rson

nel.

Trai

ning

is li

nked

into

per

son-

nel d

evel

opm

ent

proc

esse

s. T

rain

ing

and

com

pete

ncy

reco

rds

are

mai

ntai

ned.

Pre

viou

s ex

pe-

rienc

e of

EV

M s

yste

mim

plem

enta

tion

is c

onsi

d-er

ed a

cru

cial

ele

men

tw

hen

cons

truc

ting

proj

ect

team

s. P

roje

ct te

ams

are

supp

orte

d by

sta

ff w

ith th

ekn

owle

dge

to im

plem

ent

an a

ppro

pria

tely

sca

led

EVM

S fo

r the

pro

ject

and

then

sup

port

its

use

thro

ugh

initi

al m

onth

s or

data

chu

rn a

nd re

view

.

Trai

ning

cou

rses

are

tailo

red

to m

eet

spec

ific

proj

ect

need

s an

d th

eco

urse

mat

eria

l is

perio

dica

llyup

date

d to

refle

ctle

sson

s le

arne

dfr

om p

roje

cts.

Thes

e le

sson

s ar

eth

en d

irect

ly fe

din

to n

ew p

roje

cts

whe

n fo

rmin

g th

ete

ams.

2.Sp

onso

rshi

p

The

EVM

sys

tem

ises

tabl

ishe

d w

ith-

out t

he s

uppo

rtor

com

mitm

ent

of a

sen

ior

man

ager

.

The

EVM

sys

tem

ises

tabl

ishe

d w

ith th

epa

ssiv

e su

ppor

t of a

seni

or m

anag

er.

The

EVM

spo

nsor

pro

-vi

des

proa

ctiv

e w

ith v

is-

ible

sup

port

pro

vidi

ngcl

ear t

actic

al d

irect

ion.

The

EVM

spo

nsor

pro

vide

sst

rate

gic

dire

ctio

n on

the

use

of E

VM

acr

oss

the

busi

ness

and

into

the

cus-

tom

er a

nd s

uppl

ier c

hain

s.

EVM

spo

nsor

ship

and

adop

tion

isac

tivel

y su

p-po

rted

by

all

appr

opria

te s

en-

ior m

anag

emen

tte

am m

embe

rs.

Organisation

27

12

34

5C

omm

ents

As

isTo

be

EVM

bas

ics

3.Pr

ojec

t le

vel a

utho

risa

tion

The

proj

ect h

as c

om-

men

ced

with

no

form

al a

utho

risa-

tion

docu

men

ta-

tion

from

the

appr

oval

auth

ority

.

The

appr

oval

aut

horit

yha

ve s

anct

ione

d th

epr

ojec

t usi

ng a

form

alpr

oces

s. R

espo

nsib

ility

,ac

coun

tabi

lity,

and

auth

ority

for d

eliv

erin

gth

e pr

ojec

t wor

k sc

ope

are

held

by

an a

utho

-ris

ed in

divi

dual

.

The

proj

ect o

rgan

isat

iona

lst

ruct

ure

is d

efin

ed a

nddo

cum

ente

d, in

clud

ing

the

maj

or s

ubco

ntra

ctor

sre

spon

sibl

e fo

r acc

om-

plis

hing

the

auth

oris

edw

ork.

Res

pons

ibili

ty,

acco

unta

bilit

y, a

ndau

thor

ity fo

r pro

ject

wor

k sc

ope

are

held

by

the

seni

or p

roje

ct m

an-

ager

and

del

egat

edap

prop

riate

ly. O

rgan

isa-

tiona

l res

pons

ibili

ty is

defin

ed fo

r all

elem

ents

of w

orki

ng u

sing

an

OBS

. All

activ

ities

are

assi

gned

to a

n el

emen

tof

the

OBS

. A d

ocu-

men

ted

corr

elat

ion

exis

tsbe

twee

n th

e W

BS a

ndO

BS, u

tilis

ing

the

Resp

onsi

bilit

y A

ssig

n-m

ent M

atrix

(RA

M).

Resp

onsi

ble

man

ager

s (R

Ms)

have

fully

doc

umen

ted

scop

e, d

eliv

erab

les,

bud

get,

assu

mpt

ions

, and

exc

lusi

ons

for t

heir

elem

ents

of w

ork.

The

OBS

is s

ubje

ct to

form

alch

ange

con

trol

. OBS

and

RAM

are

mai

ntai

ned.

This

leve

l con

side

red

and

left

blan

k.

4.W

ork

defin

ition

Ther

e is

no

form

alW

BS o

r onl

y an

outli

ne W

BSex

ists

.

Scop

e is

doc

umen

ted

and

deco

mpo

sed

into

mea

ning

ful,

man

age-

able

ele

men

ts. A

reco

gnis

ed w

ork

brea

kdow

n st

ruct

ure

and/

or o

ther

app

ropr

i-at

e st

ruct

ure

e.g.

pr

oduc

t bre

akdo

wn

stru

ctur

e (P

BS) i

ses

tabl

ishe

d.

All

auth

oris

ed w

ork

ele-

men

ts a

re d

efin

ed fo

r the

proj

ect.

A w

ork

brea

k-do

wn

stru

ctur

e (W

BS) i

sus

ed in

this

pro

cess

.W

BS e

lem

ents

are

appr

opria

tely

doc

u-m

ente

d. T

he p

roje

ctob

ject

ives

are

cle

arly

defin

ed a

nd d

ocum

ente

dan

d re

late

d to

the

WBS

.Th

e sc

ope

of w

ork

isun

der c

onfig

urat

ion

con-

trol

. The

sco

pe is

doc

u-m

ente

d in

an

audi

tabl

ean

d tr

acea

ble

way

(e.g

.W

BS d

ictio

nary

).

A s

yste

mat

ic p

roce

ss, s

uch

asus

ing

stan

dard

WBS

str

uc-

ture

s to

ena

ble

stan

dard

ised

repo

rtin

g, d

ecom

pose

s pr

ojec

t req

uire

men

ts a

ndid

entif

ies

the

scop

e of

wor

kne

cess

ary

to d

eliv

er th

ese

requ

irem

ents

. The

link

betw

een

cust

omer

requ

ire-

men

ts a

nd W

BS e

lem

ents

iscl

early

def

ined

. The

impa

ctof

cha

nges

to s

cope

, tec

hni-

cal s

peci

ficat

ion

or re

quire

-m

ent a

re a

sses

sed

for t

heir

impa

ct o

n th

e W

BS s

truc

-tu

re a

nd it

s do

cum

enta

tion.

The

stru

ctur

e of

the

WBS

is re

view

ed to

ensu

re th

at fu

ture

proj

ects

ben

efit

from

any

less

ons

lear

ned,

part

icul

arly

rela

ting

to h

ow fa

r it f

acili

-ta

ted

good

dis

sem

i-na

tion

of w

ork

prod

ucts

, col

lect

ion

of p

erfo

rman

ce d

ata

and

resu

lting

abi

lity

to c

ontr

ol th

e pr

ojec

t.

(Con

tinue

d on

follo

win

g pa

ge)

Organisation

28

12

34

5C

omm

ents

As

isTo

be

EVM

bas

ics

5.D

etai

l wor

k au

thor

isat

ion

and

budg

et a

ssig

nmen

t

Ther

e is

no

mec

ha-

nism

for f

orm

alau

thor

isat

ion

ofw

ork

and

budg

ets.

Ther

e is

a fo

rmal

mec

ha-

nism

for w

ork

auth

ori-

satio

n bu

t it i

sin

cons

iste

ntly

app

lied

and

budg

et is

not

alw

ays

asso

ciat

ed w

ithw

ork

scop

e.

The

budg

et/w

ork/

sche

dule

is fo

rmal

lyau

thor

ised

prio

r to

wor

kco

mm

enci

ng. T

ask

own-

ers

have

form

ally

agr

eed

to c

ompl

ete

the

wor

k as

defin

ed. B

udge

ts a

rees

tabl

ishe

d (b

y co

ntro

lac

coun

t or o

ther

aut

ho-

rised

low

-leve

l acc

ount

)fo

r aut

horis

ed w

ork.

Budg

ets

are

cons

iste

ntw

ith re

sour

ces

appl

ied

tosc

hedu

les.

Bud

get i

s di

s-tr

ibut

ed fo

r dur

atio

n of

cont

rol a

ccou

nts.

For

mal

man

agem

ent p

roce

dure

sex

ist t

o op

en/c

lose

/su

spen

d w

ork

but

ther

e is

inco

nsis

tent

appl

icat

ion.

CA

Ms

man

age

a to

tal b

udge

t(£

, $) a

nd a

re re

spon

sibl

efo

r mat

eria

l pur

chas

es a

sw

ell a

s m

an-h

ours

. For

mal

clos

ure

proc

esse

s an

dm

echa

nism

s o

nce

the

wor

ksc

ope

has

been

com

plet

edan

d ar

e co

nsis

tent

lyap

plie

d.

Budg

ets

and

actu

al c

ost

are

used

to in

form

futu

re e

stim

atin

g.

6.R

espo

nsib

ility

and

acc

ount

abili

ty

Ther

e ar

e no

per

-so

nal t

erm

s of

ref-

eren

ce (T

ORs

)is

sued

that

are

appr

opria

te to

the

proj

ect.

The

seni

or p

roje

ct m

an-

agem

ent t

eam

hav

ebe

en is

sued

with

appr

opria

te T

ORs

that

have

bee

n co

mm

uni-

cate

d to

all

man

age-

men

t sta

ff w

ithin

the

orga

nisa

tion.

The

proj

ect m

anag

emen

tte

am (i

nclu

sive

of

CA

Ms)

hav

e be

en is

sued

with

app

ropr

iate

TO

Rsth

at h

ave

been

com

mu-

nica

ted

to a

ll m

anag

e-m

ent s

taff

with

in th

eor

gani

satio

n. T

here

are

clea

r rep

ortin

g lin

es to

both

the

proj

ect m

anag

e-m

ent t

eam

and

func

tiona

lm

anag

emen

t whe

reap

prop

riate

.

Ther

e is

a c

hang

epr

oces

s/fe

edba

ck in

TO

Rsan

d fo

r the

han

d ov

er o

fsc

ope

and

budg

et b

etw

een

CA

Ms,

whi

ch a

re m

ain-

tain

ed o

ver t

he p

roje

ct li

feto

pro

vide

con

sist

ency

.

The

indi

vidu

als

TORs

are

inte

grat

ed w

ithth

eir r

espe

ctiv

e H

Rpe

rson

al d

evel

op-

men

t pla

ns fo

r per

-so

nal o

bjec

tives

.

Organisation

29

7.M

ater

ial m

anag

emen

t

Mat

eria

ls a

reex

clud

ed fr

om th

eea

rned

val

ue m

an-

agem

ent s

yste

m(E

VM

S).

Mat

eria

l/co

nsum

able

sbu

dget

s ar

e in

clud

ed in

the

EVM

S an

d ar

e se

p-ar

ated

into

app

ropr

iate

wor

k an

d pl

anni

ngpa

ckag

es.

Mat

eria

l/co

nsum

able

sbu

dget

s ar

e in

clud

ed in

the

EVM

S w

ith a

ppro

pri-

ate

mea

sure

s of

pro

gres

san

d ap

prop

riate

act

ual

cost

col

lect

ion

mec

ha-

nism

s ar

e em

ploy

ed.

Mat

eria

ls/c

onsu

mab

les

can

betr

aced

from

the

purc

hase

orde

r req

uire

men

t dat

eth

roug

h to

the

need

dat

e.M

ater

ial c

osts

with

in th

eEV

MS

can

be tr

aced

to th

epu

rcha

se o

rder

.

Mat

eria

l/co

nsum

able

sbu

dget

s an

d ac

tual

cost

are

use

d to

info

rm fu

ture

est

imat

-in

g. R

esid

ual i

nven

-to

ry h

as a

ppro

pria

tedi

spos

al c

ontr

ols

with

in th

e EV

MS.

8. B

asis

of e

stim

ate

Ther

e is

an

abse

nce

of e

stim

atin

g.Th

ere

is a

reco

rd o

f the

cost

and

sch

edul

e es

ti-m

ates

but

form

al e

sti-

mat

ing

tech

niqu

es a

ndpr

oces

ses

have

not

been

app

lied.

A fo

rmal

str

uctu

red

esti-

mat

e ha

s be

en g

ener

ated

follo

win

g st

anda

rd e

sti-

mat

ing

proc

edur

es. A

llco

st a

nd s

ched

ule

esti-

mat

ing

assu

mpt

ions

are

fully

doc

umen

ted.

Estim

ate

is b

ased

on

prev

ious

proj

ect n

orm

s, h

isto

rical

data

, or p

aram

etric

est

imat

-in

g. A

ll es

timat

ing

assu

mp-

tions

are

fully

doc

umen

ted.

The

estim

ate

has

been

revi

ewed

by

an in

de-

pend

ent a

utho

rity.

Upo

n co

mpl

etio

n of

proj

ects

the

actu

alpe

rfor

man

ce d

ata

isus

ed to

info

rm fu

ture

estim

ates

/upd

ate

proj

ect n

orm

s.

9.M

anag

emen

t re

serv

e (c

ost

and

sche

dule

)

The

auth

oris

ed p

roj-

ect b

udge

t doe

sno

t con

tain

any

man

agem

ent

rese

rve

(MR)

.

The

auth

oris

ed p

roje

ctbu

dget

doe

s co

ntai

n an

elem

ent f

or M

R bu

tca

n no

t be

subs

tant

i-at

ed.

MR

has

been

iden

tifie

d an

dca

n be

sub

stan

tiate

d by

rela

tion

to th

e ris

k re

gis-

ter a

nd b

y us

ing

one

orm

ore

of th

e fo

llow

ing:

- ris

k as

sess

men

t/an

alys

is-

prev

ious

pro

ject

out

turn

s -

indu

stry

nor

ms

- co

nfid

ence

mod

ellin

gTh

e ch

ange

con

trol

pro

cess

is u

sed

to m

anag

ech

ange

s to

the

MR.

The

MR

budg

et is

man

aged

on

a re

gula

r bas

is in

ligh

t of

outs

tand

ing

risks

and

oppo

rtun

ities

. Con

fiden

cem

odel

ling

is u

sed

on a

regu

-la

r bas

is to

sup

port

the

MR

budg

et.

Met

rics

on th

e dr

aw-

dow

n an

d us

e of

MR

are

man

aged

and

fed

back

into

the

estim

at-

ing

and

risk

asse

ss-

men

t sta

ndar

ds.

10.

Supp

lier

budg

et in

tegr

atio

n

No

supp

lier/

part

ner

budg

et d

ata

isen

tere

d in

to th

epr

ojec

t EV

MS.

Supp

lier/

part

ner b

udge

tda

ta is

ent

ered

into

the

proj

ect E

VM

S at

a le

vel

inap

prop

riate

to th

ena

ture

of t

he p

rocu

red

item

.

Supp

lier/

part

ner b

udge

tde

tail

is e

nter

ed in

to th

epr

ojec

t EV

MS

at a

leve

lap

prop

riate

to th

e na

ture

of th

e pr

ocur

ed it

em.

The

supp

lier/

part

ner

budg

et d

ata

with

in th

epr

ojec

t EV

MS

is a

ppro

-pr

iate

ly a

ligne

d w

ith th

ede

taile

d in

form

atio

nw

ithin

the

supp

lier/

part

ner p

roje

ct m

anag

e-m

ent s

yste

m (w

hich

coul

d be

an

EVM

S).

Ther

e is

eff

ectiv

e ch

ange

cont

rol b

etw

een

the

proj

ect

and

supp

lier/

part

ner b

udg-

ets

ensu

ring

that

the

base

-lin

e bu

dget

is a

ligne

d at

all

times

.

Ther

e is

full

inte

grat

ion

of c

omm

erci

al a

ndpr

ojec

t pro

cess

esen

ablin

g a

colla

bora

-tiv

e op

erat

ing

envi

-ro

nmen

t bet

wee

n th

epr

ojec

t and

sup

plie

rsth

at is

ope

n to

inde

-pe

nden

t ver

ifica

tion

of p

erfo

rman

ce.

(Con

tinue

d on

follo

win

g pa

ge)

Organisation Budget

12

34

5C

omm

ents

As

isTo

be

30

12

34

5C

omm

ents

As

isTo

be

EVM

bas

ics

11.

Sche

dule

str

uctu

re a

nd c

onte

nt

A ti

me

phas

ed b

asis

sche

dule

exi

sts

but i

t con

tain

s lit

tlede

tail.

Low

-leve

lan

d hi

gh-le

vel

activ

ities

are

mix

ed. T

here

are

few

logi

c lin

ked

activ

ities

. Con

-st

rain

ts a

re u

sed

toac

hiev

e tim

e ph

as-

ing.

If a

var

iety

of

sche

dule

s ex

ist i

tis

not

cle

ar w

hich

has

prec

eden

ce.

Ther

e is

a s

ingl

e tim

eph

ased

sch

edul

e bu

tth

ere

is in

cons

iste

ncy

in th

e us

e of

logi

c, c

on-

stra

ints

and

act

ivity

defin

ition

suc

h th

at th

eva

lidity

of t

he c

ritic

alpa

th c

an n

ot b

e su

bsti-

tute

d.

A ti

me

phas

ed s

ched

ule

exis

ts a

t an

appr

opria

tele

vel o

f det

ail s

truc

ture

dor

can

be

map

ped

to th

eW

BS. T

he C

P ca

n be

subs

tant

iate

d. V

ertic

alan

d ho

rizon

tal t

race

abil-

ity c

an b

e de

mon

stra

ted.

The

stru

ctur

e of

the

sche

dule

sup

port

s an

appr

opria

te h

iera

rchy

of

sche

dule

s. A

rtifi

cial

con

-st

rain

ts a

re n

ot u

sed

tore

plac

e lo

gic.

Sup

plie

rsc

hedu

les

are

appr

opri-

atel

y re

pres

ente

d in

the

proj

ect s

ched

ule.

Supp

lier a

nd c

usto

mer

sch

ed-

ules

are

ver

tical

ly a

ligne

d.C

reat

ion

of th

e pr

ojec

tsc

hedu

le is

fully

inte

grat

edw

ith th

e pr

ojec

t pro

cess

es(e

.g. b

asel

ine

chan

ge, f

ore-

cast

ing,

risk

, res

ourc

e m

an-

agem

ent)

and

the

stru

ctur

esu

ppor

ts th

e m

anag

emen

tof

the

orga

nisa

tions

por

tfo-

lio o

f pro

ject

s (in

clud

ing

ente

rpris

e-w

ide

reso

urce

plan

ning

, for

ecas

ting

and

risk

miti

gatio

n ac

tiviti

es).

Adv

ance

d sc

hedu

ling

tech

niqu

es e

.g.

reso

urce

leve

lling

,M

onte

Car

lo s

ched

-ul

e ris

k an

alys

is a

reus

ed s

yste

mat

ical

ly in

optim

isin

g th

e sc

hedu

le.

12.

Sche

dule

res

ourc

e al

loca

tion

The

sche

dule

is n

otre

sour

ced.

The

sche

dule

is p

artia

llyre

sour

ced

but n

ot a

tth

e le

vel t

hat p

erm

itsre

sour

ce le

velli

ng to

be

effe

cted

.

Reso

urce

s ar

e de

fined

tosu

ffic

ient

gra

nula

rity

allo

win

g ef

fect

ive

reso

urce

leve

lling

to b

eco

nduc

ted

at a

ctiv

ityle

vel a

nd th

is le

velli

ngha

s be

en p

erfo

rmed

.

The

curr

ent v

ersi

on o

f the

sche

dule

is m

aint

aine

d to

refle

ct fu

ture

reso

urce

requ

irem

ents

thro

ugho

utth

e lif

e of

the

proj

ect a

ndle

velli

ng is

app

lied

tode

mon

stra

te a

ppro

pria

teal

loca

tion.

The

effe

ctiv

enes

s of

reso

urce

allo

catio

n is

revi

ewed

to e

nsur

efu

ture

reso

urce

opt

i-m

isat

ion

and

this

isfu

lly in

tegr

ated

with

ente

rpris

e-w

ide

reso

urce

pla

nnin

g.

Schedule management

31

13.

Obj

ectiv

ity o

f EV

pro

gres

s as

sess

men

t

Form

al e

arne

d va

lue

tech

niqu

es (E

VTs

)ar

e no

t use

d. L

evel

of e

ffor

t (Lo

E)ac

coun

ts fo

r the

maj

ority

of t

hepe

rfor

man

cem

easu

rem

ent

base

line

(PM

B).

EV is

ass

esse

d ba

sed

onsc

hedu

le p

erce

nt c

om-

plet

e or

sch

edul

e w

ork

rem

aini

ng. L

OE

iscl

early

iden

tifie

d b

ut is

inap

prop

riate

ly a

pplie

don

dis

cret

e m

easu

rabl

eta

sks.

EV is

rela

ted

to p

hysi

cal

prod

ucts

, mile

ston

es,

tech

nica

l per

form

ance

goal

s, a

nd/o

r oth

er

indi

cato

rs u

sed

to

mea

sure

pro

gres

s.

Thei

r use

ext

ends

to s

up-

plie

rs a

s ap

prop

riate

.LO

E is

cle

arly

iden

tifie

dan

d it

is ti

me

phas

ed to

prop

erly

refle

ct w

hen

wor

k w

ill b

e ac

com

-pl

ishe

d. L

OE

can

be s

eg-

rega

ted

for r

epor

ting

purp

oses

. The

EV

T us

edfo

r eac

h w

ork

pack

age

isfo

rmal

ly d

ocum

ente

d.

The

amou

nt o

f LO

E is

opt

i-m

ised

app

ropr

iate

ly fo

rth

e pr

ojec

t. W

here

dis

-cr

ete

mea

sure

s ca

n no

tbe

iden

tifie

d ap

por-

tione

d ef

fort

is a

pplie

d in

pref

eren

ce to

LO

E. F

or-

mal

doc

umen

tatio

n(s

uch

as th

e sy

stem

desc

riptio

n) e

xist

s st

at-

ing

how

EV

Ts a

re d

eter

-m

ined

and

use

d (e

.g.

expl

aini

ng h

ow %

com

-pl

ete

is im

plem

ente

d).

EVTs

are

revi

ewed

in li

ght o

fpr

ojec

t exp

erie

nce

and

this

is fe

d ba

ck in

to th

ede

finiti

on o

f EV

mea

sure

-m

ent t

ypes

and

sup

port

-in

g m

etric

s.

14.

Supp

lier

sche

dule

inte

grat

ion

Supp

lier/

part

ner

sche

dule

sta

n-da

rds

are

iIIde

fined

and

ther

eis

irre

gula

r pro

vi-

sion

of s

ched

ule

info

rmat

ion

from

supp

liers

/pa

rtne

rs.

Sche

dulin

g re

quire

men

tsar

e ap

prop

riate

lyflo

wed

-dow

n to

sup

pli-

ers/

part

ners

. Bas

elin

esc

hedu

les

are

prov

ided

but a

re n

ot in

corp

o-ra

ted

into

the

base

line

proj

ect m

aste

rsc

hedu

le.

Supp

lier/

part

ner m

ilest

ones

and

lead

-tim

es a

re in

cor-

pora

ted

into

the

base

line

proj

ect m

aste

r sch

edul

e.A

ll de

pend

enci

esbe

twee

n te

ams

have

been

iden

tifie

d an

d do

c-um

ente

d.

Ther

e is

eff

ectiv

e ch

ange

cont

rol b

etw

een

the

proj

ect a

nd s

up-

plie

r/pa

rtne

r sch

edul

esen

surin

g th

at th

e ba

se-

line

and

fore

cast

sch

ed-

ules

are

alig

ned

at a

lltim

es.

Fore

cast

sch

edul

es a

rere

view

ed a

nd c

halle

nged

with

refe

renc

e to

indu

stry

norm

s an

d/or

revi

sed

reso

urce

requ

irem

ents

and

avai

labi

lity.

15.

Proc

ess

docu

men

tatio

n an

d co

nsis

tenc

y of

app

licat

ion

Littl

e or

no

proc

ess

docu

men

tatio

nex

ist t

o su

ppor

tth

e ap

plic

atio

n of

EVM

.

Doc

umen

ted

EVM

proc

esse

s ex

ist b

utth

ere

is in

cons

iste

ntad

here

nce.

The

EV

Mpr

oces

ses

are

not i

nte-

grat

ed w

ith th

e w

ider

busi

ness

pro

cess

es.

A fo

rmal

doc

umen

ted

EVM

proc

ess

exis

ts (e

.g. a

sys

-te

m d

escr

iptio

n). T

here

is c

onsi

sten

t adh

eren

ceto

the

proc

esse

s. T

heEV

M p

roce

sses

are

fully

inte

grat

ed w

ith o

ther

busi

ness

and

pro

ject

proc

esse

s. T

he E

VM

Spr

oces

ses

are

unde

rco

nfig

urat

ion

cont

rol.

Gen

eric

EV

M p

roce

sses

may

be

tailo

red

with

guid

elin

es to

mee

t spe

-ci

fic lo

cal r

equi

rem

ents

in th

e fo

rm o

f loc

al p

roj-

ect i

nstr

uctio

ns fo

r dif-

fere

nt p

roje

cts.

Any

lo

cal p

roje

ct in

stru

ctio

nsar

e un

der c

onfig

urat

ion

cont

rol.

Con

tinuo

us m

onito

ring

ofpr

oces

s ap

plic

atio

n is

inpl

ace.

Poo

r pro

cess

per

-fo

rman

ce is

isol

ated

, and

corr

ectiv

e ac

tion

plan

s ar

eim

plem

ente

d. P

roce

ssim

prov

emen

ts a

re id

enti-

fied

and

docu

men

ted,

and

intr

oduc

ed u

nder

con

figu-

ratio

n co

ntro

l. Im

plem

en-

tatio

n of

pro

cess

cha

nges

are

rolle

d ou

t to

user

s in

atim

ely

man

ner.

(Con

tinue

d on

follo

win

g pa

ge)

Schedule management Process

12

34

5C

omm

ents

As

isTo

be

32

12

34

5C

omm

ents

As

isTo

be

Exec

ute

EVM

16.

Act

ual c

ost

colle

ctio

n

The

proc

ess

for

actu

al c

ost a

reco

llect

ion

is n

otde

fined

. Cos

tsco

llect

ed a

t the

proj

ect l

evel

.

Cos

ts (£

) are

col

lect

edat

Con

trol

Acc

ount

(CA

) lev

el o

n a

mon

thly

bas

is. T

here

is in

cons

iste

nt c

ost

allo

catio

n an

d ac

cu-

racy

. Sub

-con

trac

t or

mat

eria

l cos

ts a

reno

t alw

ays

repo

rted

with

in th

e sa

me

acco

untin

g pe

riod

asth

e as

soci

ated

earn

ed v

alue

iscl

aim

ed, l

eadi

ng to

cost

var

ianc

e.

Cos

ts (£

and

uni

ts) a

re c

ol-

lect

ed in

the

EVM

S at

CA

leve

l as

a m

inim

um o

n a

mon

thly

bas

is. T

here

is a

form

al p

roce

ss fo

r che

ck-

ing

and

corr

ectin

g er

rors

that

ens

ures

con

sist

ent,

accu

rate

cos

t allo

catio

n.Th

e ac

coun

ting

polic

y fo

rdi

ffer

ent c

ost t

ypes

(e.g

.ov

erhe

ad, G

&A

, dire

ct,

mat

eria

ls) i

s cl

early

defin

ed a

nd c

onsi

sten

tlyap

plie

d. S

ubco

ntra

ct o

rm

ater

ial c

osts

are

repo

rted

with

in th

e sa

me

acco

untin

g pe

riod

as th

eas

soci

ated

ear

ned

valu

e is

clai

med

. Whe

re m

ater

ial

actu

als

are

not a

vaila

ble,

estim

ated

act

uals

or

accr

uals

are

use

d.

Cos

ts (£

and

uni

ts) a

re c

ol-

lect

ed in

the

EVM

S at

wor

k pa

ckag

e (W

P) le

vel

as a

min

imum

on

aw

eekl

y ba

sis.

The

‘act

ual

cost

’ ref

lect

s ac

crua

ls &

com

mitm

ents

plu

s ot

her

defin

ed a

djus

tmen

ts a

ndca

n be

fully

reco

ncile

dw

ith th

e ac

coun

ting

sys-

tem

s.

Proc

ess

adhe

renc

eon

cos

t col

lect

ion

usin

g m

etric

s is

appl

ied

and

sys-

tem

ic is

sues

(e.g

.tim

ing)

are

cor

-re

cted

in a

tim

ely

fash

ion.

17.

Sche

dule

pro

gres

s an

d co

ntro

l

The

sche

dule

is p

ro-

gres

sed

in a

nin

cons

iste

nt a

ndirr

egul

ar m

anne

r.Th

ere

is n

o re

fer-

ence

to p

erfo

rm-

ance

aga

inst

the

base

line.

The

sche

dule

is c

onsi

s-te

ntly

pro

gres

sed

base

d on

wor

k ac

com

-pl

ishe

d on

a re

gula

rba

sis

- at l

east

mon

thly

.Th

ere

is n

o re

fere

nce

to p

erfo

rman

ce a

gain

stth

e ba

selin

e.

Regu

lar v

aria

nce

anal

ysis

ispe

rfor

med

on

curr

ent

sche

dule

vs.

bas

elin

ecr

itica

l pat

h an

d flo

atan

alys

is is

con

duct

ed.

Shor

t ter

m re

cove

rypl

anni

ng is

use

d on

am

onth

ly b

asis

. On

am

onth

ly b

asis

long

term

sche

dule

fore

cast

toco

mpl

etio

n is

con

duct

ed.

Proj

ect s

ched

ules

are

revi

ewed

and

pro

gres

sed

on a

wee

kly

basi

s to

redi

rect

shor

t ter

m re

cove

ry p

lans

whe

re a

ppro

pria

te. F

orm

alre

cove

ry p

lans

are

util

ised

to e

ffec

t rec

over

y ac

tion.

On

a re

gula

r bas

is th

ere

is in

depe

nden

t ver

ifi-

catio

n of

pro

gres

s to

date

and

val

idat

ion

ofth

e sc

hedu

le to

com

-pl

etio

n. L

esso

nsle

arnt

dur

ing

thes

ere

view

s ar

e fe

d ba

ckin

to th

e sc

hedu

ling

proc

esse

s.

Execution

33

18.

Dat

a in

tegr

ity

Ther

e is

littl

e or

no

unde

rsta

ndin

g of

data

inte

grity

with

in th

e pr

ojec

t.al

l dat

a is

trea

ted

as a

ccur

ate

with

-ou

t che

cks.

Ther

e is

an

unac

cept

able

leve

l of e

rror

s in

out

put

data

(acr

oss

earn

edva

lue,

act

ual c

ost a

ndpl

anne

d va

lue

data

)th

at h

as a

det

rimen

tal

impa

ct o

n th

e in

tegr

ityof

the

proj

ect d

ata

set.

Ther

e is

an

acce

ptab

le le

vel

of e

rror

s in

out

put d

ata

that

has

a m

inim

al im

pact

on th

e in

tegr

ity o

f the

proj

ect d

ata

set.

Dis

crep

-an

cies

are

iden

tifie

d,as

sess

ed a

nd m

anag

ed.

The

proj

ect a

ctiv

ely

atte

mpt

sto

redu

ce re

sidu

al d

ata

inte

grity

pro

blem

s by

mea

s-ur

ing

the

qual

ity a

nd ti

mel

i-ne

ss o

f the

EV

dat

a us

ing

met

rics.

Ther

e is

full

data

inte

grity

and

err

ors

are

rare

.

19.

Estim

ate

of c

ompl

ete

The

proj

ect E

AC

ifpr

oduc

ed a

t all

isde

term

ined

on

anin

cons

iste

nt a

ndirr

egul

ar b

asis

.

The

proj

ect E

AC

(gen

er-

ated

eith

er b

y m

anag

e-m

ent o

r sys

tem

atic

ally

)is

det

erm

ined

on

a co

n-si

sten

t and

regu

lar

basi

s bu

t can

not

be

subs

tant

iate

d us

ing

deta

iled

proj

ect d

ata.

The

proj

ect E

AC

(for

cos

tan

d sc

hedu

le o

ut-t

urn)

isde

term

ined

at a

n ap

pro-

pria

te le

vel o

n a

mon

thly

basi

s, w

hich

is s

ubst

anti-

ated

thro

ugh

low

er le

vel

perf

orm

ance

, ris

k m

itiga

-tio

n an

d re

sour

ces

requ

ired

to c

ompl

ete

the

rem

aini

ng p

lann

ed w

ork.

Com

para

tive

fore

cast

s (e

.g.

stat

istic

al E

AC

s an

d TC

PI)

are

prod

uced

and

use

d to

revi

ew th

e re

ason

able

ness

of th

e pr

ojec

t for

ecas

t.Po

tent

ial E

AC

cha

nges

(with

cons

ider

atio

n to

act

ions

tom

anag

e fu

ture

risk

s an

dop

port

uniti

es) a

re d

ocu-

men

ted

and

revi

ewed

dur

-in

g th

e fo

rmal

EA

C c

ycle

.3

poin

t EA

Cs

are

gene

rate

dat

pro

ject

leve

l tha

t can

be

subs

tant

iate

d.

Ther

e is

inde

pend

ent

valid

atio

n of

the

EAC

on a

regu

lar b

asis

.EA

Cs

calc

ulat

ed o

n a

time

phas

ed E

TCba

sed

on:

- th

e cu

rren

t sch

edul

efo

reca

st;

- re

sour

ce re

quire

men

tsan

d av

aila

bilit

y;-

past

per

form

ance

; and

- la

test

risk

miti

gatio

nan

d op

port

unity

real

i-sa

tion

posi

tion.

20.

Supp

lier

man

agem

ent

and

repo

rtin

g

Supp

lier/

part

ner

repo

rts

perf

orm

-an

ce a

nd fo

reca

ston

an

irreg

ular

basi

s an

d to

an

inco

nsis

tent

sta

n-da

rd. N

o su

pplie

rda

ta is

bei

ng re

p-re

sent

ed in

the

proj

ect E

VM

dat

a.

Supp

lier/

part

ner r

epor

tspe

rfor

man

ce a

nd fo

re-

cast

on

a tim

ely

basi

s to

an in

cons

iste

nt s

tan-

dard

. Sup

plie

r dat

a is

repr

esen

ted

in th

e pr

oj-

ect E

VM

dat

a, b

ut m

ayno

t be

base

d on

Info

r-m

atio

n de

liver

ed fr

omth

e su

pplie

r.

Supp

lier/

part

ner r

epor

tspe

rfor

man

ce a

nd fo

re-

cast

on

a tim

ely

basi

s to

an c

onsi

sten

t sta

ndar

d.Su

pplie

r per

form

ance

data

is v

erifi

ed b

y th

epr

ojec

t and

is d

eem

ed to

be re

liabl

e an

d ac

cu-

rate

ly p

rese

nted

.

Regu

lar s

uppl

ier/

part

ner p

er-

form

ance

revi

ews

are

con-

duct

ed u

sing

the

supp

lier/

part

ner E

V d

ata

as th

e ba

sis

of th

e re

view

, with

sup

port

-in

g va

rianc

e an

alys

is a

ndco

rrec

tive

actio

n pl

anni

ng.

Verif

icat

ion

is c

ondu

cted

at

appr

opria

te p

oint

s w

ithin

the

sche

dule

.

Supp

liers

are

incl

uded

in re

gula

r EV

mee

t-in

gs a

nd s

uppo

rtva

rianc

e an

alys

is a

ndco

rrec

tive

actio

npl

anni

ng. S

uppl

iers

are

revi

ewed

as

part

of th

e as

sura

nce

proc

ess

(e.g

. IBR

,D

R, S

R, m

atur

ityas

sess

men

ts).

(Con

tinue

d on

follo

win

g pa

ge)

Execution1

23

45

Com

men

tsA

s is

To b

e

34

12

34

5C

omm

ents

As

isTo

be

Exec

ute

EVM

21.

Ris

k an

d op

port

unity

man

agem

ent

Risk

and

opp

ortu

nity

man

agem

ent

proc

ess

not c

on-

side

red

in th

e EV

syst

em.

Risk

/opp

ortu

nity

man

-ag

emen

t and

ear

ned

valu

e m

anag

emen

tpr

oces

ses

are

loos

ely

linke

d. T

he d

ata

from

the

two

proc

esse

s ar

eco

mpa

red

and

con-

tras

ted

but n

otre

flect

ed in

eith

er th

eba

selin

e or

mon

thly

fore

cast

s.

App

rove

d ris

k m

itiga

-tio

n/op

port

unity

real

isa-

tion

activ

ities

are

budg

eted

and

incl

uded

with

in th

e pr

ojec

t sch

ed-

ule.

The

cha

nge

proc

ess

is u

tilis

ed to

app

rove

and

sche

dule

new

risk

miti

ga-

tion/

oppo

rtun

ity re

alis

a-tio

n ac

tiviti

es.

Risk

and

opp

ortu

nity

man

age-

men

t and

EV

pro

cess

es a

rein

tegr

ated

. Inf

orm

atio

n pr

o-vi

ded

on u

ncer

tain

ty a

ndris

ks h

elps

to d

eter

min

e th

eco

nfid

ence

the

proj

ect

base

line

and

fore

cast

(incl

udin

g as

sess

ing

the

appr

opria

tene

ss o

f the

rem

aini

ng m

anag

emen

tre

serv

e).

Proc

esse

s ar

e pe

riodi

-ca

lly re

view

ed a

ndm

atur

ity m

etric

s ar

eus

ed to

driv

e co

ntin

-uo

us im

prov

emen

t.

22.

Bas

elin

e ch

ange

man

agem

ent

Base

lines

are

not

mai

ntai

ned.

No

form

al p

roce

ss fo

rin

corp

orat

ing

orre

cord

ing

chan

ges

to th

e ba

selin

eex

ists

.

Base

line

chan

ges

are

cont

rolle

d by

a d

ocu-

men

ted

proc

ess.

Bas

e-lin

es a

re m

aint

aine

din

cons

iste

ntly

and

irreg

ular

ly. T

he p

roce

ssof

cha

nge

appr

oval

and

embo

dim

ent i

s no

ttim

ely.

Inap

prop

riate

chan

ges

are

appl

ied

toth

e ba

selin

e eg

. fre

-qu

ent r

epla

ns o

ccur

with

the

resu

lt of

wip

-in

g ou

t pre

viou

sly

reco

rded

var

ianc

esan

d/or

bud

get b

eing

tran

sfer

red

with

out t

heco

rres

pond

ing

tran

sfer

of w

ork.

Base

line

chan

ges

are

con-

trol

led

by a

doc

umen

ted

proc

ess.

Dire

ct a

nd c

on-

sequ

entia

l im

pact

ass

ess-

men

ts a

re c

ondu

cted

by

the

proj

ect t

eam

.A

ppro

val i

s ba

sed

onty

pe o

f cha

nge

and

valu

e. B

asel

ines

are

mai

ntai

ned

cons

iste

ntly

and

regu

larly

. Pro

cess

of

chan

ge a

ppro

val a

ndem

bodi

men

t is

timel

y.A

ppro

pria

te c

hang

es a

reap

plie

d to

the

base

line.

Budg

et is

not

tran

sfer

red

with

out t

he c

orre

spon

-di

ng tr

ansf

er o

f wor

k.

Dire

ct a

nd c

onse

quen

tial

impa

ct a

sses

smen

ts o

fch

ange

s ar

e co

nduc

ted,

coor

dina

ted

with

and

unde

rsto

od b

y th

e af

fect

edte

ams,

func

tions

and

sup

pli-

ers

prio

r to

appr

oval

.

Base

line

chan

ges

are

asse

ssed

and

alig

ned

with

oth

er p

roje

ctba

selin

es (e

.g. c

on-

figur

atio

n, re

quire

-m

ents

) prio

r to

appr

oval

. The

per

-fo

rman

ce o

f the

base

line

chan

gepr

oces

s is

per

iodi

-ca

lly re

view

ed to

ensu

re it

is p

erfo

rm-

ing

adeq

uate

ly a

ndm

eetin

g th

e ne

eds

ofal

l pro

ject

s.

Execution

35

23.

Seni

or m

anag

emen

t us

age

Ther

e is

neg

ligib

lese

nior

man

age-

men

t und

erst

and-

ing

or re

view

of

the

EV d

ata.

The

EVM

per

form

ance

data

is re

view

ed o

n an

irreg

ular

bas

is w

ith o

nly

a lim

ited

unde

rsta

ndin

gof

the

data

by

the

sen-

ior m

anag

emen

t tea

m.

The

EVM

per

form

ance

dat

ais

revi

ewed

on

a re

gula

rba

sis

with

a g

ood

unde

r-st

andi

ng/i

nter

pret

atio

nof

the

data

by

the

seni

orm

anag

emen

t tea

m, w

hoco

mm

it to

mea

ning

ful

actio

ns b

ased

on

the

data

on a

n irr

egul

ar b

asis

.

The

seni

or m

anag

emen

t tea

mre

cogn

ises

the

impo

rtan

ceof

the

data

, con

sist

ently

unde

rsta

nds

wha

t it i

s te

lling

them

, and

com

mit

to m

ean-

ingf

ul a

ctio

ns b

ased

on

the

data

on

a re

gula

r bas

is.

The

seni

or m

anag

emen

tte

am u

ses

the

data

as

a ke

y in

put t

o bu

si-

ness

dec

isio

n m

akin

g.

24.

Cus

tom

er in

volv

emen

t

The

cust

omer

has

little

or n

o in

tere

stin

EV

M.

The

cust

omer

pro

vide

spa

ssiv

e su

ppor

t and

requ

ests

mon

thly

per

-fo

rman

ce re

port

s su

m-

mar

ised

to p

roje

ctle

vel.

The

cust

omer

does

not

hav

e th

e re

le-

vant

EV

M e

xper

tise

but

may

hav

e pa

rtic

ipat

edin

EV

M s

yste

mre

view

s e.

g. in

tegr

ated

base

line

revi

ew.

The

cust

omer

is in

volv

ed in

proj

ect E

VM

revi

ews

and

help

s de

fine

and

impr

ove

EVM

repo

rtin

g fo

rmat

s.Th

e cu

stom

er re

ceiv

esfo

rmal

repo

rts

on a

per

i-od

ic b

asis

from

the

EVM

syst

em. T

he in

form

atio

npr

ovid

ed is

at a

n ag

reed

leve

l of t

he W

BS o

n pe

r-fo

rman

ce tr

ends

, and

corr

ectiv

e ac

tion

plan

s.Th

e cu

stom

er h

as th

ere

leva

nt E

VM

exp

ertis

e.

Cus

tom

er re

pres

enta

tives

enga

ge w

ith p

roje

ct te

amop

posi

te n

umbe

rs in

the

ongo

ing

revi

ew o

f pro

ject

heal

th, u

tilis

ing

EVM

info

r-m

atio

n. T

he c

usto

mer

isin

volv

ed in

EV

M s

yste

mre

view

s (e

.g. I

BRs,

dem

on-

stra

tion

revi

ews

and

ongo

ing

surv

eilla

nce)

.

The

cust

omer

is in

stru

-m

enta

l in

supp

ortin

gth

e de

velo

pmen

t and

usag

e of

the

EVM

syst

em. T

here

is fu

lltr

ansp

aren

cy in

pro

j-ec

t hea

lth (e

.g. c

osts

,va

rianc

e an

alys

is,

prog

ress

, ris

ks) a

ndcu

stom

er c

omm

it-m

ents

.

EVM

goa

l

25.

EVM

as

a de

cisi

on s

uppo

rt to

ol

EV d

ata

is o

nly

used

in th

e fo

rmal

pro

j-ec

t rev

iew

pro

cess

on a

n irr

egul

arba

sis

and/

or is

lim

-ite

d to

onl

y pa

rts

of th

e pr

ojec

tw

ork

scop

e (e

.g.

criti

cal p

ath

perf

orm

ance

).

EV d

ata

is u

sed

on a

con

-si

sten

t and

regu

lar

basi

s to

sup

port

form

alpr

ojec

t rev

iew

s. M

an-

agem

ent e

xpla

in c

ause

and

impa

ct o

f dev

ia-

tions

from

the

base

line

base

d on

cos

t and

sche

dule

var

ianc

e bu

tfo

rmal

var

ianc

e re

port

-in

g is

not

per

form

ed.

EV d

ata

form

s a

key

ele-

men

t of t

he p

roje

ctre

view

. Res

pons

ible

man

ager

s ex

plai

n ca

use

and

impa

ct o

f dev

iatio

nsfr

om th

e ba

selin

e us

ing

afo

rmal

var

ianc

e an

alys

isre

port

ing

(VA

R) tr

ig-

gere

d by

exc

eedi

ngm

anag

emen

t set

th

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36

ConclusionThe EVM compass aims to provide organisations with a customisable frame-work that provides the base for ongoing assessments of projects, enablingcontinuous improvement of EVM practice and delivering real business benefit.

37

Annex A

Terminologyand glossary

The definitions provided below are aligned to Earned Value Management:APM Guidelines.

Activity An element of work performed during the course of a project. Anactivity normally has an expected duration, an expected cost, and expectedresource requirements. Activities are often subdivided into tasks.

Actual cost of work performed (ACWP) The costs actually incurred andrecorded in achieving the work performed.

Actual cost The costs actually incurred and recorded in accomplishing workperformed.

Actual time expended The elapsed time from the beginning of the task todate.

Allocated budget See Total allocated budgetApplied direct costs The actual direct costs recognised in the time period

associated with the consumption of labour, material, and other directresources, without regard to the date of commitment or the date of pay-ment. These amounts are to be charged to work-in-process when any of thefollowing takes place:a. labour, material, or other direct resources are actually consumed;b. material resources are withdrawn from inventory for use;c. material resources are received that are uniquely identified to the con-

tract; ord. major components or assemblies that are specifically and uniquely

identified to a single serially numbered end item are received on a lineflow basis.

Apportioned effort Effort that, by itself, is not readily measured or divisibleinto discrete work packages but which is related in direct proportion to theplanning and performance on other measured effort.

Authorised work All work performed, pursuant to the contract, within thecontract price.

Authorised unpriced work (AUW) Includes work that has been authorised,but for which the cost has not been finalised by virtue of a formal contractamendment.

Baseline See Performance measurement baseline.


38

Budget The resources (in money and/or hours) assigned for the accom-plishment of a specific task or group of tasks.

Budget at completion The total authorised budget for achieving the projectscope of work. It is equal to the sum of all allocated budgets plus anyundistributed budget (management reserve is not included.)

Budgeted cost for work performed (BCWP) The sum of the budgets forcompleted work packages and completed portions of open work pack-ages, plus the applicable portion of the budgets for level of effort andapportioned effort.

Budgeted cost for work scheduled (BCWS) The sum of the budgets for allwork packages, planning packages, etc. scheduled to be achieved (includ-ing in-process work packages), plus the amount of level of effort and appor-tioned effort scheduled to be achieved. This may be expressed as the BCSWwithin a given time period, such as period BCWS or cumulative BCWS.

Budgets for work packages. See Work package budgets.Commitment That portion of purchased items or services which has been

ordered, but for which no actuals have been incurred.Contract budget base The contract target cost plus the estimated cost of

authorised unpriced work.Contract price The price payable by the customer under the contract for the

proper delivery of the supplies and services specified in the scope of workof the contract.

Contract target cost The total of the sum of all control accounts plus undis-tributed budget plus management reserve.

Control account A management control point at which actual costs can beaccumulated and compared to earned value and budgets (resource plans)for management control purposes. A control account is a natural manage-ment point for cost/schedule planning and control since it represents thework assigned to one responsible organisational element on one contractwork breakdown structure (CWBS) element.

Control account manager The performing manager who is responsible forplanning, performing, and monitoring the elements of work definedwithin that control account.

Cost performance report A contractually required report, prepared by thecontractor, containing information derived from the internal system. Pro-vides status of progress on the contract.

Cost variance A metric for the cost performance on a project. It is the alge-braic difference between earned value and actual cost (CV = BCWP –ACWP.) A positive value indicates a favourable position and a negativevalue indicates an unfavourable condition.

Critical path method A network analysis technique used to predict projectduration by analysing which sequence of activities (which path) has theleast amount of scheduling flexibility (the least amount of float). Early


39

dates are calculated by means of a forward pass using a specified startdate. Late dates are calculated by means of a backward pass starting froma specified completion date (usually the forward pass’s calculated projectearly finish date).

Direct costs The costs of resources expended in the achievement of work,which are directly charged to the project, without inclusion of indirectcosts.

Distributed budget All budgets that have been assigned to the controlaccounts. Distributed budget excludes management reserve and undis-tributed budget.

Earned value The value of completed work expressed in terms of the budgetassigned to that work.

Earned value management (EVM) A best practice project control processthat is based on a structured approach to planning, cost collection and per-formance measurement. It facilitates the integration of project scope,schedule, cost, risk and resource objectives and the establishment of abaseline plan for performance measurement.

Earned value management system (EVMS) An integrated management sys-tem which uses earned value to measure progress objectively.

Earned value techniques (EVT) The technique used to objectively assessprogress.

Estimate at completion (EAC) Actual direct costs, plus indirect costs allocat-able to the contract, plus the estimate of costs (direct and indirect) forremaining authorised work.

Estimate to completion (ETC) The forecast of labour hours and costs requiredto complete the remaining authorised work. It is based on a bottom-up analysis of remaining work in which consideration of past and future performance, along with the availability of resources, is taken intoconsideration.

Forecast cost at completion See Estimate at completion.Funding Funding represents the actual money available for expenditure in

the achievement of contract work. The planning of work and the time-phasing of budgets and estimates to completion (ETCs) should be consis-tent with the known available funding for that period.

Indirect costs The costs for common or joint objectives which cannot be iden-tified specifically with a particular project or activity. Also referred to asoverhead cost or burden.

Initial budget See Original budget.Integrated baseline review (IBR) An IBR is a formal process conducted to

assess the content and integrity of the performance measurement baseline(PMB). The purpose of the IBR is to achieve and maintain a project andcustomer understanding of the risks inherent in the PMB and the manage-ment control processes that will operate during its execution.


40

Latest revised estimate See Estimate at completion.Level of effort (LOE) Effort of a general or supportive nature which does not

produce definite end products. Earned value (budgeted cost for work per-formed) for LOE always equals the planned budget to date (budgeted costfor work scheduled) whether or not any work is performed.

Management reserve (MR) An amount of the total allocated budget with-held for management control purposes rather than designated for theachievement of a specific task or set of tasks. It is not a part of the per-formance measurement baseline.

Material The term to encompass all non-labour classes of resource.Milestone An activity of zero duration principally used to enhance the clar-

ity of the programme structure.Network diagram Any schematic display of the logical relationships of proj-

ect activities. Always drawn from left to right to reflect project chronology. Organisational breakdown structure. A functionally oriented code estab-

lished to identity the performance responsibility for work on a specificcontract.

Original budget The budget established at, or near, the time the contract wassigned, based on the negotiated contract cost.

Original duration The duration established at, or near, the time the contractwas signed, based on the negotiated contract cost.

Other direct costs (ODC) A group of costs which can be identified to specifictasks, other than labour, material and subcontract. Included in ODC are suchcosts as travel, accommodation, insurance, computer time and services.

Overhead Indirect labour, material, supplies, services costs and othercharges, which cannot be consistently identified with individual projects.See Indirect costs.

Over target baseline When remaining budgets are deemed insufficient tocomplete the remaining work, the budgets may be increased by seekingapproval in advance from the customer. Work is then be done to a newtotal budget which exceeds the original contract budget base, or an overtarget baseline. Now the total allocated budget equals the previous con-tract budget base (CBB) plus the previously budgeted margin plus anycontractor contribution.

Performance measurement baseline (PMB) The time-phased budget planagainst which contract performance is measured. It is formed by the budg-ets assigned to scheduled control accounts and the applicable indirectbudgets. For future effort, not planned to the control account level, the per-formance measurement baseline also includes budgets assigned to higherlevel CWBS elements and undistributed budgets. It equals the total allo-cated budget less management reserve.

Performing organisation A defined unit within the contractor’s organisationstructure, which applies the resources to perform the work.


41

Period A defined block of time that forms the financial and reporting calen-dar for an EVM system. Typically weekly or monthly.

Planning package A logical aggregation of work within a control account,normally the far-term effort, that can be identified and budgeted in earlybaseline planning, but is not yet defined into work packages.

Product breakdown structure (PBS) A hierarchical structure, which breaksdown the product into its constituent parts, in a similar way to a bill ofmaterials.

Responsible organisation A defined unit within the contractor’s organisa-tional structure which is assigned responsibility for achieving specifictasks.

Responsibility assignment matrix A depiction of the relationship betweenthe contract work breakdown structure elements and the organisationsassigned responsibility for ensuring their accomplishment.

Rolling wave The action of converting a planning package into a work pack-age.

Schedule The timing and sequence of tasks within a project, as well as theproject duration. The schedule consists mainly, of tasks, dependenciesamong tasks, durations, constraints, resources and time-oriented projectinformation.

Schedule variance A metric for the schedule performance on a program. It isthe difference between earned value and the budget (schedule variance =earned value - budget). A positive value is a favourable condition while anegative value is unfavourable.

Significant variances Those differences between planned and actual per-formance, which require further review, analysis, or action. Appropriatethresholds should be established as to the magnitude of variances that willautomatically require variance analysis.

Statement of work A narrative description of products or services to bedelivered by the project.

Supplies The goods and services including intellectual property required tobe supplied under the contract.

Total allocated budget The sum of all budgets allocated to the contract. Totalallocated budget consists of the performance measurement baseline plusall management reserve. The total allocated budget reconciles directly tothe contract budget base.

Undistributed budget Budget applicable to contract effort that has not yetbeen allocated into the performance measurement baseline or placed inreserve.

Variance at completion The difference between the total budget assigned toa contract, WBS element, organisational entity or control account, and theestimate at completion. It represents the amount of expected overrun orunderrun.


42

Variances See Significant variances.Work breakdown structure (WBS) A product-oriented family tree division

of hardware, software, services and other work tasks which organises,defines, and graphically displays the product to be produced as well as thework to be done to achieve a specified product.

a. Project summary work breakdown structure A summary WBS tailored toa specific defence material item by selecting applicable elements from oneor more summary WBSs or by adding equivalent elements unique to theproject.

b. Contract work breakdown structure (CWBS) The complete WBS for acontract, developed and used by a contractor within the guidelines ofMIL-STD-881 and according to the contract work statement. The CWBSincludes the levels specified in the contract.

Work breakdown structure (WBS) dictionary A description of all individualelements within each level of the WBS which is sufficient to define theirscope, including tasks, dependencies and deliverables.

Work-package budgets Resources, which are formally assigned by the con-tractor to achieve a work package, expressed in dollars, hours, standardsor other measurable units.

Work-packages Detailed short-span jobs, or material items identified by thecontractor for achieving work required to complete the contract.

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Annex B

Related documentsIn using the APM EVM compass the following documents provide addi-

tional information.1. Association for Project Management (2008) Earned Value Management:

APM Guidelines ISBN: 978-1-903494-26-42. Association for Project Management (2008) Interfacing Risk and Earned

Value Management ISBN: 978-1-903494-24-0 3. Association for Project Management (2006) APM Body of Knowledge, 5th

edition ISBN: 978-1-903494-13-4

Ibis House, Regent ParkSummerleys Road Princes RisboroughBuckinghamshire, HP27 9LE


Telephone 0845 458 1944International +44 (0)1844 271640Facsimile +44 (0)1844 274509

Email [email protected] www.apm.org.uk


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