it project management
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TRANSCRIPT
Integrating Earned Value into the Management of Software Development
Projects
Dan Brandon, Christian Brothers University
• Presented at Information Resources Management Association (IRMA)
Annual International Meeting, June 1999, Hersey, PA, USA; Reprinted in “Managing Information Technology
Resources in Organizations in the Next Millennium (ISBN: 1-878289-51-9)
Project Management & IT Management
• “IT managers careers will rise and fall based on their ability to deliver high quality projects on time.”
– J. I. Cash, Harvard Business School• Only 27% of software development projects succeed;
another 33% are over budget (average cost overrun is 189%) and/or late and/or scaled back
– Standish Group
Project Management Areas
• Project Feasibility/Justification
• Project Organization
• Project Planning & Scheduling
• Project Staffing
• Project Tracking
Typical Project Scheduling (i.e. MS Project)
• Indicate project start date (and any individual task start dates that cannot float)
• Indicate tasks (WBS) and their resource requirements (how much of whose time)
• Indicate Task Interdependencies
• Indicate Milestones
• Indicate resource availability; do resource “leveling”
• Produce “baseline” schedule
Typical Top Level Software WBS
• Requirements Definition
• Overall Design
• Detail Project Plan
• External Design
• Detail Design
• Implementation
• Integration
• Internal Documentation
• Training
• Installation
Example Second Level WBS [Figure 1 in Paper]
• Requirements Definition• External Requirements• Standards Requirements• Performance Requirements• Interface Requirements• Overall Design• External Design• Internal Design
Project Cost Plan• Using a spreadsheet program or using a
project scheduling program,
• Develop a cost plan which indicates:– the cost for each task– when the cost is planned to be incurred
• Software development is mostly labor cost
• Figure 2 (shows top level cost Plan)
• Figure 3 is a graphical representation
• Jan Feb Mar Apr• Requirements Definition 10 5• Overall Design 5 5• Project Plan 5 5• External Documentation 5•
•
• Partial View of Plan•
• Monthly Cost 10 10 10 10• Cumulative 10 20 30 40
Project Cost Plan
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Month
Cos
t
Project Tracking
• “Well done is better than well said.”– Benjamin Franklin (1706 - 1790)
Cost & Schedule Tracking
• Traditional
– Gantt Chart
– Cost versus Budget
• Earned Value (Cost/Schedule Control Systems Criteria [C/SCSC] )
Typical Approach• Present reports to management:
– Cost versus Budget (Planned Cost)
• Figure 4
– Gantt Chart of Progress
• Figure 5
• The example here is for project work thru July
Blue = Plan, Yellow = Actual
Plan and Actual Cost
0
20
40
60
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Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Month
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sts
Triangle = Actual
Diamond = Plan
• From the information shown:– Are we in good shape on this project
(i.e. ahead of, or behind schedule) ?
– When can we expect to finish this project ?
– What will be our cost at completion ?
• Earned Value can answer these questions !
Earned Value
• “Never mistake motion for action.”– Ernest Hemingway (1889 - 1961)
• “One of the most underused cost management tools available for project managers is the earned value performance measurement concept”
• Q. Fleming & M. Koppelman - Primavera Systems, Inc.
History of Earned Value
• Been around in several forms since 1950’s• DoD required many contracts (those where the
government was at risk for cost overruns) to use Earned Value (originally PERT/COST)
• Earned value was a key concept in the 1967 DoD (Dept. of Defense) policy to which contractors had to comply called Cost/Schedule Control System Criteria (C/SCSC)
• Revised in recent years by DoD to avoid “over implementation”
• Now working very well in DoD (particularly Air Force, Army, ...)
• Large body of statistical data available
• Has its own Internet site in DoD
• However use in private industry is still low:– No exposure to concepts
– Don’t understand concepts
– Don’t know how to effectively implement
Earned Value
• A quantifiable way to express real cost and schedule variances
• Work Plan - shows the budgeted cost associated with the project in time by task (work packet), rolled up to a particular level (the “reporting level”) of the WBS
• Concepts:
– Budgeted cost of work scheduled
– Actual cost of work performed
– Budgeted cost of work performed (EV)
Budgeted Cost of Work Scheduled
• A point on the planned cost (or budget) baseline representing the value of work planned (scheduled) as of a given point in time.
Actual Cost of Work Performed
• The total accrued resources spent on the project thusfar
Budgeted Cost of Work Performed
• Same as “Earned Value”
• A point on the planned cost (budget) baseline representing the budgeted value for work completed as of a point in time.
• Determined by looking at each task initiated, the planned cost for that task, and the amount of that task completed (% complete) -- Figure 5 in paper
External Documentation [Figure 5]
• Task Plan % C Value
• Overall Control 2 100 2
• Tables 3 100 3
• Sorts, Selects, ... 1 0 0
• Forms 2 60 1.2
• Reports 2 65 1.3
• Totals10 75 7.5
EV Variances• Cost Variance = ACWP - BCWP (EV)
– Note difference from simple budget variance: ( ACWP - BCWS)
– Figure 6 in paper
• Schedule Variance = BCWS - BCWP– Can be expressed in time or dollars
– To convert to time use spending rate at the measured point in time
0
10
20
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60
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May Jun Jul
ACTUAL COST
BCWS
XBCWP
S
X BCWP
• We can clearly see from the graph that we are over cost not under cost:
– ACWP - BCWP is positive– Even though budget variance (ACWP - BCWS) is
negative (under budget) !!!
• We can also se that we are behind schedule; we should have been at this point several weeks ago !
• Formulas here have sign reversed from PMI PMBOK versions
Extrapolations [Figure 8]• Schedule:
– Schedule Efficiency Factor:• EarnedValue/BCWS = 0.7
– Schedule variance
• In either dollars (24) or calendar time (1.2) !
– Estimated Time to Complete (16):• PlanTime/ScheduleEfficiencyFactor
• Cost:– Cost Efficiency Factor:
• EarnedValue/ACWP = 0.9
– Estimated Cost at Completion (EAC):
• PlanCost/CostEfficiencyFactor = 211
Effective Use of Earned Value in IT
• Proper Task Level Specification
• Meaningful Percent Complete Reporting
• “Non-Intrusive” Tracking Systems
• Accurate and Timely Cost Data
• Integration with SEI’s CMM
• TQM vs Individual Performance Evaluation
Task Level
• General rule for application software development - smaller of
– one manweek’s effort
– individual component (screen, report, memu,...)
• Important to match to accounting and/or timekeeping frequency !!
Percent Complete Reporting
• Keep it simple !• Common method (weighted milestone):
– Not started zero
– Working on it 50%
– Finished 100%
• Trade off in ease of reporting versus accuracy of reporting
IT % Complete
• Have not begun work 0%
• Working on packet 50%
• Finished packet 75%
• Packet Verified 100%
• Figure 9 in paper suggest verification methods for typical IT packet types
Integration with SEI’s CMM
• Software Engineering Institute’s Capability Maturity Model (for software)
• Level 2 (Repeatable) mainly concerns project management; key process areas:– Software Project Planning– Software Project Tracking and Oversight
• “The project’s software effort and cost are tracked, and corrective actions are taken as necessary.”
Tracking Systems
• Non intrusive
• Gather only necessary information:– time (manhours)
– per cent complete by component
• By product of normal time & attendance system (i.e. timecards):– person id (rbs)
– task id (wbs)
– % complete
– manhours
Timely and Accurate Cost Data
• Note that EV schedule variances do not need actual costs• Getting necessary and timely cost data from G/L, even at
top level of WBS may not be possible• Need to “feedward” cost data based upon regular (i.e.
weekly) time card and other input:– Base Earned Value on hours instead of dollars
– Or base cost on hours times a category “rate” for each type of employee (ie Programmer II); using actual rates is also possible but probably is both a maintenance problem and confidentially problem).
TQM as Basis
• Employee acceptance problem– “Extra paperwork”– “Effect on my performance evaluation”– “Cannot report accurately” - see % complete
reporting methods
• Justify on TQM Basis (adopt as part of overall TQM program)– Improve Task Estimation Process– Accuracy of estimating time/cost to complete
• “If you can’t measure it, you can’t manage it”.........Peter Drucker (TQM Guru)
• Project Management Institute - www.pmi.org