EVM for the Rest of Us - aacerms.orgaacerms.org/archive/presentations/2015-05_EVMfortheRestofUs.pdf · • EVM For the Rest of Us – Principles, Success Factors, and What to Strive

Copyright 2013 EcoSys. All Rights Reserved. Confidential and Proprietary Information.

EVM for the Rest of Us

Presented by: Erik Preus, EVP Solution Architect, EcoSys May 21, 2015

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• ANSI 748 (Should it be referenced “for the rest of us?”)

• EVM For the Rest of Us – Principles, Success Factors, and What to Strive for

• EVM in Practice – Earned Value Case Studies

• Q & A

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Agenda


Copyright 2011 EcoSys. All Rights Reserved. Confidential and Proprietary Information. 3

Is EVM Really This Scary?

Overhead Difficult Unintelligible Inappropriate Mine field Incorrect Headaches


28. Change Management 29. Reconcile current/prior budgets 30. Control retro changes 31. Only authorized changes 32. Document all changes

22. Review CA SV & CV 23. Identify significant variances 24. Budget vs Actual indirects 25. Summarize for internal & external reporting 26. Use EV data to make decisions 27. EAC Revision

16. Record Direct Costs 17. Summarize into WBS 18. Summarize into OBS 19. Record Indirect Costs 20. Identify unit/Lot costs 21. Material Cost

6. Schedule Work 7. Define Progress Methods 8. Time-phased PMB 9. Identify Cost Elements 10. Discrete Work Packages 11. Validate WP budgets 12. Identify LOE Activities 13. Establish Overhead 14. Establish MR/Contingency 15. Validate vertical budget

alignment

1. Define WBS 2. Define OBS 3. Integrate Subsystems 4. Identify Overhead control 5. Integrate WBS & OBS

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ANSI 748 Summary

1. Organization

2. Planning, Scheduling, Budgeting

3. Accounting Considerations

4. Analysis & Reporting

5. Revisions & Data Maintenance


• Earned Value is a measure of project performance comparing work completed against work planned, as of a given date.

• Earned Value Management is using Earned Value to measure, forecast, and improve project performance.

• Principles of EVM are positive predictors of project success.

• EVMFRU: Focus on those principles and remove anything extraneous.

What is EVM for the Rest of Us?

Measure Forecast Improve


• EVM is not separate from the overall project management lifecycle. Builds upon a solid project controls framework:

- Process standards

- Performance metrics

• EVM principles lead to better scope definition

• EVM should be accessible by being well integrated to project controls lifecycle and user-friendly

EVMFRU


BAC

Cum

ulat

ive

Cost

Time

EAC (Estimate at Completion

Projected Project Delay

Variance at Completion

PV (Planned Value)

AC (Actual Cost)

CV (Cost Variance)

SV (Schedule Variance)

Time Now

EV (Earned Value)

Earned Value Basics

Using EV Data to make decisions


Time-phased Schedule/

Budget

WBS

Actuals

Progress Data

The Pillars that Support EVM


The Pillars that Support EVM

Actuals

Progress Data

Control Account

Control Account: - Point at which Budgets

compare to Progress and Actuals

- Management Point for Planning and Control

- Earned Value Reporting Point

WBS


Budget


EV Trends inform Forecasting

Actuals

Progress Data

Forecast

WBS


Budget


Develop WBS • Encompasses entire Scope of Work

Data Structures


Time-phased Schedule & Budget • Encompasses entire Scope of Work • Define Schedule Dates

Scheduling & Budgeting


Progress Data • Progress measured by appropriate Performance Measurement Techniques

Progress Measurement


Actuals • Actual Costs, Hours, and/or Quantities over Time • Verify Coding Accuracy

Collecting Actuals


1. Budgeting & Forecasting at the Right Level – Intelligent Work Breakdown Structure (WBS)

– Fine enough to identify trends

– Not so granular as to add burden without adding value

2. Accurate and Timely Progress Measurement

3. Integrated source of Actual Costs

4. Change Management integrated into EVM

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EVM Success Factors


EV Tracking

• Detailed Tracking • Resource Loading for every

activity

WBS 1

WBS 1.1

Activity 1 Activity 2 Activity 3

Projects:


EV Tracking

• Milestone Driven Progress • Simpler Execution

Design

Construction Documents

Demolition

Construction A

Construction B

Projects:

15%

20%

50%

100%

75%


EV Tracking

• Portfolio Visibility

• EV Metrics for Each Project

• Rolled-up for aggregate performance analysis

Projects:


• Build a solid platform for budgeting, forecasting, and change management

• Use templates for WBS and progress measurement rules

• Standard reports and views for periodic and cumulative trends

• Match terminology to organization culture – CPI can be “Earned/Burned,” “Productivity,” etc.

– Balance application of ANSI guidelines with organization’s existing know-how and processes

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How to Deploy the “Right Amount” of EVM


• Monitor non-EV KPIs in conjunction with EV metrics – Develop a full project performance picture

• Provide ability to provide EVM on costs, hours, or quantities – Be able to roll up EVM accordingly

• Document variance analysis and justification – Beyond only reporting on trends and variances

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How to Deploy the “Right Amount” of EVM


• Flexible Analysis – Look at performance to date, but also

more recent, appropriate trends – Analyze by any Attribute, not just WBS

• Integrate EVM with Forecasting – Scenarios – Change behavior

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What to Strive For


• Actionable information that’s appropriate for executives

• Summary, graphical, drilldown views – Find ways to roll up EVM across projects: portfolio, divisions, etc.

• Streamline terminology/descriptive information – Encourages decision makers to WANT to dig into info further

• With Executive buy in, EVM can succeed – Without it, EVM often becomes relegated to

project controls back office.

– Don’t sell EVM, sell performance.

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EVM: A Tool for Business Decisions


Program EVM Reporting


Example Independent EACs

• IEAC1, assumes future cost performance will be same as past performance

• IEAC2, assumes future cost performance will be influenced by 80% past cost and 20% past schedule performance

• IEAC3, assumes future cost performance will be influenced by the last 3 months cost performance

• IEAC4, assumes future cost performance will be influenced by past cost and schedule performance


Earned Value Case Studies

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• Nuclear Power Generation & Operations company with major R&D, Construction, and Services projects in Canada & US

• Standardized on SAP and Primavera P6

• Requirement for centralized platform went beyond need for integration

• Deployed integrated system for EVM / performance management, reporting, and controls

• Utilized on Small Modular Reactor program

Nuclear Case Study

Nuclear Contractor Joint Venture


Nuclear Case Study

WBS & WBS Status Budgets, Forecasts

Integrated Earned Value Mgmt Budgets & Forecasts Commitments Actual Costs, Revenue Change Orders Project Cost Reporting Historical Snapshots Transaction/Audit Repository

Projects, WBS Dates Labor plans Percent Complete

Actual Costs Timesheets Commitments Revenue

Timesheets

Integration Approach


• EV Technique Varies by Work Package

• Full Time-Phased History of Earned Value by Month

• EV Measures based on both Hours and Costs

• Performance analysis by Month, Year, and Project Life

• Change & Trend Management integrated into Current Budget & Current Forecast

• EV Reports can be run by toggling Baseline Budget = Cur Budget or Cur FC

• Ability to analyze performance & ETC by Alternate Breakdown Structures:

o Discipline

o OBS

o Cost Type (Labor, Material, ODCs, etc)

Nuclear Case Study

Highlights


Nuclear Case Study

Planning Process: WBS and ABS


Standardized Performance Reporting: Cumulative & Periodic Performance

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Nuclear Case Study


Flexible Earned Value Analysis:

By Project, Category Code, and EV Method

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Nuclear Case Study


EVM Dashboard: Comparisons By Alliance Partner

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Nuclear Case Study


Case Study:

• Contractor with energy sector expertise • Awarded DOE Project requiring ANSI 748 compliance • Desired EVMS across all projects for Revenue,

Margin Forecasting • Lacked the systems and processes to perform EVM

across all projects

Contractor Case Study


Project Appropriate EVM

• Small projects

– Requires some type of document that outlines how work and performance will be measured.

• Medium projects & all Firm Fixed Price (FFP) projects

– Use a risk-based and scalable EVM system

– Complies with the 7 Principles of EVMS contained in ANSI/EIA 748

– Selected ANSI/EIA 748 Guidelines.

• Large Cost Plus or Time and Materials contracts

– EVMS that fully complies with the 32 ANSI/EIA 748 Guidelines




Developing a Standard


• Project visibility

– better performance measurement & proactive decision making

– Accurate revenue projections

• Right Sized EVM

– Standardized process by project type

• Automated Reporting

– Reduced labor required and potential data errors

• Speed to implement

– “Earned Value in 90 Days”

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Benefits


FAA TAMR Program

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Overview: • Terminal Automation Modernization and Replacement (TAMR) Program

within Air Traffic Control – Terminal (ATO-T) Organization • Modernize Air Traffic Control Systems at Nation’s Major Airports • High Visibility Capital Program

Capital Program Management Innovations: • Standardize Contractor Submissions with Oracle Primavera P6 Templates

• EVM Reporting performed based upon FAA’s structures • Resource loaded schedules drive budgets, forecasts and EVM in EcoSys

• Consolidate Funding Allocations, Budgets, Estimates, Forecasts, Obligations, Commitments, Expenditures, Performance/EVM into a single system

• ATO-T Maintains Vendors and Own Cost and Schedule Forecasts as Separate Versions

• G/L Actuals Are Reconciled against Vendor Submissions

FAA Case Study


• Project activities reported in scheduling system based on standard EVM techniques such as • Physical % complete – based on weighted Steps • Level of Effort - % duration • Milestone % complete

• Integrated with project controls system to import Units, % complete and dates • Planned, Actual and Remaining units used to calculate forecast, Actual

and Remaining costs by project • Schedule and Performance % complete info that is calculated based on

duration or Steps used for EVM metrics • Dates imported used for reporting purposes

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FAA Case Study

Solution Highlights


Most Activities updated using weighted Steps

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Performance Measurement

FAA Case Study


Conclusions

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Tool Requirements for EVM

• 100% web based and scalable

• Rapid deployment and implementation of cost control processes for any level of EV maturity.

• Ease of use through Excel-like spreadsheet templates for updating and viewing progress and performance

• Built-in API’s for scheduling and accounting application integration.

• Fully tailorable terminology, EV/Credit rules, and progress cycle: not bound to rigid terminology and earned value techniques

• Ability to provide cumulative and time phased/periodic EV

• Comprehensive reports, graphs, and performance dashboards

• Robust versioning/snapshot mechanisms

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Recap/Conclusions

• A strong project controls foundation is necessary: start simple if you need to

• Clear processes appropriate to each type of project

• Integrated Program and Project Management at all levels

• Make it easy to use and understandable

• Data and reporting automation

• Sell performance (and then perform!)

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Questions?

Thank you.

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Erik Preus Solution Architect, EcoSys [email protected] www.ecosys.net