fifi˙ˆˇfi˙ - CPM€¦ · For those seeking quickly digestible and frequent content we are launching the “Knowledge from the College, The Measurable Newsletter”. This approach

THE MEASURABLE NEWS

2018.02The Quarterly Magazine of the College of Performance Management

mycpm.org

INSIDE THISISSUE

09 11 23CPM Tennessee Valley (Cpmtv) Chapter Quarterly Meeting

By Norman Dean

Forecasting Project Completion Date Using Earned Schedule and Primavera P6™

By Asaad Alshaheen

Applying Earned Benefit Management: Benefits Maps You Can Count On

By Crispin Piney

CONTENTS05 Message from the President

07 Letter from the Editor(s)

09 CPM Tennessee Valley (CPMTV) Chapter Quarterly MeetingBy Norman Dean

11 Forecasting Project Completion Date Using Earned Schedule and Primavera P6™By Asaad Alshaheen, PMP

23 Applying Earned Benefit Management: Benefits Maps You Can Count OnBy Crispin (“Kik”) Piney, PgMP, PfMP

31 What We’re ReadingBy Glen Alleman and Rick Price

27 Vendors/Services

2018 ISSUE 02

THE MEASURABLE NEWS

2018.02The Quarterly Magazine of the College of Performance Management

mycpm.org

THE COLLEGE OF PERFORMANCE MANAGEMENT

2018 BOARD & STAFFPRESIDENTWayne Abba 703-658-1815 • [email protected]

EXECUTIVE VICE PRESIDENTKym Henderson +61 414 428 537 • [email protected]

VICE PRESIDENT OF FINANCEBrian Evans 703-201-3278 • [email protected]

VICE PRESIDENT OF ADMINISTRATIONLauren Bone +44 (0) 7766 97 40 63 • [email protected]

VICE PRESIDENT OF CONFERENCE & EVENTSKathy Evans703-201-3278 • [email protected]

VICE PRESIDENT OF EDUCATION & CERTIFICATIONBill Mathis703-825-5588 • [email protected]

VICE PRESIDENT OF RESEARCH & STANDARDSMarty Doucette317-727-1237 • [email protected]

VICE PRESIDENT OF COMMUNICATIONSVacant

PAST PRESIDENTGary W. Troop 310-365-3876 • [email protected]

EXECUTIVE DIRECTORDon Kaiser703-370-7885 • [email protected]

THE MEASURABLE NEWS IS AN OFFICIAL PUBLICATION OF THE COLLEGE OF PERFORMANCE MANAGEMENT

EDITORIAL STAFFPublisher: College of Performance ManagementStory Editors: Robin Pulverenti and Nicholas PisanoDesign: id365 Design + CommunicationsCommunications VP: Vacant

EDITORIAL COPY Editorial contributions, photos, and miscellaneous inquiries should be addressed and sent to the editor at the College of Performance Management (CPM) headquarters. Please follow the author guidelines posted on the CPM web site. Letters submitted to the editor will be considered for publication unless the writer requests otherwise. Letters are subject to editing for style, accuracy, space, and propriety. All letters must be signed, and initials will be used on request only if you include your name. CPM reserves the right to refuse publication of any letter for any reason. We welcome articles relevant to project management. The Measurable News does not pay for submissions. Articles published in The Measurable News remain the property of the authors.

ADVERTISINGAdvertising inquiries, submissions, and payments (check or money order made payable to the College of Performance Management) should be sent to CPM headquarters. Advertising rates are $1000 for inside front or back cover (full-page ad only), $800 for other full-page ads, $500 for half-page ads, and $300 for quarter-page ads. Issue sponsorships are available at $2,500 per issue. Business card ads are available for $100 per issue (or free with full-page ad). Rates are good from January 1, 2018 – December 31, 2018. College of Performance Management reserves the right to refuse publication of any ad for any reason.

SUBSCRIPTIONSAll College of Performance Management publications are produced as a benefit for College of Performance Management members. All change of address or membership inquiries should be directed to:

College of Performance Management 11130 Sunrise Valley Drive, Suite 350Reston, VA 20191 Ph 703-370-7885 • Fx 703-370-1757 www.mycpm.org

All articles and letters represent the view of the authors and not necessarily those of College of Performance Management. Advertising content does not signify endorsement by College of Performance Management. Please notify College of Performance Management for single copy or reproduction requests. Appropriate charges will apply.

© 2018 by the College of Performance Management. All rights reserved.

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THE MEASURABLE NEWS

The Quarterly Magazine of the College of Performance Management | mycpm.org

2018.02

05

Subtropical storm Alberto, the first named storm of the 2018 hurricane season, gave EVM World 2018 planners and me a bit of a scare on the weekend before EVM World began in Ft. Lauderdale, Florida. Alberto rudely arrived a couple days ahead of the official June 1 season opening, causing me to change my travel plans. With my town squarely in the storm’s predicted path and with worrisome flashbacks to Hurricane Sandy’s effect on the Fall Workshop a few years ago in mind, I canceled my flight and drove the 600 miles from Florida’s panhandle. Alberto fortunately held to its course and the south Florida weather was glorious for our event.

And what an event it was! We were treated to memorable keynotes by “Kik” Piney and Pat Finneran. Kik introduced us to Earned Benefit Program Management: Aligning, Realizing and Sustaining Strategy (the title of his new book), effectively integrating Earned Value Management with benefits realization, a key component of our evolving Integrated Program Performance Management certification. Pat recounted his extensive experience using EVM on a variety of program types ranging from aircraft development and production to maintenance, repair and overhaul. Attendees rated those presentations among the best ever, and we have provided links to them on the CPM website.

http://www.mycpm.org

I also had the privilege to present CPM’s highest honor, the Gary Christle Excellence in Leadership award, to Ms. Karen Richey, who heads the team that developed the excellent family of guides published by the Government Accountability Office. Robert Rovinsky, the only previous awardee, was there to witness the presentation and with Karen has agreed to chair a leadership forum at a future CPM event – perhaps the Integrated Performance Management Workshop this fall.

With EVM World in the rear-view mirror and having demonstrated yet again our leadership in introducing new theories, reviewing successes and celebrating our leaders, CPM is accepting nominations for open governing board positions (President and Vice President (Administration) and (Communications)) and preparing for the annual Integrated Program Management Workshop. This year’s IPMW will be held at the George Washington University in Washington, DC, November 13-14. We heard your requests to move it away from Halloween and hit a seam before the Thanksgiving – Christmas season.

Mark your calendars for November – consider running for office – and look for ways to contribute to CPM and our chapters. Meanwhile I hope you and your families are enjoying a wonderful, relaxing summer.

MESSAGE FROM THE PRESIDENTWayne Abba

http://www.mycpm.org/integrated-program-management-using-evm-its-essential/

Learn from…• Special Guest Speakers• Professional Education Training Seminars• Tools Tracks• Topical Workshops• Practice Symposia

Socialize and network at…• Newcomers’ Orientation• Speakers-Only Reception• All-Attendee Reception

Promote your organization…• Sponsorship and exhibiting packages now available

For more information…• Don Kaiser [email protected] (703) 234-4116 www.ipmworkshop.org

IPMW 2018The Premier Workshop on Earned Value Management

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The College of Performance Managementis a PMI Registered Education Provider

The PMP, PMI, and R.E.P., and the Registered Education Providerlogo are registered marks of the Project Management Institute, Inc.

IPMW 2018 Ad Press.pdf 1 5/21/2018 11:40 AM

THE MEASURABLE NEWS


2018.02

07

To our readers:

Measurable News is currently undergoing a transformation! With the College of Performance Management (CPM) board elections imminent, we look ahead to new leadership. We are excited about the evolution as this transition provides guidance with a primary objective of retaining CPM relevance within the discipline of program, project, and performance management. Under this broader vision it is the purpose of Measurable News to act as the conduit in advancing the literature of our discipline by introducing new and innovative ideas.

With this issue, we would like to introduce several key changes in the editorial staff. Robin Pulverenti and Nicholas Pisano are now the managing editors of the publication. Our sincere appreciation and gratitude go to Glen Alleman and Rick Price for the time and effort volunteered and the direction they brought to the Measurable News.

Before turning over the reins of the publication, Glen and Rick outlined a new vision to address the practical needs of the organization. In executing their vision, we are changing the format and frequency of the Measurable News and providing an additional publication.

Previously, Measurable News focused solely on a quarterly Earned Value Management publication. Beginning in 2019 a new, semi-annual journal turns to a rigorous academic and scholarly focus. This refreshed focus seeks to advance the EVM discipline by broadening the scope to explore compelling developments in areas such as Agile, Integrated Program and Project Management, and the utility and use of Big Data. This new journal leverages evidence-based research, results, and experience that contributes to the literature through best practices.

Measurable News has entered into agreements with other journals with an objective of reprinting notable content that would not otherwise draw the attention of its membership and readership. Examples include a series of articles by Kik Piney (EVM World 2018 Keynote speaker), published earlier this year in PM World regarding his concept of Earned Benefit Management. An advantage of reciprocal content means that members who contribute material to Measurable News may be asked for republication rights from partner organizations and publications, expanding their audience and the attention that their ideas garner.

For those seeking quickly digestible and frequent content we are launching the “Knowledge from the College, The Measurable Newsletter”. This approach leverages digital multi-media platforms (and an occasional print version) that expand into disciplines supporting Integrated Program Performance Management with the following goals:

1. Advancing the breadth of knowledge for those in the profession of IPPM

2. Educating and training the next generation of Program Performance Managers and Project Managers

3. Providing a forum to share ideas, tools, tips, and tricks of the trade

It is our firm belief that in order to excel in our field we possess an understanding of the scope and effort that comprise the underlying quantifiable data and disciplines that produce it.

As we look ahead to new leadership within CPM, and across organizations that our membership serves, we also look back to reflect upon the hard-work and thought leadership that helped to build the discipline of project and performance management.

CPM exists because of the focus and dedication of its membership. As members of an altruistic and committed volunteer organization, CPM serves to teach future generations given the breadth of knowledge and experience represented within the membership base. We encourage you to view the articles and video interviews captured in an interactive timeline at: http://www.mycpm.org/the-history-of-evm/. We also encourage you to contribute content or an interview to become part of this living history project.

The work that started more than 50 years ago in the Department of Defense with the concept of PERT/COST, that became C/SCSC, and then codified in 1998 as a best management practice with the signing of the EIA-748 Earned Value Management Guidelines into law, continues.

We hope you are as excited about these changes as we are and. Thank you for your patience while we work through this transition and invite you to join in the fun as we embark on this new path. Feel welcome to contribute ideas, content, and volunteer as part of both the journal and newsletter teams.

Onward and upward,The Measurable News editorial staff

To learn more about the transition, submit content, and to volunteer please contact:

Beatrice Barry: [email protected] Pisano: [email protected] Pulverenti: [email protected]

LETTER FROM THE EDITORSGlen B. Alleman and Rick Price

http://www.mycpm.org/the-history-of-evm/

Since 1978, Humphreys & Associates, Inc. has passionately advocated and promoted the integration of technical, schedule, and cost components to achieve the full benefit of using a performance measurement system to enhance management visibility and control. We have a long tradition of leadership in the industry and creativity seeking a balance of proven and innovative EVMS processes to apply to project management challenges.

H&A is unique in the common sense approach we bring to organizing, planning, and controlling projects. We use proven methods and techniques that have been honed over decades of hands-on experience to achieve the most appropriate, timely, and cost effective results. Our solutions are always compliant with the ANSI-748 Standard for Earned Value Management Systems. We are the “911” of EVMS because government and industry both call us when they absolutely and positively must resolve an issue with an EVMS.

Humphreys & Associates offers a complete range of EVMS consulting services for the entire project life cycle. From proposal preparation and management system gap analysis to mock compliance reviews or contractor self-surveillance and third party validations, H&A is the authority in EVMS.

Because of our unparalleled breadth of knowledge and hands-on experience, H&A is the industry recognized leader in EVMS trainingand hands-on mentoring for project managers and control account managers.

Interested in learning more?

Visit our website at www.humphreys-assoc.com or call us today at (714)685-1730

THE MEASURABLE NEWS


2018.02

09

The CPMTV chapter held its summer quarterly meeting on Tuesday, July 10 in Huntsville, Alabama. With good representation from industry, education, and government, 18 individuals attended the meeting. The meeting was graciously hosted by MTS and Defense Acquisition University (DAU) with MTS providing refreshments and DAU providing the meeting space at their Huntsville facility. The meeting was emceed by Bob Wasser, CPMTV President, and contained presentations by Norman Dean and Karen Kelly.

Bob Wasser kicked things off by welcoming meeting attendees, presenting the meeting agenda, and thanking the sponsors. He continued by going through the list of current CPMTV officers and stated that Mr. Jon Fleming has taken over the role of Executive Vice President. Mr. Wasser then discussed 2019 officer elections, mentioned he will serve in the office of past president, noted elections should occur electronically via an e-mail from CPM Headquarters, and then opened the floor for nominations. Mr. Jon Fleming was nominated for President, Mr. Norman Dean for Vice President of Administration, Mr. Steven Cedotal for Vice President of Finance, Mr. Reuben Russell for Vice President of Certifications, and Ms. Natasha Parker for Vice President of Meetings and Events. Mr. Wasser concluded his opening remarks by introducing the speakers.

Norman Dean, Operations Research Analyst at the Lower Tier Project Office, gave an enlightening presentation entitled “When the FAR Goes too Far: Understanding EVM Waivers and Deviations.” Mr. Dean’s talk began by discussing the governmental regulations and policies that prescribe the use of earned value. He then gave a detailed breakdown of the waiver and deviation process including why a waiver may be desired, what to state in a request, and whose signatures are required for approval. Mr. Dean concluded his talk by sharing some helpful resources.

Karen Kelly, an Earned Value Analyst at the Lower Tier Project Office, then gave a thoroughly delightful and educational talk entitled “What is Earned Schedule and Does it Matter?” Ms. Kelly started by sharing how she learned of the earned schedule technique and thanked Mr. Yancy Qualls for his assistance in developing her presentation. She continued by discussing the short comings of using the SPI metric to measure schedule performance, giving the theory of earned schedule and how it is calculated, and showing examples of how she has utilized it in her office. Those in attendance thoroughly enjoyed Ms. Kelly’s presentation, with one attendee commenting he appreciated how the presentation made him both laugh and think.

Bob Wasser closed the meeting by thanking the presenters, MTS, and DAU. The next CPMTV quarterly meeting will be Tuesday, September 11th at DAU Huntsville from 3 pm to 5 pm. Wayne Abba, CPM President, will be giving a presentation entitled "Integrated Program Performance Management: The Future of EVM".

CPM TENNESSEE VALLEY (CPMTV) CHAPTERQUARTERLY MEETING – JULY 10, 2018By Norman Dean

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THE MEASURABLE NEWS


2018.02

11

ABSTRACT Forecasting a project completion date based on project performance is an essential and ongoing task for the schedulers during the construction phase. Earned Schedule (ES) is an innovative forecasting technique that is derived from and is an extension to Earned Value Management (EVM). Research shows that ES is more accurate than EVM in terms of forecasting a project end date. Although several institutions have widely acclaimed and adopted ES, Oracle Primavera P6TM does not support the calculations of ES. This paper presents a method that implements ES concepts on the activity level using the advanced features of Primavera P6TM. The method suggested applies the concepts of ES to predict the remaining duration of activities in progress based on EVM information. It then uses these predictions to determine the project completion date. This method takes the Critical Path Method (CPM) into account in the forecasting process. In addition, this method helps primavera P6TM users benefit from ES indicators as a management tool.

INTRODUCTIONDuring the construction phase, there is a constant need to forecast project completion date based on the current rate of progress, in order to know whether or not the project will be finished on time. Delivering a project within a specified time frame is a requirement in most construction contracts. If the contractor or the owner cause a project to suffer delays, they will experience serious ramifications in the form of delay damages and/or financial loss.

One of the most effective tools for determining key information about a project’s schedule and cost is earned value management (EVM). It has proven over decades to be a very beneficial project control technique.

In EVM, the scope, cost, and schedule baselines are incorporated in an effective way, first to measure the performance of the project in progress, and second to forecast future project outcomes. Applying the cumulative project cost for all planned work over the planned duration forms a performance measurement baseline (PMB), which is commonly shown as an S-curve. The point at the top of the curve is the budget at completion (BAC), which is associated with the planned finish date. At any point in time (data date) throughout the project duration, the project status can be represented as a budgeted value. This budgeted value is also known as the planned value (PV) and sometimes called the budgeted cost for work scheduled (BCWS). During the project progress, the actual cost (AC) of work performed is measured and plotted along with the planned value. This provides a method for determining whether costs are in alignment with the planned value, i.e., if expenditures exceed the planned budget or stay below the planned budget. However, with this model, it is difficult to know if actual costs are out of line unless they are compared with the concept of earned value (EV), which is sometimes called the budgeted cost for work performed (BCWP). Using these three data points (EV, AC, PV), variance and index values can be calculated to evaluate a project’s status and to find out if the remaining time and budget are sufficient to achieve the project outcomes [1, p.217-224].

EVM has achieved significant success in describing and analyzing cost performance, but it has not succeeded as much in terms of analyzing and predicting schedule performance. The schedule indicators are measured in unit of cost, in lieu of unit of time. For example, if the schedule variance is −5,000 USD, it indicates that the project is behind schedule, but it provides no information about the length of the delay in terms of the number of days. There is a question of why a ratio of cost is used to calculate schedule indicators,

FORECASTING PROJECT COMPLETION DATE USING EARNED SCHEDULE AND PRIMAVERA P6™By Asaad Alshaheen, PMP

12 The Measurable News 2018.02 | mycpm.org

when really what is needed is a ratio of time. The big problem is that the indicators do not reflect the real situation of the project duration extending significantly beyond the planned completion date, but on the contrary, it provides satisfactory information about the project performance in terms of schedule. Common observations show that such schedule indicators become apparent when the project is nearly two-thirds complete. Thus, if the period starts from a certain point in time before the planned finish date, and it finishes at the actual completion date, these indicators may provide flawed performance measurements to the project managers. [2, p.26]

In 2003, in his paper “Schedule Is Different,” engineer and author Walter Lipke introduced the earned schedule (ES) technique as a better version of EVM traditional schedule indication to overcome what he called the “the cost-schedule dilemma” [3]. The ES method derives the schedule information using same EVM data components. The ES method offers reliable figures that both describe the real performance and forecast the future outcome for projects, whether they are finished early or late. ES is considered a breakthrough technique in integrated performance management and EVM theory and practice. The method has spread rapidly, and it is known to be utilized as a management tool for construction, commercial, software, and defense projects in various countries, including Australia, Belgium, Sweden, the United States of America, and the United Kingdom. The ES principles have been incorporated in the Practice Standard for Earned Value Management and in the Project Management Institute (PMI) College of Performance Management [2, p.27].

Taking the advantages of the ES on the project level introduced so far, this paper aims to employ the concepts of ES on the activity level to obtain predictions of an activity's remaining duration and subsequently determine a project completion date using Oracle Primavera P6 software. Oracle Primavera P6 does not support ES computations; however, it is one of the most popular project management software programs in the construction industry due to its capabilities to perform complex analysis and data presentation. This paper describes the procedures of using Oracle Primavera P6 advanced features to accomplish ES computations and display ES metrics.

EARNED SCHEDULE APPLICATION ON THE ACTIVITY LEVELLipke summarized the principles of ES on the project level as follows: “The ES idea is simple: identify the time at which the amount of earned value (EV) accrued should have been earned. By determining this time, time-based indicators can be formed to provide schedule variance and performance efficiency management information.” [2, Page 28]. In other words, it is much more useful to calculate schedule variance by comparing the duration or date at the current time with the duration or date when the value of work (EV) was planned. Thereby, it is much easier for EV practitioners to look at ES in the S-curve chart and see that the project is ahead of or behind schedule in terms of time. Figure 1 describes the concepts of ES and its associated formulae to obtain ES time, schedule variance SV (t) and schedule performance index SPI (t) at the given actual time (AT). These indicators are used to evaluate the schedule performance and to determine the estimate at completion for time. Thus, the way to think about the estimate at completion for time is the point in time when earned value equals the budget at completion.

13The Measurable News 2018.02 | mycpm.org

5

Figure 1 – Earned Schedule Concept [2]

The same method is followed to apply the ES concept on an individual activity in progress. The earned value accrued for an activity at the data date can be identified and then projected backward or forward in time to see when that value was planned to have been achieved, according to the budget. Then, ES and the actual time (AT) of EV accrued are derived to eventually calculate a schedule performance index and the schedule variance of the activity. Figure 2 illustrates how the ES concept is applied to any activity in progress. The activity in progress in the update schedule is shown above the same activity in the baseline schedule, according to actual and planned dates, respectively. The activity in progress is shown as a green bar, and the shaded area represents the progress achieved during the performance period, from the actual start of the activity up to the data date when the EV accrued is measured. The blue bar represents the activity in the baseline schedule and the shaded area represents the point at which the PV is equal to the EV accrued. ES represents the time at which the PV in the baseline schedule is equal to the EV accrued of the same activity in the updated schedule at the data date. AT represents the performance period - working days only - between the activities’ actual start and the data date when the EV accrued is measured. The difference between AT and ES is equal to schedule variance, SV(t), and the comparison between them is equal to the schedule performance index, SPI(t). Eventually, the remaining duration of the activity is forecasted based on its SPI(t).

Figure 1 – Earned Schedule Concept [2]

The same method is followed to apply the ES concept on an individual activity in progress. The earned value accrued for an activity at the data date can be identified and then projected backward or forward in time to see when that value was planned to have been achieved, according to the budget. Then, ES and the actual time (AT) of EV accrued are derived to eventually calculate a schedule performance index and the schedule variance of the activity.

Figure 2 illustrates how the ES concept is applied to any activity in progress. The activity in progress in the update schedule is shown above the same activity in the baseline schedule, according to actual and planned dates, respectively. The activity in progress is shown as a green bar, and the shaded area represents the progress achieved during the performance period, from the actual start of the activity up to the data date when the EV accrued is measured. The blue bar represents the activity in the baseline schedule and the shaded area represents the point at which the PV is equal to the EV accrued. ES represents the time at which the PV in the baseline schedule is equal to the EV accrued of the same activity in the updated schedule at the data date. AT represents the performance period

- working days only - between the activities’ actual start and the data date when the EV accrued is measured. The difference between AT and ES is equal to schedule variance, SV(t), and the comparison between them is equal to the schedule performance index, SPI(t). Eventually, the remaining duration of the activity is forecasted based on its SPI(t).


6

Figure 2- Earned Schedule Application on the Activity Level Hypothetical Scenarios Actual performance of a construction activity takes on many scenarios in a project site. For example, the start of a construction activity may be delayed, or various factors may have an impact on the production rate at which the activity can be completed. There are numerous reasons why an activity may be delayed. It could be because of climatic conditions, a lack or shortage of available resources, late deliveries, missing information, unforeseen circumstances, or unlimited other reasons. To illustrate ES computations, hypothetical examples of some scenarios are presented below. Assume the activity in figure 3 is planned to be accomplished in 6 days with the budgeted cost equal to 12,000 USD, and assume that the activity cost is distributed evenly on its original duration (OD). Scenario #1: Ideal situation • The activity started as scheduled. • The activity progressed at the planned production rate for 3 days. • The total EV is equal to 6,000 USD at the data date. • AT = 3 days. • ES = 3 days. • SV(t) = ES − AT = 3 − 3 = 0. • SPI(t) = ES / AT = 3 / 3 = 1.

Figure 2- Earned Schedule Application on the Activity Level

Hypothetical ScenariosActual performance of a construction activity takes on many scenarios in a project site. For example, the start of a construction activity may be delayed, or various factors may have an impact on the production rate at which the activity can be completed. There are numerous reasons why an activity may be delayed. It could be because of climatic conditions, a lack or shortage of available resources, late deliveries, missing information, unforeseen circumstances, or unlimited other reasons. To illustrate ES computations, hypothetical examples of some scenarios are presented below. Assume the activity in figure 3 is planned to be accomplished in 6 days with the budgeted cost equal to 12,000 USD, and assume that the activity cost is distributed evenly on its original duration (OD).

Scenario #1: Ideal situation• The activity started as scheduled.• The activity progressed at the planned production rate for 3 days.• The total EV is equal to 6,000 USD at the data date. • AT = 3 days.• ES = 3 days.• SV(t) = ES − AT = 3 − 3 = 0.• SPI(t) = ES / AT = 3 / 3 = 1.• Expected duration (ED) = OD / SPI(t) = 6 / 1 = 6 days.• Remaining duration (RD) = ED – AT= 6 – 3 = 3 days.• The activity is not delayed as shown in figure 3 – Scenario 1.

Scenario #2: Same start and lack of performance

• The activity started as scheduled.• For 3 days, the activity progressed more slowly than the planned production rate.• The total EV is equal to 4,000 USD at the data date. • AT = 3 days.• ES = 2 days.• SV(t) = ES - AT = 2 − 3 = −1.• SPI(t) = ES / AT = 2 / 3 = 0.67.• ED = OD / SPI(t) = 6 / 0.67 = 9 days.• RD =ED − AT = 6 days.• The activity is delayed 3 days due to a lack of performance as shown in figure 3 –

Scenario 2.

Scenario #3: Same start and same performance but with suspension of works• The activity started as scheduled.• The activity progressed at the planned production rate for 2 days.• The activity is suspended for 2 days, and then the work resumes for 1 day.• The total EV is equal to 6,000 USD at the data date.


• AT = 3 days.• ES = 3 days.• Schedule variance SV(t) = ES-AT=3-3=0.• Schedule performance index SPI(t) = 1.• ED = OD / SPI(t) = 6 / 1 = 6 days.• RD = ED-AT=6-3=3 days.• The activity is delayed 2 days due to the suspension of work as shown in figure 3 –

Scenario 3.

Scenario #4: Late start and same performance• The activity started 2 days later than scheduled.• For 3 days, the activity progressed more slowly than the planned production rate.• The total EV is equal to 6,000 USD at the data date. • AT = 3 days.• ES = 3 days.• SV(t) = ES - AT = 3 − 3 = 0.• SPI(t) = ES / AT = 23 / 3 = 1.• ED = OD / SPI(t) = 6 / 1 = 6 days.• RD =ED − AT = 6-3=3 days.• The activity is delayed 2 days due to slippage at the start as shown in figure 3 – Scenario 4.

Scenario #5: Early start and lack of performance• The activity started 2 days earlier than scheduled.• For 3 days, the activity progressed more slowly than the planned production rate.• The total EV is equal to 4,000 USD at the data date. • AT = 3 days.• ES = 2 days.• SV(t) = ES - AT= 2 − 3 = −1.• SPI(t) = ES / AT = 2 / 3 = 0.67.• ED = OD / SPI(t) = 6 / 0.67= 9 days.• RD = ED − AT = 9-3=6 days.• The activity is delayed 1 day due the lack of performance as shown in figure 3 – Scenario 5.

Looking carefully at the scenarios, ES measurements indicate the extent to which the progress of work is consistent with the plan, regardless of any delays that occurred due to an activity’s start slippage or due to suspending and resuming the work. Namely, the schedule performance index and the schedule variance of an activity reflect the lack of performance only, and they do not necessarily provide enough information to draw a full conclusion of the activity’s status. Therefore, these measurements should be combined with other schedule analysis information—such as critical path analysis, total float, start variance, and finish variance, for example—to give a comprehensive picture of the activity status and its effect on overall project schedule [3,p. 167-168].

The critical path method (CPM) plays a crucial role in finding the impact of activity delays on the project completion date. The power of the CPM lies in the relationship ties between activities, so if anything changes, its effects on the rest of the schedule can be seen immediately. The critical path is simply the possible chain of activities, from the beginning to the end of a project that has the least amount of float (the longest path), such that any delays in the critical path activities will negatively affect the finish date of the project. The usefulness of the CPM is that it allows one to run “what if” scenarios and spot potential problems areas early, while there is still time to proactively deal with them. It also provides an effective way of documenting the impact of delays on a project.

Thus, by using ES and schedule analysis together, one can draw a full conclusion of a project’s status. The ES provides reliable figures of the activity’s remaining duration, given the current rate of progress, while the CPM incorporates all delays and inefficiencies in the network schedule to measure the total impact on the future project outcomes.


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Figure 3- Five scenarios of ES application on the activity level

1 2 3 4 5 61 2 3 4 5 6

Data DateAT

ES

1 2 3 4 5 6 7 8 91 2 3 4 5 6

ATData Date

ES

1 2 3 4 5 61 2 3 4 5 6

ATData Date

ES

Scenario 1 Scenario 2

Scenario 3 Scenario 4

1 2 3 4 5 6 7 8 91 2 3 4 5 6

ES

ATData date

Scenario 5

1 2 3 4 5 61 2 3 4 5 6

ATData date

ES

Updated ActivityPlanned Activity

Figure 3- Five scenarios of ES application on the activity level

PRIMAVERA P6 SOLUTION FOR EARNED SCHEDULEOracle Primavera P6 is one of the most popular project management software programs that is used to plan, manage, and control all aspects of a construction project. It is a professional toolbox that provides a wide range of enterprise capabilities to the planners, project managers, schedulers, employers, and any other stakeholders who are involved in a given project.

Although Primavera P6 software does not support ES computations, it provides powerful capabilities that can be utilized to do so. User-defined fields and global changes, for instance, are two advanced features in Primavera P6 software, which also offers many mathematical and logical functions to perform complex analyses and processes.

Figure 4 illustrates the main steps to carry out ES demonstration using Primavera P6. The first two steps are required one time when working on a given schedule; the other steps are required every time to update the schedule and determine the project completion date.


10

Primavera P6 Solution for Earned Schedule Oracle Primavera P6 is one of the most popular project management software programs that is used to plan, manage, and control all aspects of a construction project. It is a professional toolbox that provides a wide range of enterprise capabilities to the planners, project managers, schedulers, employers, and any other stakeholders who are involved in a given project. Although Primavera P6 software does not support ES computations, it provides powerful capabilities that can be utilized to do so. User-defined fields and global changes, for instance, are two advanced features in Primavera P6 software, which also offers many mathematical and logical functions to perform complex analyses and processes. Figure 4 illustrates the main steps to carry out ES demonstration using Primavera P6. The first two steps are required one time when working on a given schedule; the other steps are required every time to update the schedule and determine the project completion date.

Figure 4-Earned Schedule Demonstration Steps Using P6 Create User-Defined Fields Select the Enterprise menu, and then choose User Defined Field from the drop-down menu. Create eight user-defined fields, as follows. Some fields are required, and the other are calculated. • Activity Budgeted Cost (The field type is “cost,” and it is required)

Setup Stage

•Create User Defined FieldsStep 1

•Create A Global Change 1 & 2Step 2

Updating Stage

•Enter Update InformationStep 1

•Apply The Global Change 1 & 2Step 2

•Schedule The ProjectStep 3

•Display The ResultsStep 4Figure 4-Earned Schedule Demonstration Steps Using P6

Create User-Defined FieldsSelect the Enterprise menu, and then choose User Defined Field from the drop-down menu. Create eight user-defined fields, as follows. Some fields are required, and the other are calculated.

• Activity Budgeted Cost (The field type is “cost,” and it is required)• Earned Value Accrued (The field type is “cost,” and it is calculated)• Daily Planned Value (The field type is “cost,” and it is calculated)• Expected Duration (ED) (The field type is “number,” and it is calculated)• Actual Time (AT) (The field type is “number,” and it is calculated)• Earned Schedule (ES) (The field type is “number,” and it is calculated)• SV(t) (The field type is “number,” and it is calculated)• SPI(t) (The field type is “number,” and it is calculated)

Budget at completion (BAC) and earned value are already built-in fields in Primavera P6. The program calculates these fields if the schedule is loaded with resources, costs, and/or expenses. But for many reasons, CPM schedules are often not resource loaded, especially if the contract does not require resource and cost loading. To address this problem, the author suggests creating user-defined fields for “Activity Budgeted Cost” instead of

“Budgeted at Completion,” to be entered during the updating stage, and “Earned Value Accrued” instead of “Earned Value,” to be computed during the global change steps. Otherwise, these two fields are equal to the built-in fields in P6, and the required formulas should be added to the global change 1.

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• Earned Value Accrued (The field type is “cost,” and it is calculated) • Daily Planned Value (The field type is “cost,” and it is calculated) • Expected Duration (ED) (The field type is “number,” and it is calculated) • Actual Time (AT) (The field type is “number,” and it is calculated) • Earned Schedule (ES) (The field type is “number,” and it is calculated) • SV(t) (The field type is “number,” and it is calculated) • SPI(t) (The field type is “number,” and it is calculated) Budget at completion (BAC) and earned value are already built-in fields in Primavera P6. The program calculates these fields if the schedule is loaded with resources, costs, and/or expenses. But for many reasons, CPM schedules are often not resource loaded, especially if the contract does not require resource and cost loading. To address this problem, the author suggests creating user-defined fields for “Activity Budgeted Cost” instead of “Budgeted at Completion,” to be entered during the updating stage, and “Earned Value Accrued” instead of “Earned Value,” to be computed during the global change steps. Otherwise, these two fields are equal to the built-in fields in P6, and the required formulas should be added to the global change 1.

Figure 5-Create User Defined Fields1

Figure 5-Create User Defined Fields1

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Create a Global Change 1Select the Tools menu, then choose Global Change from the drop-down menu. Create a global change under the name “Earned Schedule Calculation 1.” In the top section of the global change window, select task dependent activities in progress only (> 0% complete, < 100% complete). In the down section of the global change window, add the formulas required to calculate ES measurements and the remaining duration, as shown in figure 6.

• Daily planned value = activity budgeted cost / original duration• Daily planned value = daily planned value × 8. This step has been taken because

Primavera P6 actually stores durations in its database in the hourly format. Therefore, the figures should be multiplied by the number of hours per day. In this example, the number of hours per day is 8.

• Earned value accrued = activity budgeted cost × physical percent of completion• Actual time (AT) = Actual Duration• Earned schedule (ES) = earned value / daily planned value. This step calculates the ES at

which the planned value cumulative is equal to earned value accrued.

• Expected duration = original duration / SPI(t)• Expected duration = expected duration / 8• Remaining duration = expected duration − actual time (AT)• Remaining duration = remaining duration × 8

If the schedule is resources loaded, the following steps are required in global changes 1 and 2.

• Activity budgeted cost = budgeted at completion• Earned value accrued = earned value

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Figure 6- Create a Global Change 11

Create a Global Change 2 Select the Tools menu, then choose Global Change from the drop-down menu. Create a global change under the name “Earned Schedule Calculation 2.” In the top section of the global change window, select task dependent completed activities (100 % complete) only. In the lower section of the global change window, add the formulas required to calculate ES measurements and the remaining duration, as shown in figure 7. • Daily planned value = activity budgeted cost / original duration • Earned value accrued = activity budgeted cost • Earned schedule (ES) = original duration • Earned schedule(ES) = earned schedule (ES) / 8 • Actual time (AT) = actual duration • Actual time(AT) = actual time (AT) / 8 • SPI(t) = earned schedule / actual time (AT)


Create a Global Change 2Select the Tools menu, then choose Global Change from the drop-down menu. Create a global change under the name “Earned Schedule Calculation 2.” In the top section of the global change window, select task dependent completed activities (100 % complete) only. In the lower section of the global change window, add the formulas required to calculate ES measurements and the remaining duration, as shown in figure 7.

• Daily planned value = activity budgeted cost / original duration• Earned value accrued = activity budgeted cost• Earned schedule (ES) = original duration


• Earned schedule(ES) = earned schedule (ES) / 8• Actual time (AT) = actual duration• Actual time(AT) = actual time (AT) / 8• SPI(t) = earned schedule / actual time (AT)• SV(t) = earned schedule − actual time (AT)

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• SV(t) = earned schedule − actual time (AT)


Update Schedule

1) During the updating process, enter the actual start and/or finish and the physical percent of completion for each activity to be updated at the given data date. If the schedule is not loaded with resources, enter the budgeted value alongside the aforementioned data, as shown in figure 9.

2) Enter the remaining duration equal to 1 day for each activity in progress and Schedule the project at the given data date. This intermediate step is necessary to make P6 calculate Actual Duration field which is important to calculate AT later in global change 1.


Update Schedule

1. During the updating process, enter the actual start and/or finish and the physical percent of completion for each activity to be updated at the given data date. If the schedule is not loaded with resources, enter the budgeted value alongside the aforementioned data, as shown in figure 9.

2. Enter the remaining duration equal to 1 day for each activity in progress and Schedule the project at the given data date. This intermediate step is necessary to make P6 calculate Actual Duration field which is important to calculate AT later in global change 1.

3. Apply sequentially the previously created global changes 1 and 2 to perform the calculations and determine the remaining duration that is required to forecast the project completion date, as shown in figure 10.

4. Round the remaining duration figures and schedule the project at the given data date to forecast the project completion date, as shown in figure 11.

5. Display the results by adding the columns required, as shown in figure 12.

Looking to the results of the example shown in Figures 8 through Figure 12 leads to two key observations. First, the figures in the remaining duration column are in decimal format, and they could not be rounded to the nearest integer number with the available functions in Primavera P6. Second, Primavera P6 stores the duration in its database as hours, and this makes the software schedule the successor of a finished activity start on the same day. For example, if an activity’s remaining duration is 1.75 days, Primavera P6 schedules the finish date of this activity at 14:00 (2:00 p.m.) according to the 8 hours/day calendar and let its successor start on the same finish date at 15:00 (3:00 p.m.). The second finding is that the totals that appear at the top of the columns SPI(t) and SV(t) are simply summations of the figures in those columns. Primavera P6 does not deal with these fields like the ones that are already part of the software system, such as original duration. Thus, these totals do not reflect the overall project indicators.


A further step is required to address these two points. First, the remaining duration figures are rounded manually before scheduling the project again, to determine the project finish date, as shown in figure 9. Second, the overall project indicators can be determined graphically using software such as Microsoft Excel. For instance, Mr. Lipke provides several ES calculations for project indicators based on monthly data on the website www.earnedschedule.com. These calculators are produced using Excel.

16

Figure 8 – Baseline Schedule1 Figure 8 – Baseline Schedule1

17

Figure 9 – Layout for Updating Schedule Step1 and 21

Figure 9 – Layout for Updating Schedule Step1 and 21

18

Figure 11 – Remaining duration figures rounded manually1

Figure 10 – Layout for Updating Schedule Step 3 and 41


18




19

Figure 12 – Display the Schedule Results Step 51 Figure 12 – Display the Schedule Results Step 51

EARNED SCHEDULE ON THE PROJECT LEVELThe final step in this paper is the comparison of the forecasted project completion date derived from using traditional ES on the project level method and using the suggested method that combines schedule analysis and ES on the activity level. The results reveal a significant variance in the expected project completion date between these two methods. The example data shown in Figures 8-12 are used for demonstration purposes. The hypothetical example involves seven activities as show in Figure 8. Activities 1, 4 and 7 are critical while the others are non-critical. The scenario of the first update – at the end of forth working day – is that activity 1 started as scheduled and for four days it progressed more slowly than the planned production rate to reach 65% complete at the given data


References1) Project Management Institute (PMI), A Guide to the Project Management Body of Knowledge (PMBOK Guide), 5th Edition, Newtown Square, Pa: PMI, 2013.

2) Lipke W., Henderson K., Earned Schedule: An Emerging Enhancement to Earned Value Management, Crosstalk – The Journal of Defense Software Engineering, pp. 26-30, Nov. 2006.

3) Lipke W., Schedule is different, The Measurable News, pp. 31–34, 2003.

4) Amos, S. (Ed.), Skills and Knowledge of Cost Engineering, 5th Edition, (2004).

Endnotes1) Figures 5 – 11 are screen shots from Oracle® Primavera Project Management P6TM, Version R8.2, Oracle Primavera P6 is a trademark of Oracle and/or its affiliates.

date. Activity 2 started one day later than scheduled and for three days it progressed more slowly than the planned production rate and completed at the data date. Activity 3 started one day later than scheduled and it progressed at the planned production rate for three days to reach 75% complete at the data date.

Using schedule analysis and ES on the activity level indicates a four-day delay of the project completion date due to the four-day delay of critical Activity 1 as shown in Figure 12. On the other hand, using traditional ES on the project level indicates an eight- working day delay of the project completion date as shown in Figure 13.

The traditional method of ES on the project level considers all critical and non-critical activities in progress to determine the EV and, subsequently, ES metrics of the project. In the suggested method, ES is used to forecast the remaining duration for each activity in progress and CPM is used to incorporate delays or disruptions of the critical activities only on the project outcome since non-critical activities consume its floats in the case of any delay or disruption before they become critical activities that drive the project completion date.

21

Figure 13 – Earned Schedule on the Project Level

Conclusion This paper has described the method of application for earned schedule concepts on the activity level. Then, by using the advanced features of Primavera P6, namely user-defined fields and global changes, ES metrics are calculated. The remaining duration of the activities are then obtained utilizing the EVM information. Finally, the project completion date is determined based on the current rate of progress. A comparison between traditional ES method and the proposed method shows a significant variance in the expected completion date of the project because the traditional ES considers all critical and non-critical activities in progress to determine EV information and ES metrics. However, the proposed method integrates the ability of ES to provide reliable schedule indicators and the power of CPM, to show the effect of activity delays on project milestones. The method is easy to follow and practicable. However, there are two shortcomings associated with it. First, it is not possible to use global change to round the figure of remaining duration to an integer number; thus, the figure remains in decimal format, which allows some activities to start or finish in a part of one day and successor activities to start later that day. Second, the summation of SPI(t) and SV(t) does not reflect the correct overall project performance. Except for these minor shortcomings, the method helps Primavera P6 users benefit from ES technique for predicting the project completion date. References

Figure 13 – Earned Schedule on the Project Level

CONCLUSIONThis paper has described the method of application for earned schedule concepts on the activity level. Then, by using the advanced features of Primavera P6, namely user-defined fields and global changes, ES metrics are calculated. The remaining duration of the activities are then obtained utilizing the EVM information. Finally, the project completion date is determined based on the current rate of progress. A comparison between traditional ES method and the proposed method shows a significant variance in the expected completion date of the project because the traditional ES considers all critical and non-critical activities in progress to determine EV information and ES metrics. However, the proposed method integrates the ability of ES to provide reliable schedule indicators and the power of CPM, to show the effect of activity delays on project milestones. The method is easy to follow and practicable. However, there are two shortcomings associated with it. First, it is not possible to use global change to round the figure of remaining duration to an integer number; thus, the figure remains in decimal format, which allows some activities to start or finish in a part of one day and successor activities to start later that day. Second, the summation of SPI(t) and SV(t) does not reflect the correct overall project performance. Except for these minor shortcomings, the method helps Primavera P6 users benefit from ES technique for predicting the project completion date.

THE MEASURABLE NEWS


2018.02

23

INTRODUCTION THE LIMITATIONS OF CURRENT BENEFITS MAPSWhereas, for projects, you need to be able to specify precisely what you want to create, for programs as well as for portfolios, the objective is different. The question to be answered in this case is “how can I achieve a specific business or strategic benefit?” The approach for building the solution is to create a benefits map. There are four principal models for this (Fujitsu's/Thorp's 'Results Chain' [2007]; Cranfield's 'Benefits Dependency Network' [Peppard et al. 2007]; MSP's 'Benefits Map' [Office of Government Commerce 2011]; and Bradley's 'Benefits Dependency Map' [Bradley 2010]) and they all work on similar principles [White 2015, Jenner 2013, and Jenner 2014]. The output of the mapping exercise is a logical network that can be read in two directions as explained next.

The map illustrates how to make the benefits happen. Once the required benefits have been defined by the strategic sponsor, the following steps allow you to build the map. You need to determine, in order: the changes to the environment that are required in order allow the benefit to occur (“outcomes”); what we need to be able to do if we want to change the environment in this way (“capabilities”); what tools we need in order to create these capabilities (“deliverables”); and, finally, what we need to do to create the tools (“component projects”).

This chain can be read in the reverse direction to explain why each step is necessary: from project to deliverables, to the capabilities of these deliverables, to the outcomes of applying the capabilities, to the benefits associated with the outcomes.

The diagrams associated with the development of the case study explained below provide examples of benefits maps (figures 1 to 5).

In the same way that the London Underground map gives no indication of cost or distance, current benefits maps do not provide a complete set of numbers to allow you to plan every aspect of your journey. I have found some tools that go part of the way to quantifying the map – such as P3M [P3M] and the tool from Amplify [Amplify]. However, even these tools do not provide a credible view of the allocations and contributions for every node in the map.

Without these numbers, business justification and modelling are incomplete. The same holds for performance planning, optimization, tracking, and review with respect to the required benefits.

This article explains how to fill this gap and evaluate some of the missing numbers. It is explained based on the following case study.

THE CASE STUDYThe business objective of the program in this example is to increase profits for an organization in the area of customer service. For the purpose of the case study, strategic analysis has shown that increased customer satisfaction with after-sales support enhances business results and has the potential for delivering a benefit of €300,000 per annum compared with the current level of business. The steps to achieving this benefit have then been developed from this required strategic outcome all the way across to identifying the projects required. Analysis of this solution indicates that it will also lead to an increase in operational costs amounting to 25% of the corresponding benefit, thereby reducing the net benefit to be achieved by the program. The benefits map for this program is shown in Figure 1 and explained next.

This series is by Crispin “Kik” Piney, author of the book Earned Benefit Program Management, Aligning, Realizing and Sustaining Strategy, published by CRC Press in 2018. Merging treatment of program management, benefits realization management and earned value management, Kik’s book breaks important new ground in the program/project management field. In this series of articles, Kik introduces some earned benefit management concepts in simple and practical terms.

APPLYING EARNED BENEFIT MANAGEMENT: BENEFITS MAPS YOU CAN COUNT ONBy Crispin (“Kik”) Piney, PgMP, PfMP

https://www.crcpress.com/Earned-Benefits-Program-Management-Aligning-Realizing-and-Sustaining/Piney/p/book/9781138033122

https://www.crcpress.com/Earned-Benefits-Program-Management-Aligning-Realizing-and-Sustaining/Piney/p/book/9781138033122


Reading from right to left, and starting from the required strategic outcome of increased profit, you first see that this profit is built up (as usual) of increased revenue and (unfortunately!) increased costs - a negative business outcome identified as a “disbenefit”. Each of these business benefits is then analyzed in turn.

By hypothesis in this program, more business (node K) is generated by increased satisfaction (I). This satisfaction depends on both effective communication (F) relating to after-sales issues, as well as being enhanced by general improvements (J).

Effective communication (F) will be based on a tailored call handling process (D) defined and created by a specific project (A). It also depends on correct and up-to-date data delivered by effective documentation and tracking (E).

Effective documentation and tracking (E) will be delivered by a newly-created call handling tool (B).

Continuous improvement (J) requires both a model (G) and a process (H). These capabilities will be delivered by a specific business process analysis project (C).

PM World Journal Vol. VII, Issue III – March 2018 www.pmworldjournal.net

Benefits Maps You Can Count On Applying Earned Benefit Management

by Crispin (Kik) Piney Series Article

© 2018 Crispin “Kik” Piney www.pmworldlibrary.net Page 3 of 10

Figure 1: Structural Benefits Map for the Case Study

Once we have the structure of the map, we need to start to put in the numbers that we know.

Adding Financial Numbers

When the program was defined, we were given the business assumptions. These were the financial contribution of the extra business (€300,000) and the increased operational costs (25% of €300,000 = €75, 000). These numbers allow us to calculate the profit (K = €300,000 – €75,000 = €225,000).

We also know the component projects that are required A, B, and C). Each of them obviously needs to be specified clearly enough for technical experts to come up with a reliable estimate. In order to ensure that the estimates are unbiased and technically valid, the experts should be put under no pressure to come up with numbers that would support a program business case. This business case can then be evaluated objectively. For the purpose of this case study, the estimates for the financial allocations to the projects are as follows: Call Handling Service (A) = €50,000; Call Handling Tool (B) = €75,000; Business Process Analysis (C) = €25,000.

These numbers can be added to the map, as shown in Figure 2.

Figure 1: Structural Benefits Map for the Case Study

Once we have the structure of the map, we need to start to put in the numbers that we know.

Adding Financial NumbersWhen the program was defined, we were given the business assumptions. These were the financial contribution of the extra business (€300,000) and the increased operational costs (25% of €300,000 = €75, 000). These numbers allow us to calculate the profit (K = €300,000 – €75,000 = €225,000).

We also know the component projects that are required A, B, and C). Each of them obviously needs to be specified clearly enough for technical experts to come up with a reliable estimate. In order to ensure that the estimates are unbiased and technically valid, the experts should be put under no pressure to come up with numbers that would support a program business case. This business case can then be evaluated objectively. For the purpose of this case study, the estimates for the financial allocations to the projects are as follows: Call Handling Service (A) = €50,000; Call Handling Tool (B) = €75,000; Business Process Analysis (C) = €25,000.

These numbers can be added to the map, as shown in Figure 2.






Figure 2: Benefits Map with Financial Numbers

The next question that needs to be answered is “how much does each component in the map contribute to the total program benefit?”. In order to come up with those numbers, we first need to quantify the effect on contributions for each of the dependencies shown as arrows on the map.

Quantifying the Contribution Dependencies

This next step requires the involvement of the business analysts who created the structural map. They should provide an estimate for the importance of each dependency relationship arrow. For I to K, it is clear that the contribution value of K depends solely – and therefore 100% – on I. However, for nodes that have several input arrows such as node I (inputs from F and from J), the “contribution fraction” associated with the node at the origin of each arrow needs to be estimated. By definition, the sum across all incoming links to a given node of the fractions must equal 100% because they comprise the sum total of contributions into that node.

These numbers can then be indicated on the existing map. The result of this step is shown in Figure 3.

Figure 2: Benefits Map with Financial Numbers

The next question that needs to be answered is “how much does each component in the map contribute to the total program benefit?”. In order to come up with those numbers, we first need to quantify the effect on contributions for each of the dependencies shown as arrows on the map.

Quantifying the Contribution DependenciesThis next step requires the involvement of the business analysts who created the structural map. They should provide an estimate for the importance of each dependency relationship arrow. For I to K, it is clear that the contribution value of K depends solely – and therefore 100% – on I. However, for nodes that have several input arrows such as node I (inputs from F and from J), the “contribution fraction” associated with the node at the origin of each arrow needs to be estimated. By definition, the sum across all incoming links to a given node of the fractions must equal 100% because they comprise the sum total of contributions into that node.

These numbers can then be indicated on the existing map. The result of this step is shown in Figure 3.





Figure 3: The Benefits Map Including the Contribution Fractions

We are then in a position to calculate the contribution of each node.

Calculating the Contribution of each Node

The contribution fractions can now be used to calculate the “contribution share” of each relationship arrow. The contribution share of a link is the product of the destination contribution by the contribution fraction on that link. For example, the contribution share for link I-to-K is 100% of €225,000 (= €225,000).

The contribution of each intermediate node can then be evaluated as follows. You work back, from right to left, using known contribution values and the contribution fractions. The contribution of a node is the sum of the contribution shares of all of the outgoing links from that node.

Once you have worked your way back to the component projects, the corresponding contribution values can be added to the map, as shown in Figure 4.

Figure 3: The Benefits Map Including the Contribution Fractions

We are then in a position to calculate the contribution of each node.


Calculating the Contribution of each NodeThe contribution fractions can now be used to calculate the “contribution share” of each relationship arrow. The contribution share of a link is the product of the destination contribution by the contribution fraction on that link. For example, the contribution share for link I-to-K is 100% of €225,000 (= €225,000).

The contribution of each intermediate node can then be evaluated as follows. You work back, from right to left, using known contribution values and the contribution fractions. The contribution of a node is the sum of the contribution shares of all of the outgoing links from that node.

Once you have worked your way back to the component projects, the corresponding contribution values can be added to the map, as shown in Figure 4.





Figure 4: Benefits Map Showing All of the Contributions

This approach can and should be the basis for both the overall business case as well as for the business cases for each of the component projects. Used in this way, the map will ensure consistency of the whole model.

However, care must be taken to ensure that the initial model is complete before you commit to it. So, let us review the case study analysis that has been carried out so far.

KISS of Death

In the case study example we have just analyzed, we made one simplifying decision that probably seemed to be natural at the time but could turn out to be seriously misleading. We set the Net Profit (node K) as the strategic outcome, with a value of €300,000 – €75,000 = €225,000. Surely that is mathematically and procedurally valid. As often in the project environment, the answer is both “Yes” and “No”.

The “Yes” is because the sum is obviously correct from a mathematical point of view. The reason for the “No” is considerably less obvious.

To understand the “No”, let us complete the map by adding the two nodes that are required in order to show where the net profit (node K) comes from: that is to say increased revenue from winning More Business (node L) and the disbenefit of Extra Operational Spend (node M). The logic relative to these new nodes needs to be added as well: more business (L) depends completely on increased customer satisfaction (I), whereas increased operational spend (M)

Figure 4: Benefits Map Showing All of the Contributions

This approach can and should be the basis for both the overall business case as well as for the business cases for each of the component projects. Used in this way, the map will ensure consistency of the whole model.

However, care must be taken to ensure that the initial model is complete before you commit to it. So, let us review the case study analysis that has been carried out so far.

KISS of DeathIn the case study example we have just analyzed, we made one simplifying decision that probably seemed to be natural at the time but could turn out to be seriously misleading. We set the Net Profit (node K) as the strategic outcome, with a value of €300,000 – €75,000 =€225,000. Surely that is mathematically and procedurally valid. As often in the project environment, the answer is both “Yes” and “No”.

The “Yes” is because the sum is obviously correct from a mathematical point of view. The reason for the “No” is considerably less obvious.

To understand the “No”, let us complete the map by adding the two nodes that are required in order to show where the net profit (node K) comes from: that is to say increased revenue from winning More Business (node L) and the disbenefit of Extra Operational Spend (node M). The logic relative to these new nodes needs to be added as well: more business (L) depends completely on increased customer satisfaction (I), whereas increased operational spend (M) happens because of work on call documentation and tracking (node E) as well as on the continuous improvement activities (node J).

The benefits contributions of the component projects in this more complete map can be calculated in the same way as explained earlier.

These additional numerical values can therefore be entered on the map. This more complete, quantified benefits map is shown in Figure 5.


Figure 5: Expanded Benefits Map

A comparison of the two maps provides an interesting insight into the effect of mapping only the net profit (Figure 4) rather than including its component parts (Figure 5). The differences are presented and explained next.

Comparing the ResultsThe numbers as shown in Figure 4 and Figure 5 are as follows:In the first case, management had decided to simplify the model by removing nodes L (Extra Operational Spend) and M (Increased Profit), and making node K (Increased Profit) the strategic objective with – as stated – a benefit value of €225,000 (i.e. 75% of €300,000). Calculating across to the left-hand side showed the following contributions, all of which show a positive ROI of contribution vs. cost allocation:

• Call Handling Service contributes €90,000 (cost = €50,000)• Call Handling Tool contributes €101,250 (cost = €75,000)• Business Process Analysis contributes €33,750 (cost = €25,000)

However, if we investigate further and include the analysis to show where the extra operational cost comes from, by including nodes L and M, the result is quite different:

• Call Handling Service contributes €120,000 (cost = €50,000)• Call Handling Tool contributes €71,250 (cost = €75,000). This project contributes less to

the program benefits than it costs.• Business Process Analysis contributes €33,750 (cost = €25,000)

The reason for this important difference with respect to the simplified case is that the call handling tool (node B) has a double effect on increasing the operational costs: once, indirectly, via the continuous improvement work (H) that it supports, and once, directly, because it needs to be managed actively as well (link from E to M). Its €3,750 “overspend” (€75,000 – €71,250) has to be compensated – cross-subsidised in other words – by the benefit from the call handling service (node A) that it enables.

You might be tempted to ask: “why does it matter? After all, the individual contribution values of the component projects do not change the ROI of the overall program.” The answer is that the benefits map is not only used for making the program investment decision. The results of the analysis should also be used for tracking the progress of each project and of each outcome towards achieving their share of the benefits. If the detailed numbers against which you are tracking do not correspond correctly to the business reality, then your tracking will be misleading, resulting in faulty conclusions and unsafe decisions further down the line.

On the other hand, once you have the correct numbers, they can be used in benefits-focussed forecasting and tracking methods based on the Earned Benefit algorithms as described in detail in [Piney 2018] and explained in the next article in this series.


MESSAGES AND NEXT STEPSThis article has explained how to create the benefits map, quantify the dependencies, calculate the contribution of each node to the required benefits, and compare the cost allocation of each component project to its contribution. It showed the importance of ensuring that the map reflects the reality of the situation you are modelling, and underlined two important messages that apply to all programs:

1. Simplifying assumptions can lead to faulty analysis of the benefits model and unreliable decisions later on in the program.

2. The synergy between program components can justify approving projects that, on their own, show a negative return on investment.

The next article in the series (“Introduction to Earned Benefit”) will explain how to use quantified benefits maps to track progress towards achieving the planned beneficial outcome.

Note: This series by Mr. Piney is republished with the permission PM World Journal (www.pmworldjournal.net)

ReferencesAmplify Portfolio Management Tool. http://www.amplify-now.com/features/identify

Bradley, G. Benefit Realisation Management: A Practical Guide to Achieving Benefits Through Change. Routledge, UK. 2010

Fujitsu and Thorp, J. The Information Paradox. 2007. https://www.fujitsu.com/us/Images/Information_Paradox_Complete_2007.pdf

Jenner, S and Reid, P. Managing Benefits: Optimizing Return on Investments. 2013. Watched on https://www.youtube.com/watch?v=y1ftPiQ7How

Jenner, S. Managing Benefits. The Stationery Office, UK. 2014

Office of Government Commerce. Managing Successful Programmes. 2011. London. P3M. 2012. Watched on https://www.youtube.com/watch?v=aNoz-rTATeI

Peppard, J., Ward, J. and Daniel, E. Managing the Realization of Business Benefits from IT Investments. 2007. http://www.som.cranfield.ac.uk/som/dinamic- content/research/documents/peppardwarddaniel07.pdf

Piney, C. Earned Benefit Program Management: Aligning, Realizing and Sustaining Strategy.CRC Press, New York, NY, USA. 2018

White, N. Benefits Realization Management. 2015. Downloaded from https://www.slideshare.net/assocpm/benefits-realisation-management-third-sector-final- 13th-may

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Project Management and Project Planning and Controls is about Leadership. Here are three books that need to be on your books shelf about leadership

Leaders Eat Last, Simon Sinek – is about how real leaders can create organizations and the cultures that inhabit those organizations. Sinek makes the case that many who lead may not understand the impact they have on those they are assigned to lead. Leadership starts at the top and cascades down to those tasked with doing the work. While we rarely have control over hiring our leaders, this book reveals the attributes of leadership that can be applied when we become leaders ourselves.

Turn the Ship Around, David Marquet – this book speaks to the principle that leadership occurs at all levels of the organization. This is a book about moving decision making where the information is. It’s a book about empowerment. The US Naval Academy leadership book defines leadership as: Leadership is the art, science or gift by which a person is enabled and privileged to direct the thoughts, plans and actions of others in such a manner as to obtain and command their obedience, their confidence, their respect and their loyal cooperation. In our PP&C and PM world, this Leader–Follower model is suboptimal for our work. Marquet describes a Leader–Leader structure where it is recognized that everyone can become a leader. Marquet shows how the leader-leader model achieves great improvements in effectiveness of the staff and their morale, while also making the organization stronger.

The example in the book is from Capt. Marquet’s experience as the skipper of USS Santa Fe, an SSN–763, Los Angeles class boat. Marquet described three critical success factors for leadership which can be applied to our PP&C domain as well.

Control – is about making decisions regarding how we’re going to work and most importantly toward what end. This answers the question why are we doing this?

Competence – where technically competent staff make the decisions. This means pushing decision making and control to lower levels of the organization.

Clarity – is a supporting factor

Making the Impossible Possible: Leading Extraordinary Performance – The Rocky Flats Story, Kim Cameron and Marc Lavine – describes the cleanup of the most contaminated nuclear weapon plant in the U.S.

(Full disclosure from Glen Alleman: Rocky Flats was an environmental disaster and a site with serious worker unrest. I was a participant in the Rocky Flats Environmental Technology Site (RFETS) as a Program Manager, where we applied Earned Value Management to all our work, including using agile software development. It’s also the place where I met Nick Pisano, our new Measurable News editor).

For our PP&C domain, the lessons describe how every community performing an activity has individuals or teams whose attitudes, practices, strategies, or behaviors enable them to function more effectively than others with the same resources and environmental conditions. Rather than focusing on fixing failures by instituting more control from the outside, the positive deviance principal applied at Rocky Flats focused on achieving success from inside. The book shows how four principles can be applied to increase the probability of success for all project work.

WHAT WE’RE READINGBy Glen Alleman and Rick Price

Collaborate – develop talent, build strong relationships, and foster trust between all parties based on: culture, collaboration, credibility, human capital and social relationships

Create – Vision, Innovations, and Symbolic Leadership by articulating and reinforcing a motivating vision of what could be in contrast to what occurred in the past.

Control – is applied through stability, discipline and processes that are grounded on virtuousness, extended beyond just doing well. This means developing mechanisms for producing extraordinary results.

Compete – through incentives and rigorous performance standards. These actions start with engaging external constituents and addressing market forces. Results are obtained through performance incentives, guided by measurable results from external stakeholder agreements, managing those external relationships, taking bold actions, and incentives to produce measurable progress.

EVMLibrary.org:The CPM Online Library

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The CPM library now contains well over 2,100 documents, such as articles and presentations, and is growing everyday.

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How You Can Contribute? Do you have topical articles, speeches, or presentations?

Contact Beatrice Barry at [email protected] to have your contributions included in this online resource.

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