Intro to Earned Value Management Systems

(EVMS)

Robert E. Marmelstein, Ph.D.

10 Mar 2005

Past History Shows….

Only 16% of software projects are expected to finish on time and on budget

31% are cancelled before completion The remaining 53% are late and over budget,

with the typical cost growth exceeding the original budget by more than 89%

Of the IT projects completed, the final product contains only 61% of the original functionality.

Note: Statistics from the Standish Group International Report: CHAOS Study, Standish Group, 1999.

Reasons for this?

Poor or Unrealistic Planning Replanning often exacerbates the problem

Tasks not Sufficiently Resourced Little or No Situational Awareness during

Project Execution Lack of Objective Criteria to Track Progress Insufficient Data on Progress No Tools to Correlate Progress Data Against Plan

Inability to Diagnose and Correct Problems

What is EVMS?

A system based on detailed project planning that enables managers to accurately: Establish and control baseline Track progress in terms of cost and schedule Make forecasts Isolate and diagnose problem areas

EVMS Objectives

Plan all work prior to beginning it; Measure performance based on an

objective set of technical criteria; Analyze schedule status and projections Analyze the expenditure of funds in light of

the work accomplished (not work scheduled);

EVMS Objectives [continued]

Isolate problems: Quantify technical problems within the context of cost

and schedule parameters; Not aimed at replacing or changing the process for

technical problem detection;

Forecast completion date and final cost; Take corrective action; Maintain disciplined control of the

performance measurement baseline.

The EVMS Building Blocks

Work Organization Work Breakdown Structure (WBS)

Scheduling Budgeting Work Authorization Work Tracking and Reporting Variance Analysis (Cost, Schedule) Efficiency Analysis Estimate At Completion

Basic EVMS Terms

Budgeted Cost of Work Scheduled (BCWS) The original plan What was I supposed to do by this time & how

much was it supposed to cost? Budget Cost of Work Performed (BCWP)

What did the work I actually accomplished supposed to have cost?

Actual Cost of Work Performed (ACWP) How much have I spent getting to this point?

Performance Variances

Cost Variance (CV): CV = BCWP – ACWP Budget for Completed Work vs. Actual Costs

Schedule Variance (SV) SV = BCWP – BCWS Budget for Completed Work vs. Scheduled Costs

Absolute Measures in Terms of $$ What it Means:

Negative Variance – Behind Plan Positive Variance – Ahead of Plan No Variance – On Plan

Performance Indexes

CPI = BCWP / ACWP SPI = BCWP/ BCWS Relative Measures of Efficiency

How effective have I been at achieving my planned baseline?

What it Means: PI > 1 – More Efficient than Planned PI < 1 – Less Efficient than Planned PI = 1 – Achieving Planned Efficiency

Control Account

Software Engineering

Planning from the WBS

WorkPackages

PlanningPackages

OBS DATA SUMMARIZATION

SOFTWAREINTEGRATION

PROGRAM

Product Development

Master Plannin

g

AdaProducts

Software Tools

Standards

CPCI #1MOS

CPCI #2MOLE

CPCI #3MAC

AdaStudy

AdaConversion

AdaApproach

AdaApplications

Secure Systems

LAN Applications

Marketing

BCWSBCWPACWPBACEAC

FUNCTIONALORGANIZATION

CWBSEXTENSION

SELECTEDREPORTINGELEMENTS

SELECTEDPSWBS

ELEMENTS

Hardware Engineering

Engineering

Operations

WBS

DATA

SUMMARIZATION

VP/GM

Control Accoun

t

Control Account

Control Account

Control Account

Control Account

Control Account Elements

Work Packages

Detailed, short-span tasks, or

material items, required to

accomplish the CA objectives,

typically in the near term

Task 1

Task 2

Task 4Task 5

Task 3

Work Packages

Planning Packages

Planning PackagesFuture work that has not been

detail planned as work

packages. They are always

scheduled to occur in the

future.

Earned Value Techniques

A predetermined amount of value, i.e., budget, that is claimed, or earned, when the work is accomplished. The budget value is earned in one of the following ways:

0/100 (All or Nothing) X/Y Percent

25/75 40/60 50/50

Milestone Weights Level of Effort

Example: 0/100 Task

Budget = $1000.00

2 weeks

PTask #1

Plan:

Cost to Date = $1500.00 PTask #1

Actual:

3 weeks

What is:

• BCWS?• ACWP?• BCWP?• CV?• SV?

0/100 Task: Answers

Plan: BCWS = $1000

Actual: BCWP = $0 (No credit if product not finished) ACWP = $1500 (Actual cost so far)

Variances: CV = BCWP – ACWP = 0 - $1500 = -$1500 SV = BCWP – BCWS = 0 - $1000 = - $1000

Need to Roll-Up Results Over ALL Planned Tasks

Earned Value Analysis -The Big Picture

Example: Cost and Schedule Performance (Earned Value)

Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04CPI 78% 79% 78% 75% 73% 73% 71% 70% 69% 68% 66%SPI 96% 97% 96% 94% 92% 92% 100% 99% 100% 99% 99%

Cumulative Software Cost and Schedule Performance Index

60%

70%

80%

90%

100%

110%

120%

130%

140%

Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04

CPI SPIGoal

CPI = BCWP/ACWP SPI = BCWP/BCWS

Characterize these Programs

1.0

CPI

SPI

1.0

SPI

CPI

Under-Executing Accelerated

EVMS Best Practices

Establish unambiguous exit criteria for each task

Take credit for scheduled tasks when the exit criteria have been verified as passed and report actual costs for those tasks

Establish cost and schedule budgets that are within uncertainty acceptable to the project

Realistically allocate labor and other resources to each task

Forecasting is not performed to completion

Soft task completion criteriaMore than 20% of the total

development effort is LOE Long task durations Data is old or inaccurate Replans require radically more

efficiency than achieved to date Management doesn’t utilize the

EVMS results

1.1

ALARMS

Benefits of EVMS

Forces Solid Planning to Occur Up Front Realistic plan against which to measure performance

Provides Objective Measures of Task Completion Ties Accomplished Work To Budget Provides Clear Measures of Project Progress Fosters Management Decisions within a

Framework of Reality!

Don’t Take My Word For It….

“If you don’t measure, there is no real way of determining whether you are improving. And if you’re not improving, you’re lost.”

-- Roger S. Pressman

“A good metric lets you see if your technical people are doing the right things and doing them well. Moreover, it lets them know too.”

-- Lawrence H. Putnam and Ware Meyers

“When performance is measured, it improves (it improves by the mere fact it is being measured). When performance is measured and compared to goals, it improves still more. And when performance is measured, compared, and significant improvement is recognized and rewarded, then productivity really takes off.”

-- W.L. Creech, General, USAF (ret.) Commander, Tactical Air Command (1979-1984)

.

Any Questions?Any Questions?

Dr. Marmelstein

Were Done!

EVMS Resources

Books Earned Value

Quentin W. Fleming & Joel M. Koppleman Cost/Schedule Control Systems

CriteriaQuentin W. Fleming

Project Performance MeasurementRobert R. Kemps

Visualizing Project ManagementKevin Forsberg, Ph.D., Hal Mooz and Howard Cotterman

Software Artemis Views

Artemis Management SystemsContact: Patrick Perugini (303) 581-3102Web: http://www.artemispm.com

CobraWelcom SoftwareContact: Diana Melton (281) 558-0514Web: http://www.wst.com

Software [continued]

Dekker TRAKKERDekker Ltd.Contact: Ron Barry (909) 384-9000Web: http://www.dtrakker.com

MicroFrame Project Manager (MPM)MicroFrame Technologies, Inc.Contact: Carl Amacker (415) 616-4000Web: http://www.microframe.com

Internet Project Management Institute

http://www.pmi.org US DoD Earned Value

http://www.acq.osd.mil/pm Earned Value Bibliography

http://www.uwf.edu/~dchriste/ev-bib.html Amazon.com

http://www.amazon.com

Sean Alexander(703) 503-5000 or (888) 860-0700

salex@meridianet.com