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Earned Value Management: Pure Common Sense
chasing And Procurement: What’s The Diffe
A. Elkhodaryrence?
Ian Moody
The Webinar Will Begin Shortly
Housekeeping Slides will be available on our SlideShare page; the link will be emailed to you
Recording of the webinar will be available to download; the link will be emailed to you
Take the time to complete a post-webinar survey that will pop up at the end
You can type your questions throughout the session
Time will be allocated in the end for the speaker to address your questions
Your Presenter
Ashraf KodariAshraf Kodari, an independent management consultant, and has gained experience through multiple positions in the elds of utility operations, project management, training management, facility management, and health and safety in North America and the Middle East.
During his professional career, spanning over 26 years, Ashraf has spent 15 years managing/sponsoring projects and programs in different elds, including; utilities, training, construction, organisational engineering and IT.
Cost Tracking
0
50
100
150
200
250
300
350
400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Budget
Actual
Traditional Project Tracking PM looks at schedule and tries to make sense of
data to see if project is on schedule or not. Consider if some activities are ahead and some are
behind … how do you sum up status Sponsor/Senior Management compare planned
expenditures to actual expenditures as project progress indicator
Alternative: EVM!
Started in the 1960s based on US Department of Defense (DOD) Cost/Schedule Control System Criteria (C/SCSC)
In the 1990s, it was mandated for all federal agencies in the US
Definitions for this workshopM
anag
emen
t /
Con
trol
Includes:• Setting desired values (planning)• Measuring and comparing• Decision making, problem solving
and implementation.
Valuable Questions If you decide you want to buy a house with certain
features to live in, and you are willing to pay $1M for it …
then you find the house with the features @ $1M … Would you buy the house?
What is the value of the house for you? Then if the house prices drop by 10%, what is the value
of your house now?
Definitions for this workshopVA
LUE
What a customer is willing to pay for a product, service, result or behavior
What a “seller” would accept to part with a product, service or behavior
Value progression in projects 1
Customer is willing to pay certain price ($X) to obtain certain products or services in a specific amount of time.
Value of product or service to customer is $X Customer set the value
Value progression in projects 2
Sponsors/ Senior Management (of seller organization) determine that they are willing to pay $(X-M) to produce the product or service achieving $M gains for shareholders.
Value of product/service to sponsors is $(X-M) Sponsor set the value
Value progression in projects/programs 3 Project Manager (PM) breaks down product/service to
components PM estimates resource requirements to achieve components Estimates are aggregated. If the sum is < $(X-M) then
agreement on value exists between PM & Sponsor PM is now willing to invest $Y for each component, where ∑Y < (X-M)
PM set the value Scope defined
WBS
Cost/TimePlanning
Baseline Set
DefinitionsEA
RNED
Resources consumed and product, service or behavior achieved
Past Tense! The work has been done, and the
planned value was achieved
Questions … again
If you set the value for activity A to be $1000 You finish activity A, but you consumed $1400 in
resources … Did you earn any value, if so … how much?
EVM Base Parameters PVPl
anne
d Va
lue
(PV
) Budgeted Cost of Work Scheduled
(BCWS) What the PM decided this work is worth
and approved by sponsor Phased over planned time for resource
expenditures to take place Future Value : Not a Fact
2/5/2015A. Elkhodary23
Jan Feb Mar Apr May Jun Jul Aug Sep OctPlanned Value (PV) $100 $500 $1,200 $2,200 $3,500 $5,500 $8,500 $13,500 $16,000 $17,000
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
Planned (Desired) Value ASSUMPTION
EVM Base Parameters ACA
ctua
l Cos
t
(AC
)
Actual Cost of Work Performed (ACWP) The real cost of resources spent (how
much will accounting pay for the work) Mapped to work packages or activities
in progress or already finished Past Value : Measured Value: A Fact
2/5/2015A. Elkhodary25
Jan Feb Mar Apr May Jun Jul Aug Sep OctActual Cost (AC) $100 $205 $1,200 $2,500 $5,000 $8,000 $13,000Planned Value (PV) $100 $500 $1,200 $2,200 $3,500 $5,500 $8,500 $13,500 $16,000 $17,000
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
Planned (Desired) Value Assumptionvs.
Actual (Measured) Cost Fact
EVM Base Parameters EVEa
rned
Val
ue
(EV
) Budgeted Cost of Work Performed
(BCWP) What the work performed was planned to
cost Unique amounts to each activity Past Value : Measured Value: A Fact …
with a twist!
2/5/2015A. Elkhodary27
Jan Feb Mar Apr May Jun Jul Aug Sep OctEarned Value (EV) $100 $500 $1,500 $2,500 $3,000 $4,000 $6,500Planned Value (PV) $100 $500 $1,200 $2,200 $3,500 $5,500 $8,500 $13,500 $16,000 $17,000
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
Planned (Desired) Value Assumptionvs.
Earned (Measured) Value Fact
EV vs. PV
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Planned (Desired) Value Assumptionvs.
Earned (Measured) Value Fact If we compare EV to PV
we get an indication of schedule performance
Value of work completed vs. Value of work that should have been completed by now
SV = EV - PV
SV
AC vs. PV
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Planned (Desired) Value Assumptionvs.
Actual (Measured) Cost Fact If we compare AC to
PV we get an indication of ???
Remember “Traditional Project Tracking” slide?
?
2/5/2015A. Elkhodary31
Jan Feb Mar Apr May Jun Jul Aug Sep OctEarned Value (EV) $100 $500 $1,500 $2,500 $3,000 $4,000 $6,500Actual Cost (AC) $100 $205 $1,200 $2,500 $5,000 $8,000 $13,000Planned Value (PV) $100 $500 $1,200 $2,200 $3,500 $5,500 $8,500 $13,500 $16,000 $17,000
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
$18,000
Desired & Measured ValuesCompare
SV
CV
Cost forecasting using EVM
ETC=BAC-EV
ETC=(BAC-EV)/CPI
EAC=AC+(BAC-EV)
EAC=BAC/CPI
EAC=AC+ETC
How much more money What is the expected final cost
2/5/2015A. Elkhodary34
VocabularyVariable AbbreviationSchedule Variance SVCost Variance CVSchedule Performance Index SPICost Performance Index CPIEstimate At Completion EACEstimate To Complete ETC