PM-05 - EVA
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Transcript of PM-05 - EVA
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Earned Value Analysis
Budi Hartonohttp://boed.staff.ugm.ac.id
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Penjelasan Tugas #3
2
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What Is It ?
Why Do I Need It ?
How Do I Do It?
Earned Value Analysis
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Todays Situation
Need for accurate and consistent statusinformation
Numerous complex (and interrelated) projects
Projects with many WBS activities
Virtual Offices
Diverse technology platforms
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Theres Room For Improvement
70% of projects are:Over BudgetBehind Schedule
52% of all projects finish at189% of their initial budget
And some, after huge investments
of time and money, are simply nevercompleted
Source:The Standish Group
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How to answer the question:Have we done what we said wed do?
% complete estimating% of Budget spent% of work done% of time elapsed
subjective, incomplete
draws false conclusions
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It tells you how much youve spentand compares it to the budget.
Does it give an accurate picture ofwhere you are on the project? NO!It doesnt tell you if...
youre ahead or behind schedule
youre over or underspent
youve spent money on the rightthing
youre getting value for money
your problems are over or onlyjust begun
Whats missing?
time
Project Mgt in the dark
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Accomplishment is (planned)
work that has been carriedout successfully.
The budgeted cost of thatwork quantifies the
accomplishment. This is called earned value
time
Whats missing?
- knowing how much has been accomplished
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Enter Earned Value Analysis
Earned Value Analysis is: an industry standard way to:
measure a projects progress, forecast its completion date and final cost, and
provide schedule and budget variances along theway.
By integrating three measurements, it provides
consistent, numerical indicators with which you canevaluate and compare projects.
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Whats more Important?
Knowing where you areon Schedule?
Knowing where you areon Budget?
Knowing where you areon Work Accomplished?
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EVA Integrates All Three
It compares the PLANNED amount of workwith what has actually been COMPLETED, todetermine if COST, SCHEDULE, andWORK
ACCOMPLISHEDare progressing asplanned.
Work is Earned or credited as it is
completed.
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Earned Value needed because...
Different measures of progress fordifferent types of tasks
Need to roll up progress of manytasks into an overall project status
Need for a uniform unit of measure
(dollars or work-hours).
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Earned Value needed because...
Provides an Early Warning signal for prompt
corrective action.
Bad news does not age well.
Still time to recover
Timely request for additional funds
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And One More Reason
Why You Need EVA
?
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In the US, it is a must
These Set the Stage:
GPRA; 1993
FASA, Title V; 1994
Clinger-Cohen Act; 1996
And Then Along Came OMB! (Circular A-11, Part 7)
"Agencies must use a performance based acquisitionmanagement system, based on ANSI/EIA Standard748, to measure achievement of the cost, schedule,and performance goals."
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So, Is This Stuff New ?
Its been around since the sixties.
Cost/Schedule Control Systems Criteria
(C/SCSC)
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Examples of informal Earned Value Analysis
Its done informally without realizing it.30% time used,30% $$ spent
So, if 30% of the work is done, I must be OK ??
Shop floor estimates
Cost Comparisons
Budget vs. Actual
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But First! - We gotta get organized
EVA works best when work is compartmentalized.
Compartmentalization is best achieved with a well-planned Work Breakdown Structure.
So, how do I create a WBS for a really complexproject?
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Obviously in small bites.
How am I gonna eat this elephant?
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Proper WBS Design
One WBS Deliverable-oriented Work not in the WBS is out-of-scope Each descending level represents more detail
Full (and accurate) definition is key Defined deliverable(s) Timeframe for delivery of product
Total cost (direct and indirect) to deliver product
Lets Look at an example:
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A sample Work Breakdown Structure
Serve Pizzas to Customers
Provide the Place Cook the Food Serve Customers (Others)
Cook the SauceMake the Dough Build the Pizza
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WBS Units are Work Packages
Lowest level WBS elements
Have three measurable components
Scope of work to be accomplished Total (direct and indirect) cost Timeframe for completion
Too large and you have multiple people responsible for thework.
Too small and the program manager winds up micro-
managing everything.
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Some New Terms
BCWS - Budgeted Cost of Work Scheduled
ACWP - Actual Cost of Work Performed
BCWP - Budgeted Cost of Work Performed
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BCWS - Budgeted Cost of Work Scheduled
0
20000
40000
60000
80000
100000
120000
Jan-03
Feb-03
Mar-03
Apr-03
May-03
Jun-03
Jul-03
Aug-03
Sep-03
Oct-03
Nov-03
Dec-03
BCWS
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Earned Value Definitions (cont.)
ACWP: Actual Cost of Work Performed
Cost incurred to accomplish the work that has been
done to date.
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ACWP -Actual Cost of Work Performed
49000
56000
0
20000
40000
60000
80000
100000
120000
Jan-0
3
Feb-0
3
Mar-0
3
Apr-0
3
May-0
3
Jun-0
3
Jul-0
3
Aug-0
3
Sep-0
3
Oct-0
3
Nov-0
3
Dec-0
3
BCWP
ACWP
OK, were 7K over budget, is that bad
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Earned Value Definitions (cont.)
BCWP: Budgeted Cost of Work Performed
The planned (not actual) cost to complete the work that
has been done.
Note that this is the cost of the workperformed and,it is the budgeted amount, notthe actual amount.
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BCWP - Budgeted Cost of Work Performed
49000
55000
0
20000
40000
60000
80000
100000
120000
Jan-03
Feb-03
Mar-03
Apr-03
May-03
Jun-03
Jul-03
Aug-03
Sep-03
Oct-03
Nov-03
Dec-03
BCWP
BCWS
The project is behind schedule.
The Whole Story
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55000
49000
56000
0
20000
40000
60000
80000
100000
120000
Jan-03
Feb-03
Mar-03
Apr-03
May-03
Jun-03
Jul-03
Aug-03
Sep-03
Oct-03
Nov-03
Dec-03
BCWS
BCWP
ACWP
The Whole Story
And heres the full picture.
The project is over budget by 7k dollars.Weve only gotten 49 thousand dollars worth of work down.
And what does that mean? - - - (were behind schedule.)
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time
CV
SV
CV (Cost Variance)
BCWP - ACWP
earned value - actual cost SV (Schedule Variance)
BCWP - BCWS
earned value - planned
value 0 once all work completed
Variance
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Schedule Variance & Cost Variance
Schedule Variance = BCWP-BCWS
$49,000- 55,000
SV = - $ 6,000
Cost Variance = BCWP-ACWP
$49,00056,000
CV = - $7,000
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SPI: Schedule Performance Index
SPI=BCWP/BCWS
SPI
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CPI (Cost Performance
Index) BCWP/ACWP
earned/actual
the one to use
SPI (SchedulePerformance Index)
BCWP/BCWS
earned/planned
of diminishing value asproject progressestends to 1
1.1
0.9
0.8
1.0
1.1
0.9
0.8
1.0
CPI
SPI
Performance Indices
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Performance Metrics
SPI: BCWP/BCWS
49,000/55,000 = 0.891
CPI: BCWP/ACWP
49,000/56000 = 0.875
CSI: SPI x CPI
.891 x .875 = 0.780
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PMBOK
Estimate at Completion (EAC) =
1. AC+ETC (when original estimates areconsidered flawed)
2. AC+BAC-EV (when everything is OK andvariance will not occur in the future)
3. AC+((BAC-EV)/CPI) (when everything is
OK and variance will occur in the future)
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102000
90882
103865
0
20000
40000
60000
80000
100000
120000
Jan-03
Feb-03
Mar-03
Apr-03
May-03
Jun-03
Jul-03
Aug-03
Sep-03
Oct-03
Nov-03
Dec-03
BCWS
BCWP
ACWP
Making ProjectionsThe Situation at Year-End (Not Project Completion)
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Notes from previous slide
We can expect to finish the year having spent a bit more
than was budgeted.
But look at the ACWP curve: We have only delivered89% of the product
but weve spent everything we had, plus more.
Final line? Without a change in performance, we wouldhave to spend an additional 28% of our budget tocomplete the job.
Why 28% when were only 11% behind? Because our
Cost/Schedule Index says we will only be able to performto a 78% level, and well continue to fall behind.
E i C l
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Estimate to Complete
102000
116,571
0
20000
40000
60000
80000
100000
120000
140000
Jan-03
Mar
-03
May
-03
Jul-0
3
Sep-03
Nov-0
3
Jan-04
Mar
-04
BCWS
BCWP
ACWP