Relationship objective analysis
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RELATIONSHIP-OBJECTIVE ANALYSIS. Getting Full Value From Earned Value With a Value-Added Way of Looking at Performance Measurement. Presented By Will Gran Windmill International, Inc. Nashua, New Hampshire 03060-5830 (603) 888-5502.

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RELATIONSHIP-OBJECTIVE ANALYSIS

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Relationship objective analysis

RELATIONSHIP-OBJECTIVE ANALYSIS

Getting Full Value From Earned Value With a Value-Added Way of Looking at Performance Measurement

Presented By Will Gran

Windmill International, Inc.

Nashua, New Hampshire 03060-5830

(603) 888-5502

Presented at the 14th Annual International Integrated Program Management Conference

Tysons Corner Sheraton Premiere Hotel

November 19, 2002


Value added from earned value

Value-Added From Earned Value

  • Review some basics

  • Traditional analyses

    • Line graph presentation

    • EAC formula

  • Relationship-Objective Analysis

    • Variances

    • Efficiencies

    • Resource use rates

    • Estimates at completion

  • Some closing thoughts . . .


When i say i mean

When I Say . . . I Mean . . .

Planned Value BCWS

Completed Value BCWP

Resources UsedACWP

Remaining Planned ValueBCWR

Baseline Total Value BAC

Resource Value VarianceCV

Time Value VarianceSV

Resource Use Efficiency IndexCPI

Time Value Efficiency IndexSPI

Contract At CostTC

Contract At PriceTP

Contract LiabilityCP


Evms 32 criteria

EVMS 32 Criteria

  • Industry Standard EIA 748, paragraph 2.4.f

    “Develop revised estimates of cost at completion based on performance to date, commitment values for material, and estimates of future conditions. Compare this information with the performance measurement baseline to identify variances at completion important to company management and any applicable customer reporting requirements including statements of funding requirements.”


Performance analysis process

Performance Analysis Process

  • Objective analysis from the data:

    • Status performance to time now

    • Look for performance trends

    • Compare tends with a baseline plan

    • Project performance trends into the future

    • Relate projected trends to some meaningful objective

  • Subjective analysis from information:

    • Investigate root causes of variances

    • Identify future influencing factors and risk

    • Adjust projected trends

    • Assess resource requirements

    • Compare with contract parameters


Traditional performance analysis

Traditional Performance Analysis

The Line Graph

X-Axis:Passage of time

Years, quarters, months, weeks, days, etc.

Y-Axis:Measure of Resources

Dollars, items, lengths, volumes, etc.


The line graph

The Line Graph


Line graph charts

Line Graph Charts

The presentation is limiting . . .

  • Depicts absolute values versus a time scale

  • That focus on performance history

  • Difficult to identify trends

  • Difficult to compare trends to a baseline plan

  • Difficult to develop credible cost projections to completion


Estimate at completion formula

Estimate At Completion Formula

EAC = Actuals + PF X Remaining Planned Value

  • Assumes Performance Factor will be a constant

  • And 1 unit of Planned Value will convert to 1+/- unit of Actual

    The Estimate At Completion Formula

  • Provides a point estimate

  • Is a limited predictive metric

  • That inherently underestimates overruns

  • And inherently underestimates underruns


The traditional analyses

The Traditional Analyses

Line Graph Charts

and the

Estimate At Completion Formula

Provide partial value from Earned Value


Why the difference in eacs

Why The Difference In EACs?


A different look at performance

Work Completed

Percent Complete =

X 100

Baseline Total Value

Resources Value

Percent Of (Objective) =

X 100

Value Of (Objective)

A Different Look At Performance

Relationship-Objective Analysis

X-Axis:Value of work completed

Y-Axis:Progress toward an (Objective)


Relationship objective graph

Relationship-Objective Graph

An X - Y Scatter Diagram


An objective may be

An (Objective) May Be

  • Baseline Total Value

  • Estimate At Completion

  • Contract At Cost

  • Contract At Price

  • Contract Liability

  • Or any general (Objective) that is a specific resource value


Variance as percent

Variance As Percent

Line Graph


Variances as of baseline plan

Completed Value - Planned Value

Time Variance =

X 100

Baseline Total Value

Completed Value - Resources Used

Resource Variance =

X 100

Baseline Total Value

Variances As % Of Baseline Plan

  • Deviation from baseline time plan

  • Deviation from baseline resource plan

    Reduces volatility of variance trends in early periods of the project.


Variances as of baseline plan1

Variances As % Of Baseline Plan

An X - Y Scatter Diagram


Performance efficiency since start

Completed Value

Resource Use Efficiency Index Since Start =

X 100

Resources Used

Completed Value

Time Value Efficiency Index Since Start =

X 100

Planned Value

Performance Efficiency Since Start

  • Value of work completed with resources used

  • History of past performance efficiency

  • Efficient > 100%

  • Inefficient < 100%


Resource use efficiency since start

Resource Use Efficiency Since Start

An X - Y Scatter Diagram


Performance efficiency to finish

Remaining Planned Value

Efficiency Index To Meet (Objective) =

X 100

(Objective) Resources Remaining

Baseline Total Value - Completed Value

Efficiency Index To Meet (Objective) =

X 100

(Objective) - Resources Used

Performance Efficiency To Finish

  • Ability to accomplish work within (Objective)

  • Future performance required


Resource use efficiency to finish

Resource Use Efficiency To Finish


Rate of using resources

Resources Used

Planned Value

Resource Use as % Of (Objective) =

Planned Value as % Of (Objective) =

X 100

X 100

(Objective)

(Objective)

Completed Value

Completed Value as % Of (Objective) =

X 100

(Objective)

Rate Of Using Resources

  • History of a “resource burn rate”


Rate of using resources1

Rate Of Using Resources


Estimate at completion eac

Estimate At Completion (EAC)

EAC = Actuals + PF X Remaining Planned Value

  • Assumes Performance Factor will be a constant

  • And 1 unit of Planned Value will convert to 1+/- unit of Actual

    The Estimate At Completion Formula

  • Provides a point estimate

  • Is a limited predictive metric

  • That inherently underestimates overruns

  • And inherently underestimates underruns


Performance factors

Performance Factors

Should be related to performance

Cumulative ~ Resource Use Efficiency Index

Running Average ~ Resource Use Efficiency Index (Period of Time)

Product ~ Resource Use Efficiency Index X Time Value Efficiency Index

Weighted ~ 0.8 Resource Use Efficiency Index + 0.2 Time Value Efficiency Index

Time Value Kicker ~ Resource Use Efficiency Index + 0.2 Time Value Efficiency Index


Estimate at completion

Estimate At Completion


Trend line projection analysis

Trend Line Projection Analysis

  • Identify performance trend

  • Select set of data to project trend

  • Determine “best fit” line

    • Y-Axis intercept

    • Slope of “best fit” line

  • Extrapolate to 100% complete

Projects performance trend to end of effort


Resource use trend projection

Resource Use Trend Projection


Eac trend projection

EAC Trend Projection


Best case worse case most likely

Best Case - Worse Case - Most Likely


Thoughts while showering

Thoughts While Showering . . .

  • Focus on the BIG picture first, then dig deeper

  • Volatility indicates poor baseline plan, poor discipline, or both

  • Watch for front loading due to optimistic planning

  • Significant change in scope creates a new baseline

  • Don’t be fooled by the early “resource variance hump”

  • Time variances are associated with Work-In-Progress

  • Time variances disappear when work is completed

  • Resource variances accumulate when work is completed

  • Time variances lead resource variances

  • Look for long term trends and assess impacts


Thoughts while shaving

Thoughts While Shaving . . .

  • An Index produces a ratio

  • EAC formula produces a point estimate

  • EAC as percent of an (Objective) produces a rate of change

  • Trends usually appear before 20% Complete

  • Relationship-Objective Analysis extrapolates rate of change trend to completion . . .

    . . . And gives you Full Value from Earned Value


Thoughts while sitting

Thoughts While Sitting . . .

  • The Performance Factor is not constant as the Estimate At Completion formula assumes

  • The trend of the Performance factor is the key determining parameter for the most realistic Estimate At Completion

  • Understand which Performance factor should be the best predictor and why


Agathe christie says

Agathe Christie Says . . .

“Getting Full Value from Earned Value with Relationship-Objective Analysis is like a good detective story.

The main characters are introduced, the plot is established, and the clues to Who Dunit emerge in the first 20% of the story.”


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