Using Earned Value Management System EVMS

1. Using Earned Value Management System (EVMS) Briefing for ATC Engineering & Test Division (ACT-200) Managers and Leads

2. February 7, 2000 2 Briefing Objectives What is a Project? What is a Program? What is Project Management? What is EVMS? Why do we need EVMS? How is EVMS Implemented? Who will implement it?

3. February 7, 2000 Project Management Terms - IV Project - A temporary endeavor To create a unique product or service. Program - A group of related projects - e.g. DSR, VSCS, URET, STARS, ...as part of NAS Managed in a coordinated way - ACT-200 Coordinating Usually include elements of ongoing operations

4. February 7, 2000 4 Project Management Terms - I PM is the Application of Knowledge, Skills, Tools, and Techniques to Project Activities to Meet or Exceed Stakeholders� Needs & Expectations. Knowledge of general management practice & relevant application areas. PM overlaps general management in many areas but they are not synonymous - e.g DSR vs. Division/Branch.

5. February 7, 2000 5 Project Management Terms - II Work Breakdown Structure (WBS): A deliverable-oriented grouping of project elements which organizes and defines the total scope of the project. Each descending level represents an increasingly detailed definition of a project component. Project components may be products or services.

6. February 7, 2000 6 Project Management Terms - III Work Package: Lowest Level of the WBS that may be Divided into Activities. OBS: An Organizational Chart Relating Work Packages to Organization Units. Responsibility Matrix: Relates Organization Structure to WBS & Ensures that each Element of the Project�s Scope of is Assigned to a Responsible Individual.

7. February 7, 2000 7 Earned Value Management System (EVMS) - I EV - Tool for Measuring Project Performance Compares work actually accomplished to work planned to determine if cost & schedule performance is as planned EV is an Early Warning System Helps management make proactive decisions to keep projects on course

8. February 7, 2000 8 Earned Value Management System (EVMS) - II EV Integrates Cost, Scope & Schedule measurements EV Involves Calculating 3 key values for each activity Budget - BCWS Actual Cost - ACWP Earned Value/Physical Progress - BCWP Basis for variance analysis

9. February 7, 2000 9 Planning for EVMS - I Create a work breakdown structure Organize work into discrete work packages and activities Allocate a budget to each of the activities Develop a schedule and Assign resources to accomplish each activity on the schedule Be sure to include all work in the schedule

10. February 7, 2000 10 Planning for EVMS - II Award performance credit for physical % complete using any of these methods 0-100 Short duration tasks < 160 hours EV is Zero until activity is complete 50-100 Duration less than 600 hours 50% at start of activity & 50% at completion

11. February 7, 2000 11 Planning for EVMS - III Interim milestone; Duration less than 600 hours Based on completed milestone for task Level of Effort (LOE) Long duration & consistent tasks Difficult to measure - no deliverables Measured by duration of time used e.g. 10 weeks support is 50% complete at 5 weeks

12. February 7, 2000 12 Tracking & Analysis Each update cycle/Reporting Period Monthly or Bi-Monthly Obtain physical % complete for each task Calculate EV for each task Sum up EV for all tasks as project EV Calculate actual expenditure for actual work completed during the period Compare the Cumulative EV to Actual expenditure

13. February 7, 2000 13 Elements of EV Analysis - I Performance indices relate value of work performed to dollar spent. e.g. CPI = 0.65 means that for every dollar spent, actual value of the work performed is $0.65. Cumulative CPI used to forecast project cost at completion (also slide 17) Cumulative SPI used to forecast project completion date (also slide 17)

14. February 7, 2000 14 Elements of EV Analysis - II Cost Variance - Difference between budgeted cost of work scheduled & actual cost of work performed CV = BCWP - ACWP Schedule Variance - Difference between budgeted cost of work scheduled & actual cost of work performed SV = BCWP - BCWS

15. February 7, 2000 15 Elements of EV Analysis - II SPI - BCWP/BCWS SPI => 1.0, Project Schedule performing as planned or better SPI < 1.0, Project not performing as planned - needs help

16. February 7, 2000 16 Elements of EV Analysis - III CPI - BCWP/ACWP CPI => 1.0, Project Cost performing as planned or better CPI < 1.0, Project Cost not performing as planned - needs help % Over/Under Budget - CAC - BCWS

17. February 7, 2000 17 Project Cost & Schedule Forecast Methods Estimate at Completion (EAC) is total cost to complete an activity, work package, or a project expressed as:: EAC = Actuals-to-date + Estimate to complete (ETC) Cost EAC - BAC/CPI Schedule EAC - BAC/SPI

18. February 7, 2000 18 EV Reporting Interpret the results of the calculations - Slides 8 - 11 Take or recommend corrective action as necessary

19. February 7, 2000 19 Conclusion EVMS provides management with an effective tool for program planning and control early warning system for program mgt. EV Integrates Cost, Quality, & Schedule objectives when appropriately implemented Must a baseline for measurements, and control at the start of project.

20. February 7, 2000 20 References Project Management Institute (PMI), 1996. A Guide to the Project Management Body of Knowledge (the PMBOKTM Guide) - Ray W. Stratton, 1999. Improving SPI and CPI Calculations on LOE Heavy Programs, Proceedings of the 30th Annual PMI Seminars & Symposium Fleming and Koppeman, 1996. Earned Value Project Management.

21. Thank you for Listening Pat A. Eigbe, PMP�, -- Hi-Tec Systems x. 5-7857