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N O T E. If the slide show is not launched, click on View  Slide Show in the menu bar at the top of the Power Point window. When the View option is not visible, the slide show has been launched and you must click to proceed to the next slide. “CLICK” TO CONTINUE….

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  1. N O T E If the slide show is not launched, click on View  Slide Show in the menu bar at the top of the Power Point window. When the View option is not visible, the slide show has been launched and you must click to proceed to the next slide. “CLICK” TO CONTINUE…

  2. E A R N E D V A L U E M A N A G E M E N T Performance Measurement Baseline “CLICK” TO CONTINUE…

  3. E A R N E D V A L U E M A N A G E M E N T PMB Development Steps SCOPE SCHEDULE Identify the scope of work Extend to control account / work package level Arrange the work packages in order Schedule work packages Classify the work and select an EV technique Budget the work packages Spread the budget over time Calculate cumulative BCWS BUDGET “CLICK” TO CONTINUE…

  4. E A R N E D V A L U E M A N A G E M E N T PMB Development Steps (cont.) SCOPE The graphic on the next slide illustrates how the WBS is extended by the contractor to the level at which work will be planned and performed. Normally there is one individual, the control account manager, responsible for planning and accomplishing that part of the WBS. The level of the WBS at which the control account is established will vary with the work being accomplished. Identify the scope of work Extend to control account / work package level “CLICK” TO CONTINUE…

  5. W O R K B R E A K D O W N S T R U C T U R E Vehicle Contract LEVEL 1 LEVEL 2 VEHICLE SE & PM LEVEL 3 POWER PKG FRAME TEST DATA LEVEL 4 ENGINE POWER TRANSPORT COMPANY LEVEL 5 EXHAUST CONTROLS COOLING ENG CONTROL ACCOUNT MECHANICAL DESIGN DESIGN CONTROL ACCOUNT ANALYTICAL DESIGN MFG CONTROL ACCOUNT DRAFTING/ CHECKING Work Packages E A R N E D V A L U E M A N A G E M E N T The Control Account:A Key Management Control Point • Variances are assessed • Estimates are revised • Workaround plans are devised • BCWS is established • BCWP is determined • ACWP is collected “CLICK” TO CONTINUE…

  6. E A R N E D V A L U E M A N A G E M E N T PMB Development Steps (cont.) SCHEDULE The next step in the process is to arrange the work in the order in which it must be accomplished. There are often different levels at which this occurs. It is necessary to integrate these levels to ensure consistency and traceability to established contract milestones. The chart on the next slide illustrates these concepts of scheduling. Arrange the work packages in order Schedule work packages “CLICK” TO CONTINUE…

  7. ITEM 1 2 3 4 5 6 7 s s COST ACCOUNT 14 COST ACCOUNT 15 s s COST ACCOUNT 16 s s COST ACCOUNT 17 s s COST ACCOUNT 18 s s COST ACCOUNT 19 START STOP COST s s ACCOUNT 16 s s WP NO. 1 WP NO. 2 s s WP NO. 3 s s WP NO. 4 s s WP NO. 5 s s E A R N E D V A L U E M A N A G E M E N T Schedule Integration PROGRAM LEVEL l l l The master schedule and lower level schedules must be traceable both VERTICALLY and HORIZONTALLY CONTRACT PROGRAM SCHEDULE l l l l l l l l l MAJOR EVENT OR FUNCTIONAL ORGANIZATION MILESTONE SCHEDULE INTERMEDIATE LEVEL CONTROL ACCOUNT & WORK PACKAGE SCHEDULES DETAIL PROGRAM LEVEL “CLICK” TO CONTINUE…

  8. E A R N E D V A L U E M A N A G E M E N T PMB Development Steps (cont.) BUDGET • Work can be identified in the following ways: • Discrete: There is a specific, identifiable work product (reports, drawings, units) • Apportioned: Work is both planned and accomplished as a factor of some other discrete work product (e.g., quality control) • Level of Effort: There is no discrete work product. Work is planned and earned based on the passage of time. (e.g., program management) Classify the work and select an EV technique “CLICK” TO CONTINUE…

  9. E A R N E D V A L U E M A N A G E M E N T PMB Development Steps (cont.) BUDGET The method selected should reflect the nature and duration of the task to be accomplished. The contractor should identify what methods are available for use in their system in the EVM system description. Some commonly used methods and their application are displayed on the next slide. Classify the work and select an EV technique “CLICK” TO CONTINUE…

  10. E A R N E D V A L U E M A N A G E M E N T Earned Value Techniques Method Task Duration:Task planned (BCWS) and earned (BCWP) 0/100 1 Period: Task is planned and EV credit taken when completed 50/50 2 Periods: 50% at start of task and 50% at task completion MILESTONE 2 or more periods: Weighted interim milestones are identified for partial task completion % COMPLETE 2 or more periods: Interim milestones not identifiable. Should be based on measurable work accomplishment. UNITS COMPLETE 2 or more periods: Value per unit established and earned as accomplished APPORTIONED VARIES: Budgeted and earned as a factor of some other discrete work package LEVEL OF EFFORT VARIES: Budgeted and earned as with the passage of time WE WILL DISCUSS THESE MORE LATER>>> “CLICK” TO CONTINUE…

  11. E A R N E D V A L U E M A N A G E M E N T PMB Development Steps (cont.) BUDGET It is necessary to identify what resources will be needed to accomplish the work (labor, material, other direct costs-ODC) and to time-phase (and “dollarize”) these resource requirements. The chart on the next page displays how this would look. Budget the work packages Spread the budget over time Calculate cumulative BCWS “CLICK” TO CONTINUE…

  12. JAN FEB MAR APR MAY JUN JUL AUG SEP TASK 1 2 3 2 TASK 2 2 5 4 TASK 3 6 10 6 5 1 TASK 4 1 4 4 Monthly BCWS 2 5 7 10 10 6 6 5 4 55 Cumulative BCWS 2 7 14 24 34 40 46 51 E A R N E D V A L U E M A N A G E M E N T Identify Resources Budget Over Time– Calculate BWCS “CLICK” TO CONTINUE…

  13. E A R N E D V A L U E M A N A G E M E N T Simple Baseline Scenario To further illustrate how this might work, let’s imagine that we are planning to go golfing this weekend. We have a simple course with a par 4 per hole and plan to take approximately 10 minutes per hole. Now, let’s go through the baseline development steps……. “CLICK” TO CONTINUE…

  14. E A R N E D V A L U E M A N A G E M E N T PMB Development Steps (cont.) SCOPE Identify the scope of work Golf Game (This could be considered “control account”) Extend to control account / work package level 18 Holes (These are our tasks.) “CLICK” TO CONTINUE…

  15. E A R N E D V A L U E M A N A G E M E N T PMB Development Steps (cont.) SCHEDULE Arrange the work packages in order Hole 1Hole 2  Hole 3 etc. Finish to Start relationship(We need to finish one hole before we begin the next.) “CLICK” TO CONTINUE…

  16. E A R N E D V A L U E M A N A G E M E N T PMB Development Steps (cont.) SCHEDULE • Schedule work packages • 10 Minutes per hole BUDGET • Classify and Select an EV technique • Discrete --> 0-100?? • (This would mean that we don’t take any credit until the ball is in the hole.) “CLICK” TO CONTINUE…

  17. E A R N E D V A L U E M A N A G E M E N T PMB Development Steps (cont.) BUDGET Budget the work packages 4 Strokes/hole Spread the budget over time Calculate cumulative BCWS “CLICK” TO CONTINUE…

  18. 70– BAC = 72 60– 50– C O S T ( I N S T R O K E S ) 40– 30– 20– 10– 10 20 30 40 50 60 70 100 80 90 130 160 170 120 110 140 150 T I M E ( M I N U T E S ) Cum BWCS E A R N E D V A L U E M A N A G E M E N T Performance Measurements Baseline(PMB = Cum BCWS) “CLICK” TO CONTINUE…

  19. E A R N E D V A L U E M A N A G E M E N T Earned Value Techniques Revisited Let’s now look at other earned value techniques we might have used to plan our game….. We initially decided that the holes were of short duration… completed in 1 period and that they be planned taking credit at completion… when the ball falls in the cup… the 0/100 method. Suppose, however that you golf more like me… It takes about half the effort just getting the ball off the tee… and it will probably take me more than one 10-minute period for the hole... so I may want to plan the tasks using the 50/50 method. “CLICK” TO CONTINUE…

  20. 0 4 2 2 E A R N E D V A L U E M A N A G E M E N T Earned Value Technique Method Length BCWS & BCWP Calculation 0/100 1 Period 50/50 2 Periods “CLICK” TO CONTINUE…

  21. E A R N E D V A L U E M A N A G E M E N T Earned Value Techniques Revisited (cont.) Another method we could use would be to identify the tasks in terms of the “front nine” and the “back nine”…. then we could use a milestone method with the completion of each task as a milestone. If we were to consider the game as a whole and determine our % complete as we progress…. that would be another method we could use Similarly, we could consider each hole as a unit and plan based on “units completed” “CLICK” TO CONTINUE…

  22. 0 4 2 2 4 4 4 4 4 4 4 4 4 E A R N E D V A L U E M A N A G E M E N T Earned Value Technique Method Length BCWS & BCWP Calculation 0/100 1 Period 50/50 2 Periods MILESTONE 2 or more periods 17% 100% % COMPLETE 2 or more periods 12 72 3 18 UNITS COMPLETE 2 or more periods 12 72 “CLICK” TO CONTINUE…

  23. E A R N E D V A L U E M A N A G E M E N T Earned Value Techniques Revisited (cont.) To illustrate the “Apportioned” method…. suppose we had a caddy along…. it was estimated that, as we progress, the caddy’s effort is approximately 1/3 of the golfer’s effort… The initial plan/budget for the caddy is 1/3 of the that planned for the golfer (1/3 of 72 = 24)…. as the game progresses, the caddy “earns” based on a factor of the earned value of the task upon which it depends. Let’s use a golf cart to illustrate “Level of Effort”… suppose it rents by the hour… we would budget based on the hourly rate for the time estimated… and it would “earn value” also based on the passage of time regardless of how many holes we’ve completed. “CLICK” TO CONTINUE…

  24. 0 4 2 2 4 4 4 4 4 4 4 4 4 1/3 of units complete from above 4 Time Now 24 E A R N E D V A L U E M A N A G E M E N T Earned Value Technique Method Length BCWS & BCWP Calculation 0/100 1 Period 50/50 2 Periods MILESTONE 2 or more periods 17% 100% % COMPLETE 2 or more periods 12 72 3 18 UNITS COMPLETE 2 or more periods 12 72 APPORTIONED VARIES 24 LEVEL OF EFFORT VARIES 72 “CLICK” TO CONTINUE…

  25. E A R N E D V A L U E M A N A G E M E N T PMB Development Concepts Represents all work A participative process Time-phased to contract and program milestones Budgeted appropriately Reflects risk assessment Is realistic/achievable Is objective/measurable “CLICK” TO CONTINUE…

  26. E A R N E D V A L U E M A N A G E M E N T Summary PMB provides agreed on plan for a contract Integrates technical, schedule, and cost Helps prevent problems rather than fixing them Defines means of determining status “CLICK” TO CONTINUE…

  27. E S T I M A T E S A T C O M P L E T I O N ( E A C s ) SAMPLE To print the PowerPoint slides, click on File  Print… You will then be prompted to choose your print options. Select them and click OK. “CLICK” TO CONTINUE…

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