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Using Earned Value Management System (EVMS)

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

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Using Earned Value Management System (EVMS)

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

  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. 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 Complements of Project Management Institute

  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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. EV Reporting • Interpret the results of the calculations - Slides 8 - 11 • Take or recommend corrective action as necessary

  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. 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

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