symposium 2016 : conf. 401 jonathan shriqui evm: go beyond the numbers

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EVM: Go Beyond the Numbers

Jonathan Shriqui, PMP

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WHAT IS THE PURPOSE OF EVM?

To establish a common standard of project performance measurement & stakeholder

management, regardless of program size or industry.

To provide early warning signs of deviation from plan.

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WHAT IS EVM?

Not a single processGrouping of 32 guidelines (EIA-748-C)Management technique:• Establish a time phased budget of the SOW• Captures the progression of work• Provide reliable & timely information for

project management analysis & actions

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3 Key components to EVMPMI Talent Triangle:

LeadershipStrategic and Business

Management Technical Project

Management

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Role of Leadership with EVM

Leadership is the foundation of EVM:Set the organizational toneFosters a culture of EVMTailors business process to support EVMUtilizes EVM info to support leadership

decisions

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EVM Challenges to Leadership

Leadership must accept that EVM:May be lengthy to implementRequires tools & trainingMay be process heavyRequires a business rhythm Acceptance that EVM requires TIME.

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EVM Benefits to Leadership

Leadership should receive the following benefits:Provide early warning signs of potential

project issuesIntegration of scope, schedule & costCredibility of program controlStakeholder CommunicationEnhanced Risk Management

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Strategic and Business Management

Business MaturityBusiness OperationsCustomer Relationship

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Strategic & Business Management

Business Maturity • Capability Maturity Model Integration• CMMI Rating from 1 to 5

The CMMI principal is that “the quality of a system or product is highly influenced by the

process used to develop and maintain it”*

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Business Maturity

EVMS will most likely be effective

in a org. that reflects a CMMI rating of 3 or

above

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Strategic & Business ManagementBusiness Operations

- Reporting- Cash Flow Forecasting- Resource Forecasting- Risk Management

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Strategic & Business Management

Business Operations / Reporting• EVM Culture• EVM lingo & metrics in review meeting• EVM understood/used by senior management• EVM data should remain constant throughout the

various level of reporting

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Strategic & Business Management• Business Operation

- Cash Profiling- Resource Reqs.

Your ETC is yourForecast.

USE INPUT FROM YOUR CAMs.

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Strategic & Business Management• Business Operations / EVM &Risk Management

– Both work cohesively, not in silos

Mgmt Reserve > Risk Register + VACIf not, engage in stakeholder awareness

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Customer / Stakeholder Relationship

The outputs of EVM process (variance reporting) should be the source of data for stakeholder mgmtThe project is:

Over/under cost because…Late/ahead of schedule because…The key risks are…Our mitigation/enhancement plan is…

Program Control InstillsStakeholder Confidence

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Technical Project Management

EVM BasicsSmall Project

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Business world: “Cash Is King”

EVM world: “Schedule Is King”

A realistic, achievable & logical schedule is key with EVM

WHO IS KING?

EVM 101

Time

Budget versus Actual

2D Project (Business) Management

$’s

Budget

Actual

Time Now

Under spent ?

BehindSchedule ?

$’s

3D Project Management

Time

Plan

Costs

Time Now

Budget versus Actual

Earned

Schedule

Cost

7. Reporting- CAM reports (e.g. one page reports,

SWOT, SOFT)- Variance Reports (by exception)- Recovery Plans

2. Schedule- Work & Planning packages- Resource- Time-phased budget

1.Scope- Contract / SOW- WBS, OBS, RAM &

WBS Dictionary- Control Accounts

5. Costs- Booking / charge numbers- Actual costs / bookings

6. Analysis- Trend analysis- Variance analysis- TCPI, IEAC- Other PM analysis (e.g.

Critical Path Analysis)

8. Risk & Opportunity- Exposure (financial, schedule & performance)- Costed Mitigation / Realisation actions

9. Change- Change Requests- Change Log- Baseline

maintenance- Re-planning- Formal control of

scope & budget changes

4. Status Data (Progress) & Forecasts- Achievements (earned value)- Estimates to complete

3. EV “Engine”- PMB- Performance data- EVM reports (CPR1-5,

trends & SPA graph)

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Bathroom Renovation

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Our Budget - BACItem BAC

Flooring $1,600Vanity $1,900Shower $2,000Bathtub $1,500Total $7,000

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BCWSBudgeted Cost of Work Scheduled

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The BCWS is your time phased BAC∑BCWS = BAC = YOUR DOLLARIZED PLAN

Week 1 Week 2 Week 3 BAC

Flooring $1,600 $1,600

Vanity $1,000 $900 $1,900

Shower $1,000 $1,000 $2,000

Bathtub $1,000 $500 $1,500

Period Total $2,600 $2,000 $2,400 $7,000

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BCWSBudgeted Cost of Work Scheduled – Week 1

Our PLAN is to perform $2,600 of defined scope in week 1.• Old Floor Removal = 6hrs @ 50$/h = $300• Purchase materials (tiles, grout, etc) = $500• Tile Installation = 16hrs @ 50$/h = $800• Purchase & delivery of bathtub = $1,000

$2,600 BCWS Week1

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ACWPActual Cost of Work Performed

ACTUAL cost of the EARNED scope.BAC:• Planned Direct Cost• Planned Indirect Cost• Planned Material Cost

No expenditures to unplanned scope

ACWP:• Actual Direct Cost• Actual Indirect Cost• Actual Materials Cost

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Our Cost – ACWP – Week 1BCWS W1 ACWP W1

Removal $300 VS $100

Material $500 VS $500

Installation $800 VS $700

Bathtub $1,000 VS $1,000

Period Total $2,600 VS $2,300

But what did we accomplish?

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BCWPBudgeted Cost of Work Performed

What did we “earn” in relation to our plan?What did we accomplish?What did we start/finish?

What is the status of the scope?

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What was accomplished in week 1?

Earned / Planned– Removal 100% completed – we earned $300/$300– Purchased 100% of materials – we earned $500/$500– Installed 25% of the tile – we earned $200/$800– Purchased & installed bathtub - we earned $1,500/ $1,000

$2,500/$2,600

BCWPBudgeted Cost of Work Performed – Week 1

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The key to good EV is proper “statusing”A realistic and achievable schedule Selecting appropriate EV Technique:• LOE, % complete, 50/50, Milestone, units complete,

apportioned (0-100, 50-50, 20-80, etc)

Be honest and objective!

BCWPBudgeted Cost of Work Performed

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SVP - S

SPIP / S

CVP - A

CPIP / A

$0 1.0 +$200 3.0

$0 1.0 $0 1.0

($600) 0.25 ($500) 0.28

+$500 1.5 +$500 1.5

($100) 0.96 +$200 1.09

BCWS W1

BCWP W1

ACWP W1

Removal $300 $300 $100

Material $500 $500 $500

Installation $800 $200 $700

Bathtub $1,000 $1,500 $1000

Period Total $2,600 $2,500 $2,300

EV Metrics – Week 1

SV = BCWP – BCWS SPI = BCWP/BCWSCV = BCWP – ACWP CPI = BCWP/ACWP

Time Now

BCWS 100 100 100 100 100 100 100 100 BCWS 400

BCWP 0 400 0 0 0 0 0 0 BCWP 400SPI 1.0

BCWS 100 100 100 100 100 100 100 100 BCWS 400

BCWP 0 200 0 200 0 0 0 0 BCWP 400SPI 1.0

BCWS 100 100 100 100 100 100 100 100 BCWS 400

BCWP 100 100 100 100 0 0 0 0 BCWP 400SPI 1.0

“My SPI is 1.0, but my project is late!?”

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SPI, CPI, EAC, TCPI, iEAC, BEI, VAC, BAC, BCWR,

UB, MR, PMB, etc. So What? I need

information, not data!

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BCWS W1

BCWP W1

ACWP W1

Installation $800 $200 $700

SVP - S

SPIP / S

CVP - A

CPIP / A

($600) 0.25 ($500) 0.28

Why SV? Inspection determined that the grading of the existing subfloor was out of tolerance. Leveling of the subfloor

was required for proper tile installation. Why CV? Due to the unleveled subfloor, the purchase of self-leveling cement and extra labour was required to level subfloor.

Variance Analysis

Why SV?

Why CV?

Contracts Management

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BCWS W1

BCWP W1

ACWP W1

Installation $800 $200 $700

Impact AnalysisSV

P - SSPI

P / SCV

P - ACPI

P / A($600) 0.25 ($500) 0.28

Schedule Impact: Delays due to releveling the subfloor may affect the start date of the vanity installation. Tile installation is

now on the critical path.Cost Impact: Extra material and extra labour effort will

increase the estimate at complete (EAC). Will incur storage costs for the vanity (offsite) if floor is not finished on time.

Schedule Management

Supply Chain Management

Risk Management

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BCWS W1

BCWP W1

ACWP W1

Installation $800 $200 $700

SVP - S

SPIP / S

CVP - A

CPIP / A

($600) 0.25 ($500) 0.28

Schedule : Consider diverting resources to minimize schedule delays and getting off the critical path.

Cost: Recommend absorbing the cost of additional resources to avoid paying storage and transportation costs

Schedule Management

Cost Growth

Mitigation Plan

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Importance of CAM trainingCAM training & experience will affect the quality of: • Performance Assessment • Variance Analysis• Impact Analysis• Mitigation plans• Ultimately the data used influence the outcome.

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Lets go 15 years into the future…

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Vertical EV

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$’000 BCWS BCWP ACWP Foundation $300 $300 $100

Framing $500 $500 $800

Electrical $800 $200 $700

Plumbing $1,000 $1,500 $1000

Period Total $2,600 $2,500 $2,600

SV SPI CV CPI$0 1.0 +$200 3.0

$0 1.0 $(300) 0.6

($600) 0.25 $(500) 0.28

+$500 1.5 +$500 1.5

($100) 0.96 $(100) 0.96

Labour $800 $400 $600

Material $600 $500 $400

Subcontract $1,200 $1,600 $1,600

Period Total $2,600 $2,500 $2,600

$(400) 0.5 $(200) 0.7

($100) 0.8 +$100 1.25

+$400 1.3 $0 1.0

($100) 0.96 $(100) 0.96

But my schedule is late!

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Resources BCWS BCWP ACWP

Labour $800 $400 $600

Material $600 $500 $400

Subcontract $1,200 $1,600 $1,600

Period Total $2,600 $2,500 $2,600

SV SPI CV CPI

$(400) 0.5 $(200) 0.7

($100) 0.8 +$100 1.25

+$400 1.3 $0 1.0

($100) 0.96 $(100) 0.96

Vertical EV

LOE $400 $400 $500

Discrete $400 $0 $100

Period Total $800 $400 $600

$0 1.0 $(100) 0.7

($400) 0.0 $(100) 0.0

($100) 0.5 $(200) 0.7

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Horizontal EV

Date SPI

CUR - SPI 0.90

CUM - SPI 0.94

3 Month 0.856 Month 0.869 Month 0.89

• Trends without graph• Shifts in program momentum• Labour vs Material• Discrete Labour Only

𝟗𝒎𝒐𝒏𝒕𝒉𝑺𝑷𝑰= 𝑩𝑪𝑾𝑺𝒄𝒖𝒎−𝑩𝑪𝑾𝑺𝒄𝒖𝒎𝟗𝒎𝒐𝒏𝒕𝒉𝒔 𝒂𝒈𝒐

𝑩𝑪𝑾 𝑷𝒄𝒖𝒎−𝑩𝑪𝑾 𝑷𝒄𝒖𝒎𝟗𝒎𝒐𝒏𝒕𝒉𝒔𝒂𝒈𝒐

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Integrate them with:• Risk Management Strategy• Business’ Internal Processes• Forecasting Processes•Schedule/Baseline Management

EVM Outputs

Program Control

Earned Value Management System

Data EVMS Information

• Quantitative Data • SPI, CPI

• Qualitative Information• We were late because…• We spent more because…• Our mitigation plan is…

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EVM is NOT a quality tool!You must PLAN for quality WITHIN your project.

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Another 15 years later…

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EVMS: Contractual Requirement Customer

Contractor

Expectation of Program ControlCommon Knowledge & Lingo

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• Customer:• Ability to understand & assess

EVM data• Ability to conduct audit• Define your reporting reqs

(CDRL/SDRL)

EVMS: Contractual Requirement• Contractor:

– Ability to produce EVM data (CDRL/SDRL)

– Ready to be audited– Adhere to an EVM

culture / processes

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EVM SOWAn improper or too vague EVM SOW may result in an EVMS that is:- Contractually compliant- But has little or zero value added- May cause more “pain” than gain

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Refine your EVM SOW• EVMS that complies with a standard (EIA 748-C)

• % of LOE labour shall not be greater then X%• EVM as a SDRL to subcontractors• A task shall not have a duration longer then X days• Reporting shall be at the X level of the WBS or CA.• Expectation EVM analysis and recovery.

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Always remember…

Good decisions are based on knowledge and not on numbers.

- Plato

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For more information…

• Thank you for your participation today!

• For more information on the contents of this presentation, please feel free to contact me as follows:

o Jonathan Shriqui, PMPo jshriqui@fleetech.como 613-255-6520o www.fleetech.com

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Time Permitting…

EVM Practical Uses