how to setup evm within a pmo

1

Earned ValueProject

Management

Michael Gowlett

ux

Copyright Of Banking Alliance Presented By Michael Gowlett

Introduction

2

Name

Position

Experience

Presentation By Michael Gowlett

PMO Manager at Kredietbank Luxembourg

18 Years of Financial Experience

Expertise PMO Implementations & Operational ManagementVirtualizing PMO’sProgramme Office AutomationEarned Value Management (EVM)

Certifications PMP & Prince 2 Practitioner

Based In Luxembourg for 2.5 years

Copyright Of Banking Alliance – Presented By Michael Gowlett

http://www.tudor.lu/cms/confGDP/content.nsf/id/accueil?opendocument&language=en

EARNED VALUEPROJECT MANAGEMENT

MICHAEL GOWLETT

WWW.BANKING-ALLIANCE.COM

[email protected]

3Copyright Of Banking Alliance – Presented By Michael Gowlett

http://www.banking-alliance.com/

AgendaInsight to Earned Value Management (EVM)?

Explain why you should use EVM?

I’ll describe some EVM tools that are available to us

How EVM can be implemented?

I’ll walk you through a Luxembourg case study

We’ll talk about a Plan Maturity Model & how its used

I’ll describe some of the core EV KPI’s

Highlight some of the PMO EV implementation challenges

I’ll walk you through the creation of an EVM architecture through multiple PPM tool integration and collaboration.

Advantages & Benefits

Finally, some good sources for understanding EVM & a Q&A4



What Is Earned Value Management?

EVM is a project management technique for measuring project performance and progress in an objective manner.

EVM has the ability to combine measurements of scope, schedule, and cost in a single integrated system.

EVM allows an organization to measure project time, cost & quality more effectively.

First developed by the US Government in 1960s

EVM is fast becoming the preferred technique for advanced cost & schedule tracking within organizations.

Recognized by the PMI as an industry standard tool since the first PMBOK edition in 1987

EVM is a mathematical analytical technique used to derive critical delivery KPI’s to the reviewer at a glance.



Why should you use EVM?

Most projects have no mechanism to measure the value of the actual “work” being performed against plan & budget.

Tracking the progress against the planned spend and actuals are separate processes but a relationship needs to exist between them, and EVM accomplishes this.

Cost overruns or work schedule slippages are often not visible until a month end report is revealed

EVM can eliminate the “Good News” reporting culture we often see in projects and allows for early detection and intervention of schedule and cost problems.



EVM TOOL OPTIONS


EVM Tool Options

Tools Advantages Disadvantages

Excel • Low cost • Time consuming• Suitable for small projects

MS Project • Familiar business product.

• Built-in EVM system.

• Detailed plans above 200 lines can be complex to manage.

• Can be unreliable & time consuming

• No collaboration & automation

MS Project & MS Sharepoint

• Familiarity + EVM• Collaboration• Low up front cost• Automation Avail:

• Requires an integrator to set-up a MOSS site to the right level

• Partial Integration

PPM Tools• Clarity• Planview

• Rich feature set• Fully automated

• High purchase price €1.5m+ excluding year on year running costs.

• ROI can be hard to justify



EVM Graph Standard



http://en.wikipedia.org/wiki/File:EVM_Fig4.png

HOW TO IMPLEMENT EVM


Establish the objectives

Identify a suitable project (Typically start with a small project)

Identify a suitable partner to mentor on your PMO team

Arrange a planning workshop

Select the relevant PPM tools to fit your budget

Training

Knowledge Transfer

Support & Mentoring

11

How to Implement EVM



CASE STUDY

KBL LUXEMBOURG PRIVATE BANK




Case Study – Key Drivers

Adopt EVM without investing in a (€) 7 figure project & portfolio management system (PPM)

To develop a solution, using off the shelf current PPM tools that minimized additional training & the learning curve.

They wanted to automate 90% of the reporting process

To integrate desperate data sources, to derive meaningful management information and metrics

To provide early warning of project issues

To provide the management team with an exception based reporting tool



Case Study –Before EVM - Typical Tools

What PPM products do we typically see on a given project?

WBS (Work Breakdown Structure)

High Level Plan (Steering level)

MS Project Plan (Gantt Charts)

Milestone List

Resource Plans

Budget Reports

Timesheet Management Actuals

Financial Reports

14

No Integration

No Automation

Labour Intensive



Case Study - Before Earned Value

Costs were captured in plans but spend to date was unclear

Resource actuals were tracked monthly by timesheets only

Performance of the actual work couldn’t be measured

Each department used its own processes & forms

No consistent measurements or KPI’s existed across multiple projects

No process of identifying early warning signs of cost over runs

Issues went un-noticed due to the frequency of reporting

No formal project methodology existed

No consistency to the project lifecycle

99% of the processes were manual.



EVM Implementation Challenges

Knowledge of how to intepret an EV graph

At initiation choosing the right tools to consolidate the data

Set the appropriate tolerances to determine deviation

Standardize the reporting expectations

Know what measurements to monitor to indicate deviation or improvement in performance.

An EVM architecture is a key element to obtaining the most out of the EVM technique (Explained later)

For larger projects it can up to take 3 months to fully adopt



Understanding Core EV KPI’sAcronym Algebraic Equation Explanation of Equation Explanation

PV Plan % Comp x BAC

PV of work at a status date in time

Authorized budget assigned to the project or scheduled task

EVActual %

Complete * Project budget

EV<AC = Cost or effort overrun; EV>AC = Under

budget/effort

Represents the cost of work value performed at a given point in time i.e. when a status date is selected in MPP

AC No Derivation AC>EV=Cost overrun; AC<EV= Cost under budget

Total costs actually incurred to date in accomplished work performed for a

schedule or activity

CPI EV/AC If CPI is = to 1 = Within budget; If CPI <1 = Over

budget; If CPI >1 = Project costs are under budget

Measures cost efficiency. A value >1 indicates a favorable position. A value

<1 and a negative value equals an unfavorable position

SPI EV/PVIf SPI is = to 1, On Schedule ; SPI=<1 Schedule Delay; If SPI >1 Ahead Of Schedule

Efficiency of the time utilized on the project




PMO Challenges Of EVMEVM data can be time consuming to maintain if you don’t utilise collaborative content management databases to reduce the cost of data collection

A lot of organizations don’t have the knowledge to exploit the functionality benefits in our everyday PPM tools.

EVM is beyond the reach of most PMO teams, who have not been trained to implement this relatively complex technique.

It requires BI reporting skills to generate trend analysis, dashboards and ad-hoc reporting

Few training courses exist to acquire the skills to implement EVM

While EVM increases the likelihood of success, it can add to the cost

Requires an understanding of the EV equations to calculate EV

EVM can place a high demand on the PMO because the actual project plan needs to be at the advanced standard level of maturity



Plan Maturity Level

Adopting Earned Value, you need to know that it requires

an good level of planning.

A pre-requisite is that your project plans are mature

enough.

Organisations with immature plans need to increase their

planning capabilities before implementing EVM





Case Study - Plan Maturity Level

20

Low Level

Level 1 Level 2 Level 3 Level 4 Level 5High Level

Level 6

Level Plan Maturity Level Planning Requirements

6 EV technique is used & the MPP is being updated periodically?

EVA can be retrieved from the MPP to track, cost, time & quality and the reports are providing valuable information to senior management.

5

Have the resources been leveled across the plan?

Resource are fully allocated (not generic and the plans have been leveled to achieve an agreed resource utilization

Is Work (effort) Vs Elapsed available? The plan will differentiate elapsed time (duration) from effort (work) to understand the resource utilization between each of its deliverables

Are the resource costs shown & are they being monitored?

Billable resource costs are captured for each resource

4 Has a contingency been included? The plans contain sufficient contingency for the phase and complexity of the projectAre holidays & sickness being tracked? The plans contain forecasted holidays and have contingency for sickness

3Has the MPP been base-lined? Has the plan been base-lined to measure efficiency & progress

Has a critical path been established? Has the critical path been established to understand the deliverables that closer monitoring

2Is the % Complete being maintained? Have the tasks % complete been updated & periodically are the they been tracked

daily/weekly/monthlyDoes the MPP contain dependencies? Does the plan have predecessors & successors (dependencies) captured?

Have valid milestone been agreed & are they shown?

Does the plan contain an adequate number of achievable milestones?

1Have tasks & elapsed times been

captured?At minimum are all the tasks and activities captured with resource assignment?

Has the project plan been derived from an estimating model/tool or a WBS

How, or what has been used to derive the estimates? Have you used a specific tool/technique?



[email protected]

EVM Architecture at KBL

PPM Tool Collaboration & Content Integration





Tools Adopted by KBLMS Project

MS Sharepoint

Reporting Tool (SQL Reporting Services)

Mindjet Mind Manager (WBS Development)

MS Visio



WBS

Steering Level Plan

Project Plan

Task Assignment Level

EVM Reporting

Define Our Resources

Dashboard

Plan Our Resources

Baseline Our Project Plan

Assign Our Resources To Tasks In MPP

Export Our Project Plan Into

A Sharepoint List

Synchronize Our Actuals From

Sharepoint back Into Project

Triggering Work Assignments To

Resources

Now We Have Integration & Collaboration Between All PPM Tools

PPM Tool Usage Through The Planning Phase To Create An EVM Architecture

H

M

L

Copyright Of Banking Alliance Presented By Michael Gowlett

Sharepoint Portfolio Dashboard



Example Of An EVM Report



ADVANTAGES & BENEFITS


Case Study – Overall EV Advantages

Tracking Perspective:PMO has the ability to identify a slipping project schedule or cost deviation as periodically as when the actuals are synchronized.

Reporting Perspective:We can track near real-time delivery against the plan (Schedule)Senior management can view a performance of a live dashboard that shows all EVM KPI’s allowing the viewer to drill down from Portfolio > Programme > Project & Task level.Historical databases of performance can be retrieved to tune future project estimates & assumptions.

Trends Perspective:We can have more control over early detection of schedule & cost deviation because you can accurately see when & where deviation is trending against your baseline.



MS Access for automated reporting:

When used with SharePoint

It can replace large & unmanageable Excel spreadsheet DB’s

The integration of SharePoint, Project & Access together can

minimize financial reconciliation errors

We also have further automation with

Task & activity synchronization when using SharePoint & Project

The PMO has less manual intervention for retrieving actuals

because work assignments are delegated to owners via email, so

trigger alerts can be setup, for task timing reminders

Case Study – After – EV PMO Benefits



Overall EVM Benefits

29

Provides advanced warning of cost and schedule overruns

Enables preventative measures and/or corrective actions to be undertaken at the earliest signs of project deviation.

Provides a mechanism to monitor the performance of suppliers and their staff in near real time.

Provides a direct link between budgets, plans, resources and delivery.

Provides statistics to stakeholders and steering groups showing past, current and predicted performance

Enhances management visibility, allowing you to drill down into a portfolio of projects & tasks to retrieve statistics, that can be measured against a baseline

Provides a management reporting methodology that encourages delegation and an exception based management style. Reduces Micro Management.

Removes the “good news” reporting culture

The PMO becomes more productive when it has the right PPM tools.


Further Reading

30

http://www.amazon.co.uk/Earned-Value-Management-Microsoft-Project/dp/1932159983

http://en.wikipedia.org/wiki/Earned_value_managementWikipedia





http://en.wikipedia.org/wiki/Earned_value_management

http://en.wikipedia.org/wiki/Earned_value_management

QUESTIONS


EARNED VALUEPROJECT MANAGEMENT

MICHAEL GOWLETT BANKING ALLIANCE LTD

[email protected]


http://www.banking-alliance.com/

how to setup evm within a pmo

Technology