measurable news-issue-4-2013

THE MEASURABLE NEWS

2013.04The Quarterly Magazine of the College of Performance Management

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INSIDETHISISSUE

07 19 21 31Applying Earned Value to Overcome Challenges in Oil and Gas Industry Surface Projects

By Williams Chirinos, MSc, PEng, PMP

PARCA:The Next Generation of Earned Value Management

By Karen A. Kostelnik

Measuring Schedule Adherence

By Mario Vanhoucke

Taking the Guessing out of When to Rebaseline

By Mojtaba Zarei Kesheh and Ray Stratton, PMP, EVP

20 USD/AUD | 15 EUR/GBP

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CONTENTS05 Update from the VP Communications

Mark Phillips

07 Applying Earned Value to Overcome Challenges in Oil and Gas Industry Surface ProjectsWilliams Chirinos, MSc, PEng, PMP

15 10 Do’s and Don’ts for Using Performance Management DataMark Phillips, PMP

18 Election ResultsLauren Bone

19 PARCA: The Next Generation of Earned Value ManagementKaren A. Kostelnik

21 Measuring Schedule AdherenceMario Vanhoucke

27 Data About Our CommunityMark Phillips, PMP

31 Taking the Guessing out of When to RebaselineMojtaba Zarei Kesheh and Ray Stratton, PMP, EVP

35 New Award for CPM VolunteersEleanor Haupt, EVP

37 CPM Chapter Initiatives UpdateLauren Bone

43 Vendors/Services

2013 ISSUE 04

THE COLLEGE OF PERFORMANCE MANAGEMENT

2013 BOARD & STAFFPRESIDENTGary W. Troop 310-365-3876 • [email protected]

EXECUTIVE VICE PRESIDENTRay Stratton 714-318-2231• [email protected]

VICE PRESIDENT OF FINANCEBuddy Everage 202-507-4372 • [email protected]

VICE PRESIDENT OF ADMINISTRATIONLauren Bone UK+44(0)7766974063 • [email protected]

VICE PRESIDENT OF CONFERENCE & EVENTSBarry Schuler571-557-6574 • [email protected]

VICE PRESIDENT OF EDUCATION & CERTIFICATIONKim Hunter301-330-3101• [email protected]

VICE PRESIDENT OF RESEARCH & STANDARDSKym Henderson 61 414 428 537 • [email protected]

VICE PRESIDENT OF COMMUNICATIONSMark Phillips248-914-3774 • [email protected]

PAST PRESIDENTSusan Wood850-585-4830 [email protected]

EXECUTIVE ADMINISTRATORGaile Argiro703-370-7885 • [email protected]

ASSISTANT ADMINISTRATORStephanie Bautista703-370-4301 • [email protected]

THE MEASURABLE NEWS IS AN OFFICIAL PUBLICATION OF THE COLLEGE OF PERFORMANCE MANAGEMENT

EDITORIAL STAFFPublisher: College of Performance ManagementManaging Director: Gaile ArgiroStory Editor: Peter SchwarzDesign: id365.comCommunications VP: Mark Phillips

EDITORIAL COPY Editorial contributions, photos, and miscellaneous inquiries should be addressed and sent to the editor at the College of Performance Management (CPM) headquarters. Please follow the author guidelines posted on the CPM web site. Letters submitted to the editor will be considered for publication unless the writer requests otherwise. Letters are subject to editing for style, accuracy, space, and propriety. All letters must be signed, and initials will be used on request only if you include your name. CPM reserves the right to refuse publication of any letter for any reason. We welcome articles relevant to project management. The Measurable News does not pay for submissions. Articles published in The Measurable News remain the property of the authors.

ADVERTISINGAdvertising inquiries, submissions, and payments (check or money order made payable to the College of Performance Management) should be sent to CPM headquarters. Advertising rates are $1000 for inside front or back cover (full-page ad only), $800 for other full-page ads, $500 for half-page ads, and $300 for quarter-page ads. Issue sponsorships are available at $2500 per issue. Business card ads are available for $100 per issue (or free with full-page ad). Rates are good from January 1, 2013 – December 31, 2013. College of Performance Management reserves the right to refuse publication of any ad for any reason.

SUBSCRIPTIONSAll College of Performance Management publications are produced as a benefit for College of Performance Management members. All change of address or membership inquiries should be directed to: College of Performance Management 101 South Whiting St, Suite 320, Alexandria, VA 22304 Ph 703.370.7885 • Fx 703.370.1757 www.mycpm.org

All articles and letters represent the view of the authors and not necessarily those of College of Performance Management. Advertising content does not signify endorsement by College of Performance Management. Please notify College of Performance Management for single copy or reproduction requests. Appropriate charges will apply.

© 2013 by the College of Performance Management. All rights reserved.

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2013.04

05

UPDATE FROM THE VP COMMUNICATIONSMark Phillips, PMP

This issue of the Measurable News is a rich sampling of the breadth of our community and our energy moving forward. It has practical advice for practitioners, academic research on emerging concepts and the introduction of a new project management approach for oil and gas surface projects. It provides a targeted platform for U.S. DOD policy holders to communicate with the community and a place for the community to learn more about itself. We are also pleased to formally publish the results of the recent CPM board election. Taking it all in, I’m sure you’ll notice that our contributors, stakeholders and audience, span the globe, cross diverse industries and are dedicated to continual advancement.

Speaking of advancement, this issue coincides with the International Integrated Program Management Conference (IPMC) in Bethesda, Maryland. The IPMC is a great opportunity to meet with the full spectrum of community members, face-to-face, to network, discuss and brainstorm. You can learn about the latest tools and techniques, spend in-depth time with vendors and experts, or participate in our renowned training programs. Many of our attendees are in a unique position to address your concerns and answer questions. It is an event where people are eager to discover and are equally eager to share. The full program is available on the IPMC website at www.ipmconference.org.

As we gather together on these pages or at the conference, I am reminded that the recent elections mark the first complete cycle since the staggered election process was introduced. Between the 2012 elections and the most recent elections every board position has been up for re-election. The completed process allows for a smooth continuation of initiatives started under the previous board and the introduction of new initiatives under the newly constituted board. We owe a big thank you to the outgoing board members for their vision, dedication and service to the community. A lot has happened during their tenure. They have successfully navigated CPM, often through rough waters, to get it to where it is today. If you are at the IPMC, I invite you to thank them in person. If not, don’t hesitate to send them an email or give them a call.

The new board members will be at the IPMC as well. I invite you to introduce yourself, congratulate them and share your ideas with them. The same goes for any reaching out to any board member. We are here to add value to and advance the best interests of the broad CPM community and our stakeholders.

Before concluding this update I would be remiss if I didn’t include a reminder of our monthly webinar series and our online library of performance management information, the EVM Library. It is the largest online collection of performance management articles, presentations and information that we know of. And it continues to grow every month. Links to both resources, the webinars and the online library, can be found on our website at mycpm.org.As always, if you have further ideas on how we can help or would like to discuss current initiatives, don’t hesitate to reach out to me at [email protected]. And if you are at the IPMC event, please do stop by and say hello.

Mark Phillips, PMPVice President – Communications

IPM 2013

I EAA International Cost Estimatingand Analysis Association

Sponsored by…

Plan now for...

The PMP, PMI and R.E.P., and the Registered Education Provider logo are Registered marks of the Project Management Institute, Inc.

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Setting the Baseline

Erin Whittaker • [email protected] 703.938.5090 • fax 703.938.5091 www.iceaaonline.org

Learn from… • Special Guest Speakers • Professional Education Training Seminars • Tools Track Presentations • Topical Workshops • Practice Symposia

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Gaile Argiro • [email protected] 703.370.7885 • fax 703.370.1757 www.mycpm.org

For exhibiting information…

The premier conference on Earned Value Management

25th Annual International Integrated Program Management Conference November 18–20, 2013Bethesda North Marriott Hotel & Conference Center • Bethesda, MDLook for more information on www.mycpm.org

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2013.04

07

ABSTRACT Statistics show that the failure rate of projects in the oil and gas industry is greater in comparison to other industries. To overcome this particular challenge, a new project management methodology based on earned value is outlined, because new and emerging ideas are needed to reverse this trend in the oil and gas Industry.

Even though there is an effort to implement the best project management techniques worldwide, energy projects regardless of their size still experience difficulties, particularly in the oil and gas industry. Oil and gas surface facility projects have difficulties meeting the three successful criteria; delivered on time, with a final actual cost on or below budget, and in full compliance with the requirements.

This article describes the main characteristics of oil and gas surface projects and analyzes the major challenges encountered during the planning and execution of these types of projects. This article also addresses the current use of earned value project management in the oil and gas industry and presents a reason why this technique has not been widely applied. In the last part, a new project management approach is presented to facilitate an effective implementation of earned value in the oil and gas industry, in order to increase the probability of success and return of investment of capital surface projects in the near future.

OIL AND GAS SURFACE PROJECTSOil and gas industry surface projects are needed to transport and process the crude oil and gas from wellheads to shipment facilities. Usually wellheads are in remote locations such as deserts, jungles, offshore deep-water and onshore desolated areas. These remote locations are also usually under seasonal cold or hot temperatures and with restricted and difficult access roads. To move the multiphase flow (oil-gas-water) from the wellheads, it is required to install multi or mono phase flow lines and artificial lift equipment like pumps, compressors, pressure vessels, and electrical and remote control units. On the other hand, oil sands deposits are mined when they are close to the surface and large trucks are used to transport the oil sands to the extraction plants.

Surface process plants are needed to separate oil, gas, water, and sand streams into independent ones. These process plants are located also in remote and sensitive natural areas, relatively close to the wellheads and oil sands. Further, process facilities are needed to take each independent stream into specification and ready for distribution or usage. The crude oil is mixed with other oil streams or further dehydrated and transferred to field storage tanks. The gas is processed in extraction and compression gas plants for distribution and commercialization. The subsurface water is cleaned for reinjection into the reservoir as a pressure recovery method, and the sands (plus residual water) are transferred to holding ponds for reclamation. The previous steps are called upstream process, which are part of exploration and production companies working on the oil and gas extraction business.

At the field storage tanks or shipment facilities the oil and gas are finally transferred to downstream process refineries through pipelines or floating ship vessels. Pipelines are the most efficient method to transport hydrocarbons. A pipeline project usually requires pump stations to keep the liquid flowing or compressor stations to transfer the gas to the destination points.

PROJECT CHALLENGESFrom the wellheads and oil sands deposits up to the refineries, oil and gas surface facilities projects challenges are related to the process and transfer of large volumes of hydrocarbons across remote natural and sensitive areas. These projects are risky and complex. They involve all disciplines; process, mechanical, civil, piping, electrical,

APPLYING EARNED VALUE TO OVERCOME CHALLENGES IN OIL AND GAS INDUSTRY SURFACE PROJECTSBy Williams Chirinos, MSc, PEng, PMP

08 The Measurable News 2013.04 | mycpm.org

instrumentation, control, and project management. Health, safety and environment are paramount from conception to start-up; therefore, the project management discipline has to coordinate efforts to effectively comply with all government and regulatory entities.The capital expenditure in surface facilities projects is high, specifically for new installations. Let us consider the project sizes according to the total installed costs (TIC), as follows:

• Mega projects have TIC greater than $1B• Large projects have TIC between $100M and $1B• Medium projects have TIC between $1M and $100M• Small projects have TIC less than $1M

Taking into consideration the previous assumptions, the order of magnitude of oil and gas surface project costs are as follows:

1. Greater than 12 inches diameter and more than 1000 km pipeline projects cost several billion dollars.

2. Design and construction of floating production storage and offloading vessels (FPSO) are also mega projects.

3. A 30k barrel of oil sands plant project costs around 1.5 billion dollars.4. A 10k barrel of oil and gas flow station facility costs around $150M (this is a large cost

range project and the cost depends on the plant capacity).5. Plant capacity expansions are medium cost range projects.6. Installing an artificial lift method in an oil well is usually a small project ranging between

$0.2M and $0.5M.7. Installing a 10M standard cubic feet compressor in a gas wellhead is typically a small

project that can cost $0.5M.

There is no doubt that oil and gas surface facilities projects are capital intensive projects, and the size factor increases the risk of failure, because statistics show that the larger the project, the greater the percentages of cost overrun and schedule slippage during the project execution phase.

Another characteristic of these capital intensive projects is that there are long lead items to procure, like process equipment (e.g. pumps, heat exchangers, compressors, separators, scrubbers, storage tanks or control valves) and material (e.g. line pipe). Exploration and production companies need to manage a large number of service providers during the engineering, procurement, and construction project phases. There are logistic challenges involved during the transportation of equipment and material from the fabrication shop to the construction site. A constant review of the local transit regulations is required to avoid interruptions of high-load moves that may result in unnecessary delays or increases in costs, due to the impact on construction schedules. Cost and time for the movement of modules, equipment and materials need to be included in the project plan.

On the regulatory side, companies are dealing with more exigent regulatory requirements that incorporate complexity in the permit submittal and approval process. Currently, new pipeline projects increasingly face environmental resistance due to the environmental impact caused by pipeline failures in the past.

What is more, a variety of stakeholders are involved in oil and gas energy projects. Producers, service providers (such as engineering, procurement and construction companies), material suppliers, government entities, and the public, are typical stakeholders that require attention and need reliable project status information.

EARNED VALUE IN OIL AND GAS INDUSTRY PROJECTSEven though earned value is the most effective way to determine project status and measure project performance, it has not been widely applied or used worldwide. During the execution of projects, a comparison between the resources planned to be spent (budget) and the resources spent (actual cost) is not sufficient to determine the project status and performance. It is necessary to include in the comparison the actual work accomplished in order to really understand the actual completion level of a project.

The use of earned value as a project management technique is important to increase the probability of success and return on investment of oil and gas surface capital intensive projects worldwide, because for this particular industry, the rate of project failures is higher than other industries. Two examples:

1. In Canada over the last 30 years, 5 billion dollars have been overspent in 28 gas plant and oil sands plant projects (the original budget was $16B). More than half of these projects experienced schedule slippage, according to an article entitled “Successful Project Execution Through an Integrated EPC Delivery Approach,” written by Robert Walden

09The Measurable News 2013.04 | mycpm.org

and published by the Association for the Advancement of Cost Engineering (AACE) in October 2012.

2. Independent Project Analysis (IPA) CEO Ed Merrow stated at the Calgary Project Management Conference in 2011 that, “1 in 5 mega projects in the oil and gas industry have reasonably acceptable results.” To determine this, they studied around 300 mega projects (oil and gas, minerals and metals, chemicals and power) worldwide over the last 20 years.

Our research is telling us that one of the reasons why earned value has not been applied across industries is because of the current project management practice of determining the project progress through the activity/task-based percent complete. This technique is not only an indirect method to determine physical completion, but also incorporates subjectivity in the measurements of project performance. In addition, most people say that earned value management is difficult, expensive, and time consuming to implement, because of all the administrative processes involved. Therefore, a simplified, practical, yet effective approach is needed in order to help implement earned value, specifically for the oil and gas surface capital intensive projects worldwide.

COMPLEXITY TO SIMPLICITY – A NEW PROJECT MANAGEMENT APPROACHA move from complexity to simplicity in project management is presented by INEXERTUS through a simplified and practical approach that focuses on one technique in both the planning and execution phases of projects. In the planning phase the focus is on the scope definition, and in the execution phase, the focus is on applying a simplified approach to earned value. These two techniques are described below.

In the planning phase the steps are as follows:a) Defining and organizing the entire oil and gas surface facility project scope of work

in a consistent work breakdown structure. Listing all the project deliverables (e.g. a technical report, an engineering work package, or a gas compressor), and milestones (e.g. the purchase order issuance, a process plant simulation, or a contract sign-off) at the lowest level of each work breakdown structure branch (see figure 1). Focusing on deliverables and milestones, instead of activities or tasks, increases the objectivity when reporting physical project progress.

Figure 01. Work Breakdown Structure with Deliverables and Milestones

b) Grouping the deliverables and milestones in control accounts to estimate the resources and time required to produce these results. Developing a work plan with the involvement of the people that are going to execute the project (see figure 2).


Figure 2. Work Plan with Deliverables and Milestones

c) Discussing the plan with all main stakeholders and approving the work plan, in order to generate a consistent and more realistic project baseline (see figure 3).

Figure 3. Project Baseline

The planning process is a preliminary stage to prepare and approve the project baseline. After the approval, the baseline is frozen, published, and sent out to all stakeholders. This is an important step to start the project execution, because one of the reasons why projects fail is due to the lack of effective communication (everyone is not always on the same page). The publication of the baseline communicates the agreed execution plan and expectations, and makes the alignment of stakeholders stronger from the beginning. During the execution phase a simplified and practical approach to earned value is applied to credit value only for the work that has been completed. The earned schedule concept is also applied to forecast the project completion date. With a work plan based on project results, it is possible to determine the project progress more objectively, as deliverables are finished or milestones are achieved. As time goes by, the completion of deliverables and achievement of milestones are verified with a “Yes/No” question posted to the project performers, and confirmed by inspections according to the quality plan. This question reduces the subjectivity at the moment of reporting project progress, because the real status is based on facts, instead of opinions. Here, the earned value is credited on discrete amounts only if deliverables are completed or milestones are achieved during a reporting period. If not, the earned value will be credited when the work is accomplished in a future reporting period. In the same fashion, if some work was completed in advance, the associated earned value is credited at the time of completion. Planned value, earned value, and actual cost are cumulative values in order to perform earned value analysis and forecast the final cost and completion date of the project. The forecasts are based on previous performance, and they are calculated each time a reporting period is closed out.


Earned value and actual cost are updated each time we close a reporting period. For the first closed reporting period, figure 4 shows that the earned value credited in control account A was $20,000 (because all deliverables and milestones were completed), and the actual cost was $15,000.

Figure 4. Work Plan during Project Execution

During the second reporting period, figure 4 shows that four out of six deliverables and milestones were completed (in control accounts A and B). The earned value credited was lower than the planned value ($40,000 versus $60,000), and the actual cost was higher than the earned value ($75,000 versus $40,000).

For the second closed reporting period, figure 5 shows that $30,000 ($50,000 - $20,000) was credited to control account A because the deliverables and milestones were completed, and $10,000 was credited to control account B (1/3 of $30,000), because one deliverable and one milestone were not completed.

Figure 5. Project Status Report of second Reporting Period

After closing the second reporting period, the project is 23% complete, over budget, and behind schedule. The earned schedule forecast for the project completion date is June 30th, one month later than the original plan (see figure 5). Figure 6 shows the performance curves after closing the second reporting period.

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CONCLUSION

Figure 6. Performance Curves during Project Execution

Oil and gas surface facilities projects are complex, risky, and capital intensive projects, because large volumes of hydrocarbons are processed and transferred across remote natural and sensitive areas. These characteristics have posed particular challenges to properly manage these projects. As a result, the rate of failure for these types of projects is higher in comparison to other industries, which is why new and emerging ideas are welcome to manage these projects more efficiently. The new project management approach proposed in this article facilitates the implementation of earned value management. Stakeholders can then focus on generating the agreed results, and project progress can be credited only if deliverables are completed or milestones are achieved. At the end of the day, this approach will increase the objectivity and probability of project success during the planning and execution phases, and will also improve the overall oil and gas surface project performance measurement.

REFERENCESMiller, M. (2009). “Building a project work breakdown structure,” (page 193). Boca Raton, FL. CRC Press. Norman, E., Brotherton, S., & Fried, R. (2008). “Work breakdown structures,” (page 67). Hoboken, NJ. John Wiley & Sons.Project Management Institute. (2006). “Practice standard for work breakdown structures,” second edition (page 32), Newtown Square, PA. AuthorProject Management Institute. (2011). “Practice standard for earned value management,” second edition (page 56), Newtown Square, PA. Author. Song, L. (2010). “EVM A global and cross-industry perspective on current EVM practice,” (page 15). Newtown Square, PA. Project Management Institute.

ABOUT THE AUTHORWilliams Chirinos is president of INEXERTUS, Inc. a project management consulting firm specializing in providing software applications, consulting, and training services to implement the latest and most effective project management techniques. He has project management experience and expertise, substantiated by more than 20 years of experience in the Oil and Gas Industry and EPC environments. He obtained his Industrial Engineering degree in Venezuela and a Master of Science degree in Petroleum Engineering at The University of Tulsa, Oklahoma, in the United States. He is a Project Management Professional (PMP) credential holder and an active PMI member since 2006. Currently he is an Associate Editor of the Oil and Gas Facilities for the Society of Petroleum Engineers, and was a Technical Editor Reviewer from 2005 to 2012. He is also the President of the PMI Southern Alberta Chapter Toastmasters Club. Mr. Chirinos can be contacted at [email protected].

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Performance management systems like Earned Value Management (EVM) can be ripe with data. Data is a tricky thing. It can help paint a valuable picture, full of insight. But it can also provide a false sense of precision and an illusion of control. Here are some considerations which I’ve found helpful to keep in mind when using performance management data.

DO’S1. Study, analyze and learn what you can from the numbers.2. Understand what the data mean and explain it to others.3. Share the data with other people. Listen to people’s feedback.4. Use the data as one way of understanding project performance and guiding

management decisions.5. Be open to other ways of interpreting the data and the guidance it provides.6. Remember that the numbers only represent activity on a project; they are not the

actual activity on the project.7. Remember that people drive project performance. Numbers don’t.8. Know that the data you ask for influences how people set-up their projects and spend

their time and resources. 9. Know that what you do with the data affects the people who produce the data and

how they feel about their jobs and their role in contributing to project performance.10. Since the data you ask for and what you do with that data affect people and their

decisions, know that the data you ask for and what you do with that data directly impacts project performance.

DON’TS1. Don’t hide or ignore the data. Ignoring it doesn’t make it go away.2. Don’t share data without looking at it, analyzing it and making sure it makes sense.3. Don’t be afraid to ask questions about the data.4. Don’t pass-up on opportunities to learn about new and different ways to understand

and use performance management data.5. Don’t get stuck thinking that getting more exact numbers improves project

performance or your ability to manage a project. 6. Don’t forget that people drive project performance.7. Don’t forget to actively manage and work with the people on a project. 8. Don’t forget that numbers are an indicator, not a determinant of project performance. 9. Don’t forget that the numbers may be telling you something about the data collection

process and not the project’s performance.10. Don’t forget that the data paint a picture of the choices people make on the project

and provide insight into why those choices are made.

ABOUT THE AUTHORMr. Mark Phillips is the President of Standpipe Manager, Inc., a private, U.S. based consulting company delivering innovative program management and product development services to industry and government. He has extensive experience in project management, program controls and rapid technology development. He is the author of the forthcoming book Reinventing Project Communication: How to Design, Lead and Manage High Performing Projects by Gower Press. He is on the governing board of the College of Performance Management where he serves as the Vice President–Communication.

Mr. Phillips has founded several technology companies over the past 16 years. He has presented original research at numerous industry and defense related events. His work has been published in outlets including the Small Wars Journal, C|Net and eWeek magazine. He holds a Masters in Applied Economics from the University of Michigan and a B. Sc. [Econ] in Philosophy and Economics from the London School of Economics and Political Science. He is a certified Project Management Professional.

10 DO’S AND DON’TS FOR USING PERFORMANCE MANAGEMENT DATABy Mark Phillips, PMP

As you may be aware, the College of Performance Management has been newly transformed as an independent entity, after a mutual and amicable separation from the Project Management Institute (PMI®).

Come join us and get involved in shaping the exciting future of the “new” CPM!!!Membership is $85/year and renewals are $50. Register online at www.mycpm.org.

CPM is the premier organization for earned value management (EVM) and project planning and controls. As an international, non-profit organization, CPM is dedicated to project management and performance management.

CPM Objectives • Promote Earned Value Management and Project Planning and Control: Foster the recognition and use of earned

value management and other project planning and control techniques as integrating processes for project management• Disseminate Information: Provide opportunities for the exchange of ideas, information, solutions and applications• Improve Community: Encourage and enable the advancement of theory and application through research,

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Membership Benefits• Discount to CPM Conferences• Access to latest information on performance management• Networking with other professionals, industry leaders, and academia• Quarterly magazine, The Measurable News • Access to CPM electronic library• Monthly Webinars

Conference• Earn PDUs for Project Management Professionals• Update skills• Network• Participate in EVM Training and Certificate Program

Active members, serving on a committee, as a speaker, volunteer or as a member of the Governing Board, gives you the greatest reward of all – contributing your knowledge and experience to benefit others!

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On behalf of the entire CPM Board, I would like to thank all of the candidates who made the time and commitment for nomination in the 2013 CPM Board election. The caliber of candidates was very high and the elections keenly contested.

The newly elected of the CPM Governing Board for three year terms effective on the 1st of January 2014 are:

• EXECUTIVE VICE-PRESIDENT: WAYNE ABBA• VICE-PRESIDENT FINANCE: BUDDY EVERAGE• VICE-PRESIDENT RESEARCH AND STANDARDS: DALE GILLAM• VICE-PRESIDENT GLOBAL OUTREACH: KYM HENDERSON

The CPM Board congratulates the successful candidates and looks forward to working with them in 2014 and onward.

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THE MEASURABLE NEWS


2013.04

19

Ms. Karen A. Kostelnik supports Mr. Gordon Kranz, the Deputy Director for Earned Value Management Performance Assessments and Root Cause Analyses in the Office of the Assistant Secretary of Defense for Acquisition. Mr. Kranz’s office serves as the Department of Defense focal point for all policy, guidance, and competency relating to Earned Value Management.

Ms. Kostelnik, a certified Project Management Professional (PMP), has an MBA from the University of Maryland Smith School of Business with 20 years of experience in the areas of program execution, organizational management, and financial analysis.

Performance Assessments and Root Cause Analyses (PARCA) in the Office of the Assistant Secretary of Defense for Acquisition is an exciting place to be. Both Mr. Gary Bliss, Director of PARCA and Mr. Gordon Kranz, Deputy Director for Earned Value Management in PARCA are visionary leaders who believe in Earned Value Management (EVM) and the benefits it provides DoD programs. Mr. Kranz’s office serves as the Department of Defense focal point for all policy, guidance, and competency relating to Earned Value Management (EVM). EVM is one of DoD’s and industry’s most powerful integrated program management tools used by the government and industry program managers and their teams to support decision making as they navigate the day-to-day constraints and risks that all DoD programs face.

PARCA EVM’s vision is to foster cross functional situational awareness, visibility, and accountability through integrated program management at all levels of the acquisition community. The department was founded on the following Guiding Principles:

• Increase the quality and utility of EVM data• Increase the use of EVM across the acquisition chain• Improve acquisition professionals’ ability to utilize EVM• Reduce Contractor’s administrative burden of inefficient use of EVM• Ensure constructive 2-way communication between DoD and Industry• EVMS is perceived by all stakeholders to be cost effective

These principles drive the activities of Mr. Kranz and his team. Last summer, PARCA released the Integrated Program Management Report Data Item Description (IPMR DID). The IPMR DID combined and replaced the Contract Performance Report and Integrated Master Schedule DID’s and requires data to be submitted in UN/CEFACT XML data schema. The integrated report and focused requirements reduces the reporting burden on contractors. The receipt of the data in XML format means that analysts and other consumers of the data do not need to have the native tools to view and analyze the data.

Mr. Bliss has said, “The release of the IPMR DID was revolutionary in that for the first time, Government will receive integrated cost and schedule information that will facilitate analysis to identify potential issues earlier in the program life cycle and allow for course corrections.” In anticipation of receiving XML files, PARCA is piloting a toolset that can be used by OSD analysts to view integrated cost and schedule data. Additionally, PARCA is working with tool vendors and corporate partners to validate the capability to produce UN/CEFACT XML files.

PARCA recently worked with its DoD EVM partners to introduce a proposed change to the EVM DFARS language to clarify and better define the application of EVM, especially the importance of work scope. EVM is a powerful tool when used correctly and PARCA advocates the use of EVM on programs to better manage the program, not as an exercise that is done only because it is a requirement. At its core, EVM is a disciplined program management technique that facilitates performance measurement independent of resources expended. It starts with a solid plan for accomplishing work scope that includes discrete tasks with well-defined completion criteria.

In our current environment, it is more important than ever that programs are managed

PARCA:THE NEXT GENERATION OF EARNED VALUE MANAGEMENTBy Karen A. Kostelnik

“All programs deserve to be program managed; Earned Value Management is one of the program management tools that can be used by all program team members,”

– Mr. Gordon Kranz


efficiently. EVM provides a framework in which programs can proactively manage cost, schedule, and technical performance. Mr. Kranz says, “There is a subset of programs that require full-blown, compliant EVM to be used, but for the rest of the programs, EVM techniques can be tailored to the needs of the program.” A starting point is the use of the Integrated Master Plan (IMP). The IMP ties program-level milestones to significant accomplishments and criteria. PARCA is engaged in a study to explore program management best practices, including the use of the IMP and Work Breakdown Structure (WBS) as boundary objects to facilitate communication across the program, based on concepts and a line of research developed by Mark Phillips. The results of the study will be used to identify potential areas where guidance can be provided or policy updated.

PARCA does not create policy in a vacuum. PARCA actively engages with DoD, other Government partners, Industry and thought leaders on performance management. On a quarterly basis, PARCA meets with EVM focal points for the Services and other Government Agencies to discuss a variety of EVM topics of interest to the community including policy and its interpretation. PARCA has created an issue resolution process which involves collaboration with Government and Industry to resolve interpretation issues and at times results in the identification of policy gaps. The team recently expanded communication efforts to nurture communication and relationships between Government, Industry and the EVM community. This includes efforts such as presenting a webinar to the CPM community [Publisher’s Note: See the article “Data About Our Community” in this issue for survey results from the PARCA CPM webinar], establishing recurring meetings between PARCA, DCMA, and Corporate EVM POC’s; meeting with NDIA PMSC Working Groups; attending and presenting at Quarterly NDIA PMSC meetings; meeting with the Civilian Agency Working Group; and leading and presenting workshops at CPM’s EVM World and the IPMC conference. These are a few of the ways in which PARCA is actively engaged with the EVM community, across Government and Industry, to circulate policy, solicit feedback and develop best practices relating to EVM. All these activities help PARCA EVM meet its vision to foster cross functional situational awareness, visibility, and accountability through integrated program management at all levels of the acquisition community.

PARCA is interested in your thoughts and ideas on EVM. If you have a question or suggestion, please send an email to [email protected]. For additional information about PARCA, visit the website at http://www.acq.osd.mil/evm.

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THE MEASURABLE NEWS


2013.04

21

ABSTRACT Ten years after the introduction of the Earned Schedule concept proposed by Lipke (2003), researchers and practitioners have investigated, validated, criticized and modified this novel concept and successfully used it in research simulation studies, software development and practical project control settings. Only one year later, Lipke (2004) proposed an extension on his Earned Schedule concept to measure the influence of rework due to the lack of scheduling adherence on the earned value. His new concept, known as the p-factor approach, measures the portion of the Earned Value (EV) accrued in congruence with the baseline schedule, which will be used to adapt the current EV to a so-called effective EV (EV(e)) taking the risk of rework into account. Unlike the ES concept, the p-factor approach has up to now stayed in the background, and little adoption by both researchers and practitioners has been detected. The aim of this article is to review this interesting p-factor concept with an artificial project example and to partially illustrate its strengths and weaknesses based on a research study using fictitious and empirical project data.

1.0 INTRODUCTIONSince the introduction of the Earned Schedule (ES) concept (Lipke, 2003) as a time related extension of the well-known Earned Value metrics, studies on the time dimension of EVM have been published throughout the popular and academic literature. I believe that an overview of many of the recent academic oriented research publications has been summarized in my research study published in Vanhoucke (2010a). Ever since, I have used the ES concept in university classes and company trainings, accompanied by a second book (Vanhoucke, 2012) and accepted articles in well-known flagship journals, such as Omega (Vanhoucke, 2010b, 2011). Thanks to the funding recently obtained at Ghent University (Belgium) for another six years of intensive research on project control, more results and publications are definitely on its way. Preliminary results will be updated yearly in the online overview written by Vanhoucke (2013a).

Despite the ever growing positive attention on EVM and the commonly accepted agreement on the importance of EVM in a project monitoring environment, both EVM in general and ES more specifically have not been free of criticism. As an example, authors such as Book (2006) and Abba (2008) have questioned the novelty and/or correctness of the ES formula. Probably the most fundamental criticism on an EVM/ES system is its assumption of a project setting where activities and precedence relations are known in advance and where estimates (activity durations, resource requirements, unexpected events, etc.) can be given within a certain range. However, Loch et al. (2006) mentioned that projects often do not fulfill these assumptions but, on the contrary, are commonly plagued by fundamentally unforeseeable events and/or unknown interactions among various actions and project parts. Consequently, due to the cycles of rework, the accuracy of the EVM metrics can be biased, leading to incorrect management decisions (Cooper, 2003).

While much of the criticism on the EVM/ES systems is probably correct and cannot be simply solved by presenting straightforward extensions on the current EVM/ES metrics, I believe that the p-factor makes a small yet possibly important step towards the right direction. The p-factor concept looks like a simple and straightforward extension on the ES method, and will therefore undoubtedly be part of criticism. As mentioned before, this new concept initially introduced in 2004 has not passed the test of logic yet due to the lack of fundamental research and practical validation, and therefore I believe that it deserves much

1) Ghent University, Tweekerkenstraat 2, 9000 Gent (Belgium), Vlerick Business School, Reep 1, 9000 Gent (Belgium), and University College London, Gower Street, London (UK), [email protected]

MEASURING SCHEDULE ADHERENCEBy Mario Vanhoucke1


more research attention to test its strengths and weaknesses, and its merits in a dynamic project control environment. The purpose of this article is only to give researchers an incentive to start and set up such a deeper analysis. The outline of this paper is as follows. Section 2 reviews the logic of the schedule adherence concept and illustrates its formula on a small fictitious project example. Section 3 briefly describes the main results of a research study on a wide set of fictitious projects and a limited set of real life projects. Section 4 makes conclusions and highlights paths for further research.

2.0 SCHEDULE ADHERENCE

2.1 DefinitionThe rationale behind the p-factor approach lies in the observation that performing work not according to the baseline schedule often indicates activity impediments or is likely a cause of rework. Consequently, the premise is that, whenever impediments occur (activities that are performed relatively less efficiently compared to the project progress), resources are shifted from these constrained activities to other activities where they could gain earned value. However, this results in a project execution which deviates from the original baseline schedule and might, consequently, involve a certain degree of risk. Indeed, the latter activities are performed without the necessary inputs, and might result in a certain portion of rework. Based on these observations, the p-factor has been introduced by Lipke (2004) as a measure to provide the connection of project output to EVM. It measures the portion of earned value accrued in congruence with the baseline schedule, i.e. the tasks which ought to be either completed or in progress, as follows:

mentioned before, this new concept initially introduced in 2004 has not passed the test of logic yet due to the lack of fundamental research and practical validation, and therefore I believe that it deserves much more research attention to test its strengths and weaknesses, and its merits in a dynamic project control environment. The purpose of this article is only to give researchers an incentive to start and set up such a deeper analysis. The outline of this paper is as follows. Section 2 reviews the logic of the schedule adherence concept and illustrates its formula on a small fictitious project example. Section 3 briefly describes the main results of a research study on a wide set of fictitious projects and a limited set of real life projects. Section 4 makes conclusions and highlights paths for further research. 2 Schedule Adherence 2.1 Definition The rationale behind the p-factor approach lies in the observation that performing work not according to the baseline schedule often indicates activity impediments or is likely a cause of rework. Consequently, the premise is that, whenever impediments occur (activities that are performed relatively less efficiently compared to the project progress), resources are shifted from these constrained activities to other activities where they could gain earned value. However, this results in a project execution which deviates from the original baseline schedule and might, consequently, involve a certain degree of risk. Indeed, the latter activities are performed without the necessary inputs, and might result in a certain portion of rework. Based on these observations, the p-factor has been introduced by Lipke (2004) as a measure to provide the connection of project output to EVM. It measures the portion of earned value accrued in congruence with the baseline schedule, i.e. the tasks which ought to be either completed or in progress, as follows:

with p Schedule adherence = 1: perfect schedule adherence < 1: lack of perfect schedule adherence N Set of activities in the project PVi,ES Planned value of activity i at time instance ES EVi,AT Earned value of activity i at the actual time AT The p-factor is the ratio of the earned value corresponding to the baseline schedule divided by the total planned value at time instance ES. Since the nominator takes the minimum of the planned value at time unit ES and the earned value accrued at the actual time, the p-factor obviously always lies between zero and one, inclusive. Hence, the p-factor measures to what degree the earned value is accrued according to the baseline schedule (100% means a perfect schedule adherence). 2.2 Example Despite the simplicity of the p-factor formula presented earlier, it is often subject to confusion. Figure 1 shows a fictitious four-activity project with a pre-defined duration (above the node) and cost (below the node) for each activity. In order to illustrate the calculations of the p-factor, a baseline schedule and three possible project executions will be simulated and discussed. The simulated project progress under the three scenarios is illustrated in figure 2. Each fictitious project execution represents a different situation which can be summarized as follows:

• Activity Overlapping: The p-factor concept does not take precedence relations into account, but instead takes a general project view on the schedule adherence. Nevertheless, it should be able to detect the presence of overlaps, which is probably the main reason for lack of information and risk of rework. Figure 2a gives an illustration of an overlap between two activities in series, and shows that the p-factor is able to detect this situation.

with p Schedule adherence = 1: perfect schedule adherence < 1: lack of perfect schedule adherence N Set of activities in the projectPVi,ES Planned value of activity i at time instance ESEVi,AT Earned value of activity i at the actual time AT

2.2 ExampleDespite the simplicity of the p-factor formula presented earlier, it is often subject to confusion. Figure 1 shows a fictitious four-activity project with a pre-defined duration (above the node) and cost (below the node) for each activity. In order to illustrate the calculations of the p-factor, a baseline schedule and three possible project executions will be simulated and discussed.

The simulated project progress under the three scenarios is illustrated in figure 2. Each fictitious project execution represents a different situation which can be summarized as follows:

• Activity Overlapping: The p-factor concept does not take precedence relations into account, but instead takes a general project view on the schedule adherence. Nevertheless, it should be able to detect the presence of overlaps, which is probably the main reason for lack of information and risk of rework. Figure 2a gives an illustration of an overlap between two activities in series, and shows that the p-factor is able to detect this situation.

• PV/EV Accrue Deviations: Activities that are completed within their estimated time and budget are not necessarily performed in congruence with their predefined planned value. Since the p-factor is a concept to measure the degree of adherence to the baseline schedule, expressed as a relation between the project progress (Earned Value) and the baseline schedule (Planned Value), it should be able to give an indication of the deviation between PV and EV. In figure 2b, the EV accrued during the real life project progress is not in line with the PV curve of the baseline schedule, although the project finishes exactly on time. The p-factor measures this lack of schedule adherence.

• Ahead of Schedule and/or Delayed Project Execution: Obviously, deviations from the original baseline schedule during project progress leads to a final project status ending ahead or late. This lack of schedule adherence should be measured and reported by the p-factor concept in order to serve as a dynamic tool to forecast the final project status. Figure 2c shows a situation of a delayed project with activities finishing ahead of and behind schedule, resulting in p-factor values lower than 1.


• PV/EV Accrue Deviations: Activities that are completed within their estimated time and budget are not necessarily performed in congruence with their predefined planned value. Since the p-factor is a concept to measure the degree of adherence to the baseline schedule, expressed as a relation between the project progress (Earned Value) and the baseline schedule (Planned Value), it should be able to give an indication of the deviation between PV and EV. In figure 2b, the EV accrued during the real life project progress is not in line with the PV curve of the baseline schedule, although the project finishes exactly on time. The p-factor measures this lack of schedule adherence.

• Ahead of Schedule and/or Delayed Project Execution: Obviously, deviations from the original baseline schedule during project progress leads to a final project status ending ahead or late. This lack of schedule adherence should be measured and reported by the p-factor concept in order to serve as a dynamic tool to forecast the final project status. Figure 2c shows a situation of a delayed project with activities finishing ahead of and behind schedule, resulting in p-factor values lower than 1.

1 2 3 4 5 6 7 8 9 10 11

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id

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Figure 1: A fictitious four-activity project network

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a. Activity Overlapping

b. PV/EV Accrue Deviation

c. Ahead/Behind Schedule

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50 60 7515 35 65 100 225 350 450 450 500 510 5250.6 1.4 2.6 4 5.25 6.5 8 8 10 10.4 111 1 1 1 0.83 0.86 1 1 1 1 1

Figure 2: A fictitious four-activity project under 3 progress scenarios

2.3 Effective Earned Value

The p-factor assumes that lack of schedule adherence is caused by a combination of the presence of impediments or constraints and work performed under risk. Figure 3 shows an intermediate project

Figure 2: A fictitious four-activity project under 3 progress scenarios

2.3 Effective Earned ValueThe p-factor assumes that lack of schedule adherence is caused by a combination of the presence of impediments or constraints and work performed under risk. Figure 3 shows an intermediate project progress state at the Actual Time AT = 6 for the project progress of figure 2b. The EV accrued at the current time AT = 6 is given in black and the ES = 6.5 (vertical line). The figure visualizes the p-factor as follows:

• The portion of the work to the left of the ES line is assumed to be performed without risk and indicates the presence of an impediment or project constraint.

• The portion of work to the right of the ES line indicates work which is ahead of the normal project performance and is assumed to have a certain degree of risk.

• The p-factor is equal to the EV (black bars) to the left of ES divided by the total EV.

progress state at the Actual Time AT = 6 for the project progress of figure 2b. The EV accrued at the current time AT = 6 is given in black and the ES = 6.5 (vertical line). The figure visualizes the p-factor as follows:

• The portion of the work to the left of the ES line is assumed to be performed without risk and indicates the presence of an impediment or project constraint.

• The portion of work to the right of the ES line indicates work which is ahead of the normal project performance and is assumed to have a certain degree of risk.

• The p-factor is equal to the EV (black bars) to the left of ES divided by the total EV.

impediment

work under risk

ES = 6,5 @ AT = 6

Figure 3: Activity impediments and work under risk to measure the p-factor It is assumed that this degree of risk is the result of an inefficient use of resources which were shifted from the constrained activities to less constrained activities where the resources could gain earned value. However, these shifted resources work without the necessary inputs possible resulting in a certain portion of rework (i.e. risk). The p-factor is a measure to express the portion of the EV without risk (referred to as EV(p), while the remaining portion is denoted as EV(r)). A project manager should realize that the remaining EV(r) portion might be subject to risk and possibly results in rework. The effective earned value EV(e) is defined as the risk-adapted portion of earned value that is performed within the expected baseline schedule performance, taking into account that only R% of the EV(r) will be accounted as risk-free. A value for R% is given by the project manager, based on his/her best guess and experience. Mathematically, these p-factor assumptions can be summarized as follows: EV = p ∗ EV + (1 − p) ∗ EV = EV(p) + EV(r) � EV(e) = EV(p) + R% ∗ EV(r) with EV Earned value EV(p) Risk-free earned value EV(r) Remaining earned value portion performed under risk EV(e) Effective earned value R% Estimated portion of EV(r) that is usable and requires no rework 3 Summary of research result s 3.1 Research results In order to critically validate the p-factor concept, it has been tested on a large set of fictitious projects in a study by Vanhoucke (2010a, 2013b). During all experiments, various values for the R% estimate have been used. Details of the methodological approach can be found in the referenced study, but the main conclusions can be summarized as follows:

• Schedule Adherence: The p-factor measures the schedule adherence on the project level and not on the individual activity level, similar to the SPI and CPI measures. Despite this aggregated view on the project, it is able to detect lack of schedule adherence causes, such as activity overlapping, schedule delays, deviations between PV and EV accrue, etc, as discussed in section 2.2.

• Topological Structure: The structure of the project network, defined by the set of activities and

Figure 3: Activity impediments and work under risk to measure the p-factor


It is assumed that this degree of risk is the result of an inefficient use of resources which were shifted from the constrained activities to less constrained activities where the resources could gain earned value. However, these shifted resources work without the necessary inputs possible resulting in a certain portion of rework (i.e. risk). The p-factor is a measure to express the portion of the EV without risk (referred to as EV(p), while the remaining portion is denoted as EV(r)).

A project manager should realize that the remaining EV(r) portion might be subject to risk and possibly results in rework. The effective earned value EV(e) is defined as the risk-adapted portion of earned value that is performed within the expected baseline schedule performance, taking into account that only R% of the EV(r) will be accounted as risk-free. A value for R% is given by the project manager, based on his/her best guess and experience. Mathematically, these p-factor assumptions can be summarized as follows:

EV = p ∗ EV + (1 − p) ∗ EV = EV(p) + EV(r) ∗ EV(e) = EV(p) + R% ∗ EV(r)

withEV Earned valueEV(p) Risk-free earned valueEV(r) Remaining earned value portion performed under risk EV(e) Effective earned value R% Estimated portion of EV(r) that is usable and requires no rework

3.0 SUMMARY OF RESEARCH RESULTS

3.1 Research resultsIn order to critically validate the p-factor concept, it has been tested on a large set of fictitious projects in a study by Vanhoucke (2010a, 2013b). During all experiments, various values for the R% estimate have been used. Details of the methodological approach can be found in the referenced study, but the main conclusions can be summarized as follows:

• Schedule Adherence: The p-factor measures the schedule adherence on the project level and not on the individual activity level, similar to the SPI and CPI measures. Despite this aggregated view on the project, it is able to detect lack of schedule adherence causes, such as activity overlapping, schedule delays, deviations between PV and EV accrue, etc, as discussed in section 2.2.

• Topological Structure: The structure of the project network, defined by the set of activities and precedence relations between these project activities, has an effect on the p-factor value. This observation is similar to the forecast accuracy of EVM time prediction methods as investigated in Vanhoucke and Vandevoorde (2007b) and as discussed in previous articles in the Measurable News (Vanhoucke and Vandevoorde, 2007a, 2008, 2009).

• Forecasting Accuracy: The use of the p-factor to improve the forecast accuracy of time prediction methods is limited and should therefore not be used. However, despite its failure to improve the accuracy of time forecasts, some results have shown that the p-factor is a good indicator for predicting how accurate forecasts will be (Vanhoucke, 2009).

3.2 Empirical evidenceDue to the novelty of the p-factor concept, limited empirical data or practical experience is available. In the current section, I briefly review the results of a consultancy project to highlight the merits of the p-factor, but results have to be taken with care and no generalizations can be made. This part can be considered as an open invitation to project management practitioners to share their findings and ideas on the p-factor concept with the EVM community.

The empirical data is based on a small set of projects that were all analyzed by the ProTrack (www.protrack.be) software tool. Many of the projects showed a random p-factor evolution over time and hence were not retained in the study. One set of projects, however, showed a systematic drop in the p-factor below 1 during the night activities, giving an indication of the less attractive working conditions. A deeper analysis into the project activities revealed that night operations were considered as less attractive and therefore often postponed to the early and day team members, while part of the day operations were often done at night. Consequently, many unattractive night operations were often shifted (i.e. seen as impediments) and more attractive day operations were done earlier than planned (i.e. against the logic of the network structure), resulting in resources (i.e. the night team) shifting towards others, more attractive day activities to gain earned value. More details of the empirical project data can be found in Vanhoucke (2013b).


CONCLUSIONS

It should be noted that this observation is based on only a small set of very similar projects, and hence, as a researcher, I should add the comment that these observations cannot be considered as generally true. More research is definitely needed, based on larger sets of simulated and empirical project data. However, the results were inspiring and might indicate that the p-factor is more than just another extension on the EVM/ES formulas without much added value. I believe that the preliminary observations show that it might be able to detect other planned deviations different than the traditional time and cost performance measures currently known in EVM/ES.

This paper briefly reviews the schedule adherence concept of Lipke (2003) based on a simulation study published in Vanhoucke (2013b). The two main conclusions of this study can be summarized along the following lines.

First, the computational results of the simulation study show that the p-factor is a promising concept. Although results are only preliminary and failed in improving current EVM techniques, such as forecasting time and cost, it is believed that the relevance of the p-factor concept mostly lies in the easy and simple detection of portions of work that show either constraints and impediments or performance under risk, relative to the baseline schedule. The results have shown that the simple dynamic calculation of the p-factor (based on the traditional EV metrics) might help to predict the accuracy of the forecasts along the life of the project. However, the use of this factor to improve forecast accuracy is limited to incorporating corrections for optimistic duration forecasts by adjusting the earned value to an effective earned value taking the possibility of rework into account. In doing so, the forecast accuracy of optimistic scenarios will be corrected to more realistic estimates while pessimistic forecasts will suffer under this correction mechanism.

Secondly, the study showed that the research on schedule adherence might be highly relevant to both academics and practitioners. Promising results on a small set of empirical projects trigger the need for more research. A more profound study of newly developed concepts such as the p-factor concept is what should drive researchers, who should not be satisfied with only preliminary results and conclusions based on arbitrary cases or loose statements. Instead, a profound and detailed theoretical knowledge supported by empirical observations and runs on extensive sets of data is what they need to move on. Although some interesting insights could be shown on a very limited set of real life projects, more research is definitely needed to further validate this concept on both fictitious as well as empirical data. The current work done at Ghent University is focusing on the relation between EVM accuracy and stability using schedule adherence concepts, and it is therefore hoped that new results will be published soon in the academic literature. It is believed that the current research efforts constitute the first step in this interesting future research direction.

ACKNOWLEDGEMENTSWe acknowledge the support by the concerted research action (CRA) funding received in 2012 at Ghent University (Belgium) for the project titled “Searching for static and dynamic project drivers to predict and control the impact of management/contingency reserve on a projects success”.

REFERENCESAbba, W. (2008). The trouble with earned schedule. The Measurable News, Fall:29–30. Book, S. (2006). “Earned Schedule” and its possible unreliability as an indicator. TheMeasurable News, Spring:24–30. Cooper, K. (2003). Your project’s real price tag? Letters to the editor. Harvard BusinessReview, 81:122–122.Lipke, W. (2003). Schedule is different. The Measurable News, Summer:31–34.Lipke, W. (2004). Connecting earned value to the schedule. The Measurable News, Winter:1, 6–16.Loch, C., De Meyer, A., and Pich, M. (2006). Managing the unknown: A new approach to managing high uncertainty and risk in project. John Wiley and Sons, Inc., New Jersey.Vanhoucke, M. (2009). Static and dynamic determinants of earned value based time forecast accuracy. In Kidd, T., editor, Handbook of Research on Technology Project Management, Planning, and Operations, pages 361–374. Information Science Reference.Vanhoucke, M. (2010a). Measuring Time - Improving Project Performance using Earned Value Management, volume 136 of International Series in Operations Research and Management Science. Springer.Vanhoucke, M. (2010b). Using activity sensitivity and network topology information to


monitor project time performance. Omega The International Journal of Management Science, 38:359–370.Vanhoucke, M. (2011). On the dynamic use of project performance and schedule risk information during project tracking. Omega The International Journal of Management Science, 39:416–426.Vanhoucke, M. (2012). Project Management with Dynamic Scheduling: Baseline Scheduling, Risk Analysis and Project Control, volume XVIII. Springer.Vanhoucke, M. (2013a). The Art of Project Management: A Story about Work and Passion. Available online at www.or-as.be.Vanhoucke, M. (2013b). The impact of project schedule adherence and rework on the duration forecast accuracy of earned value metrics. In Project Management: Practices, Challenges and Developments. NOVA Publishers.Vanhoucke, M. and Vandevoorde, S. (2007a). Measuring the accuracy of earned value/earned schedule forecasting predictors. The Measurable News, Winter:26–30.Vanhoucke, M. and Vandevoorde, S. (2007b). A simulation and evaluation of earned value metrics to forecast the project duration. Journal of the Operational Research Society, 58:1361–1374.Vanhoucke, M. and Vandevoorde, S. (2008). Earned value forecast accuracy and activity criticality. The Measurable News, Summer:13–16.Vanhoucke, M. and Vandevoorde, S. (2009). Forecasting a project’s duration under various topological structures. The Measurable News, Spring:26–30.

ABOUT THE AUTHORProf Dr Mario Vanhoucke is a Full Professor of Business Management and Operations Research at Ghent University (Belgium), Vlerick Business School (Belgium, Russia, China) and University College London (UK). He has a Master’s degree in Commercial Engineering and a PhD in Operations Management from the University of Leuven (Belgium). At Ghent University, he is the program director of the Commercial Engineering program where he teaches Project Management and Applied Operations Research. At Vlerick Business school, he teaches Decision Making for Business and Business Statistics to Master and MBA students.

His main research interest lies in the integration of project scheduling, risk management and project control using combinatorial optimization models. He is an advisor for several PhD projects, has published papers in more than 40 international journals and is the author of two project management books published by Springer (see www.or-as.be/bookstore). He is a regular speaker on international conferences as an invited speaker or chairman. He is also a regular reviewer of articles submitted for publication in international academic journals.

Mario Vanhoucke is also a founding member and director of the EVM Europe Association (www.evm-europe.eu). He is also a partner in the company OR-AS (www.or-as.be) which released a third version of its project management software tool ProTrack 3.0 (www.protrack.be). ProTrack is an advanced scheduling product which focuses on the integration of scheduling, risk, control management and online learning through a PM Knowledge Center (www.pmknowledgecenter.com). He leads a research group which has obtained Concerted Research Actions (CRA) funding of more than € 1 million for an integrated PM research study at Ghent University (Belgium). To that purpose, a derivative of the software tool ProTrack, known as the PM programming tool P2 Engine (www.p2engine.com), has recently been developed that will be used for testing novel ideas by the CRA research team members.The project management research undertaken by Mario Vanhoucke has received multiple awards including the 2008 International Project Management Association (IPMA) Research Award for his research project “Measuring Time: A Project Performance Simulation Study” which was received at the IPMA world congress held in Rome, Italy. He also received the “Notable Contributions to Management Accounting Literature Award” awarded by the American Accounting Association at their 2010 conference in Denver, Colorado.

THE MEASURABLE NEWS


2013.04

27

WEBINAR NO. 7

We’ve begun conducting surveys during the CPM webinars. The survey results help presenters know about the audience to improve their presentations. The survey results also provide insight into the make-up, concerns and issues of our community. Needless to say, survey data is only one dimension in understanding the community and only captures webinar participants. But I believe you’ll find the information interesting.

A full description of the webinar topics and the presenters can be found on the CPM website at MyCPM.org. Recordings of the presentations and the slides are available to members and paid attendees at the CPM EVM Library at EVMLibrary.org.

EARNED VALUE MANAGEMENT: A BEACON IN THE CLOUD OF PROGRAM EXECUTIONWebinar Information Webinar Topic: Earned Value Management: A Beacon in the Cloud of Program ExecutionPresenter: Mr. Gordon Kranz, Deputy Director EVM, PARCA, U.S. OSDDate: 19 July 2013, 12:00 p.m. EasternNumber of Attendees (includes presenters and hosts): 54

ARE YOU CURRENTLY USING EVM ON YOUR PROGRAM?

3

30

25

20

15

10

5

0

Yes No

14 (35%)

2 (5%)

0

2

4

6

8

10

12

14

16

Program Management

Project Management

Systems E Estimationngineering

Cost Cost Control Other

1 (2.5%)

5 (12.5%)

9 (22.5%)

27

9 (22.5%)

WHAT IS YOUR AREA OF EXPERTISE?

3

30

25

20

15

10

5

0

Yes No

14 (35%)

2 (5%)

0

2

4

6

8

10

12

14

16

Program Management

Project Management

Systems E Estimationngineering

Cost Cost Control Other

1 (2.5%)

5 (12.5%)

9 (22.5%)

27

9 (22.5%)

DATA ABOUT OUR COMMUNITYBy Mark Phillips, PMPVice President – Communications

Poll Questions


WEBINAR NO. 8

WHAT ARE THE BIGGEST ISSUES YOU SEE IN THE IMPLEMENTATION OF EARNED VALUE? ANY ADVICE TO THE DOD POLICY HOLDER?

Program mgt actual usage of ev as a forecasting and risk management tool. Often EV is looked at as a 'cost requirement' not an actively used risk management tool.

For many companies, EV implementation requires a culture change.

The perception that EVM requires too many resources to be appropriate for any but the largest programs with the "deep pockets" (MDAPs, etc).

Having programs develop a reliable, achievable schedule with a verifiable critical path

Ensuring compliance or DCMA's interpretation of the ANSI/EIA 748 GLs.

Construction Contractor Buy-In re: reporting quality data = issue and as proposed earlier, inclusion of requirements and execution in contract

Some managers or executives do not like to submit to the rigors of EVM.

Lack of interest by senior management

Biggest obstacle is the lack of PEO/PM senior management emphasis on using EVM as a management tool. Focused PARCA outreach and AT&L memoranda emphasizing its importance to PMs helps. EVMers are "island of enthusiasm in a sea of indifference" out here.

Maybe not the biggest issue, but one issue we see is on contracts whose local government client "doesn't want EVM", even though ANSI-compliant EVM is on the contract. Our PMs find it VERY difficult to deal with that attitude and still meet the contract.

DOD is requiring EVMS on services contracts that are essentially LOE. DCMA does not have a framework for doing surveillance on these contract types and it causes confusion and inefficiencies.

1) Understanding and interpreting the algorithms and parameters at the individual cost account holder level; 2) business systems that do not provide simple access to the data needed for EVMS computations; 3) NIH [Not Invented Here] mentalities

There are no requirements in DFARS or DoD acquisition policies to make the IMP a contractual requirement on development programs and to force the integration of the technical baseline with the IMS and EVM.

Somehow we need to ensure that EVM is executed "in good faith” so that it is indeed an early warning system and not a "tail chase." For example, need a way to detect whether movement between MR and CAs is sound management and not a "shell game."

COMPARISON OF EARNED VALUE MANAGEMENT SYSTEM STANDARDSWebinar Information Webinar Topic: Comparison of Earned Value Management System StandardsPresenter: Mr. Tony Barrett, CEO Value TechnologyDate: 15 August 2013, 12:00 p.m. EasternNumber of Attendees (includes presenters and hosts): 51

IS YOUR ORGANIZATION MANDATED TO USE A U.S. GOVERNMENT EVM STANDARD?

US ANSI/EIA 748

Australia AS 4817

PMI EVM Practice

Standard

GAOCombined

Tailoringmy own

None

0

2

4

6

8

10

12

14

16

18

20

22

20 (64.5%)

1 (3.2%)2 (6.5%)

3 (9.7%)

5 (16.1%)

0 (0%)

30

25

20

15

10

5

0

Yes No

25 (59.5%)

17 (40.5%)

Open Ended Question

Responses:List order does not indicate priority or importance of the issue

Poll Questions


WHICH STANDARD ARE YOU CURRENTLY USING?

US ANSI/EIA 748

Australia AS 4817

PMI EVM Practice

Standard

GAOCombined

Tailoringmy own

None

0

2

4

6

8

10

12

14

16

18

20

22

20 (64.5%)

1 (3.2%)2 (6.5%)

3 (9.7%)

5 (16.1%)

0 (0%)

30

25

20

15

10

5

0

Yes No

25 (59.5%)

17 (40.5%)

WHAT ARE YOUR BIGGEST CHALLENGES IN IMPLEMENTING AND USING EVM?

Change control

Getting adequate and timely data from the accounting system next to convincing PM's that EVM brings better project monitoring and control

Lack of good accounting data

Customer timely responsiveness

Full Integration of Cost/Schedule to would comply with 748

Lack of experienced personnel

DCMAs different (by region, by person) and changing interpretation of the requirements and what is and isn't compliant.

Implementing DCMA EVMS on a services contract.

Convincing management that there is value to requiring EVM on Fixed Price contracts

The tone set at the top

In Canada, it is the lack of awareness of EVM let along how and when and why to implement

Customer acceptance of the system -- and their understanding of the data it presents

Low priority for CAMs [Control Account Managers] and engineers

Lack of management support and involvement

Also train the people who will apply it

Sponsors believe it is too expensive

Management

CONNECTION AGILE + EVMWebinar Information Webinar Topic: Connecting Agile + EVMPresenter: Mr. Glen Alleman, Principle Niwot Ridge LLCDate: 12 September 2013, 12:00 p.m. EasternNumber of Attendees (includes presenters and hosts): 40

WEBINAR NO. 9

Open Ended Question



DO YOU WORK IN AN ENVIRONMENT WHERE EVM IS MANDATED?

30

25

20

15

10

5

0

Yes

Hardware Software Electronics Construction/Development

Integration-System

Integration

Other

0

2

4

6

8

10

12

27 (71%)

2 (5.7%)

10 (28.6%)

5 (14.3%)

8 (22.9%) 8 (22.9%)

2 (5.7%)

No and I don’tuse EVM

1 (3%)

No but I douse EVM

10

WHAT TYPE OF PROJECTS DO YOU WORK ON?

30

25

20

15

10

5

0

Yes

Hardware Software Electronics Construction/Development

Integration-System

Integration

Other

0

2

4

6

8

10

12

27 (71%)

2 (5.7%)

10 (28.6%)

5 (14.3%)

8 (22.9%) 8 (22.9%)

2 (5.7%)

No and I don’tuse EVM

1 (3%)

No but I douse EVM

10

WHAT ARE YOUR BIGGEST CHALLENGES YOU FACE IN ADOPTING AGILE PRACTICES?

Cultural change from waterfall

Using Agile Metrics to forecast an LRE [Latest Revised Estimate]

Prioritizing customer demand & mixing agile with non-agile teams

Adopting EV Technique. People insist this is all LOE [Level of Effort]. But if there is a deliverable, it is NOT LOE

Management understanding the credit measurement to be used and where to measure

Customers stuck with traditional language and not understanding 'story points' and other terms

Educating everyone else about Agile

Understanding the value of the methodology

The need to comply with all 32 criteria

The type of projects I work on don't lend themselves to the Agile methodology

Accurate and timely data

Organizational inertia culture

Management

Institutional resistance - Agile is equated with lack of planning

Cultural Issues within my organization

Poll Questions


Open Ended Question

THE MEASURABLE NEWS


2013.04

31

ABSTRACT

DisclaimerThis paper is co-authored by a member of the College of Performance Management. This paper and concepts therein have not been reviewed or approved by CPM and represent the personal views of authors.

Currently, schedule predictors in earned value management (EVM) and earned schedule (ES) are based on the performance measurement baseline (PMB) data and single point CPI and SPI values at the time of reporting period. This paper introduces the concept of Re-baseline Factor (RBF) as a quantified basis for triggering a new (not revised) PMB.

INTRODUCTIONModification of the EVM baseline (PMB) is a continuous process is keeping the PMB current with current knowledge and the promotion of planning packages to work packages. But a complete replanning and rebaselining of an entire project is disruptive and politically charged. To admit to needing to do a rebaseline is to admit the current plan is not achievable. It’s full of political consequences for the PM, the project organization, the customer, and potentially their stakeholders. The use of a Rebaseline Factor (RBF) has the potential to take the politics out of “is it time for a rebaseline?”

Rebaselining a project can be a political minefield. Should we rebaseline? Should we wait a little longer? Can we recover to the current plan? How will a rebaseline play politically? Will it affect my career? Is there a way to use EVM data as a basis to trigger a rebaseline?

The PMB provides a reference point for measuring variance and calculating EV metrics. It is a reference level against which the project is monitored and controlled. Creation of a new PMB should be regarded as a significant event in complying with a proper PMB management process. Currently, the common re-baseline process has no quantified basis and it is just a matter of managerial decision.

As a project progresses we will have to make adjustments to the schedule and the budget. A new performance measurement baseline should be created when specific criteria are met. Project planners need a quantifiable factor as the basis for discussion leading to the best time for re-baseline.

METHODOLOGYWe propose that CPI and SPI metrics be used in order to define the PMB rebaseline trigger threshold. Having analyzed a large number of rail and construction projects across a few continents including Europe, America and Asia the following CPI and SPI ranges have been considered as boundaries for considering rebaselining this class of projects. (Figure 1):

Taking the Guessing out of When to Rebaseline

By Mojtaba Zarei Kesheh and Ray Stratton, PMP, EVP

Abstract

Currently, schedule predictors in earned value management (EVM) and earned schedule (ES) are based on the performance measurement baseline (PMB) data and single point CPI and SPI values at the time of reporting period. This paper introduces the concept of Re-baseline Factor (RBF) as a quantified basis for triggering a new (not revised) PMB.

Disclaimer

This paper is co-authored by a member of the College of Performance Management. This paper and concepts therein have not been reviewed or approved by CPM and represent the personal views of authors.

Introduction

Modification of the EVM baseline (PMB) is a continuous process is keeping the PMB current with current knowledge and the promotion of planning packages to work packages. But a complete replanning and rebaselining of an entire project is disruptive and politically charged. To admit to needing to do a rebaseline is to admit the current plan is not achievable. It's full of political consequences for the PM, the project organization, the customer, and potentially their stakeholders. The use of a Rebaseline Factor (RBF) it has the potential to take the politics out of "is it time for a rebaseline?"

Rebaselining a project can be a political minefield. Should we rebaseline? Should we wait a little longer? Can we recover to the current plan? How will a rebaseline play politically? Will it affect my career? Is there a way to use EVM data as a basis to trigger a rebaseline?

The PMB provides a reference point for measuring variance and calculating EV metrics. It is a reference level against which the project is monitored and controlled. Creation of a new PMB should be regarded as a significant event in complying with a proper PMB management process. Currently, the common re-baseline process has no quantified basis and it is just a matter of managerial decision.

As a project progresses we will have to make adjustments to the schedule and the budget. A new performance measurement baseline should be created when specific criteria are met. Project planners need a quantifiable factor as the basis for discussion leading to the best time for re-baseline.

Methodology

We propose that CPI and SPI metrics be used in order to define the PMB rebaseline trigger threshold. Having analyzed a large number of rail and construction projects across a few continents including Europe, America and Asia the following CPI and SPI ranges have been considered as boundaries for considering rebaselining this class of projects. (Figure 1):

CPI Range 0.8 ≤ CPI ≤ 1.2SPI Range 0.8 ≤ SPI ≤ 1.2

Figure 1. Acceptable CPI and SPI RangeFigure 1. Acceptable CPI and SPI Range

Values that exceed those in Figure 1 suggest that a rebaseline be considered and form a part of the RBF approach. Other industries may wish to consider alternative threshold values.

When the CPI and/or SPI breaches at any of the defined thresholds, it will be considered as a contributor (it counts) to the overall Re-baseline Factor (RBF) which will determine if a new PMB is required for the schedule prediction purpose. This will be explained later on.

A new PMB should not be triggered by a set of EV indices derived from a single point. It is the recent trend for the CPI and SPI indices that should trigger the need for a new project baseline. The RBF is determined by looking at the number of recent occurrences of SPI and/or CPI exceeding a threshold value and the direction of recent change.

TAKING THE GUESSING OUT OF WHEN TO REBASELINEBy Mojtaba Zarei Kesheh and Ray Stratton, PMP, EVP


The proposed rule set is that a threshold breach will count toward a rebaselining when all of the following conditions are satisfied:

1. Threshold Breach: Either the CPI or the SPI exceeds the upper or lower threshold; 2. The threshold is breached for three consecutive periods; 3. The index trend indices trend is in the same direction; 4. The index trend indices trend is worsening.

This rule is illustrated in different scenarios as follows and shown in Figure 2.

Scenario 1 illustrated below shows a series of threshold breaches which do not count. The project shows a CPI (or SPI) which has exceeded the upper threshold for three consecutive periods. However, in the third period, although the CPI exceeds the upper threshold, the trend is down indicating an improvement. Therefore, this does not constitute a threshold breach (Figure 2 – scenario 1).

Scenario 2 illustrated below shows a project where the CPI (or SPI) has breached the upper threshold (in Period 3) and the lower threshold in period 5. These breaches do not count according to the indices trend definition above. Therefore, this does not constitute a threshold breach (Figure 2 – scenario 2).

Scenario 3 illustrated below shows a project where the CPI (or SPI) has breached the upper threshold for three consecutive periods and the trend is in the same direction (rule condition 3). These breaches do not count according to the indices trend definition above because the index trend is improving (rule condition 4). Therefore, this does not constitute a threshold breach (Figure 2 – scenario 3).

Scenario 4 illustrated below shows a series of three threshold breaches which do not count. The project shows a CPI (or SPI) which has exceeded the upper and lower threshold over the course of three consecutive periods (rule condition 2) but a continued worsening trend is not indicated (rule condition 4). It suggests that the data driving EV metrics is volatile. The mean point of the three breaches would fall within the “green” tolerance zone. Therefore, this does not constitute a threshold breach (Figure 2 – scenario 4).

Figure 2 – CPI or SPI Indices Trend Scenarios – Non Breach Scenarios

Scenario-5 illustrated below (Figure 3) shows a series of threshold breaches which do count.The project shows a CPI (or SPI) which has exceeded the upper threshold for three consecutive Periods. The trend for all three breaches is in the same, worsening direction. Therefore, this constitutes a threshold breach.

Figure 3 - CPI or SPI Index Trend Scenario – Breach Scenario

In computing the RBF the following rules apply:

1) All control accounts (CA) contribute toward the RBF trigger.

2) The number of control accounts (NCA) must be known.

3) CPI and SPI shall be used to derive an overall trigger score.

4) The acceptable range or threshold for both CPI and SPI shall use an agreed upon range of values centered about 1.0, such as shown in Figure 1.

5) A threshold is breached if either the CPI or the SPI exceeds the acceptable range.


Scenario-5 illustrated below (Figure 3) shows a series of threshold breaches which do count. The project shows a CPI (or SPI) which has exceeded the upper threshold for three consecutive Periods. The trend for all three breaches is in the same, worsening direction. Therefore, this constitutes a threshold breach.



Scenario-5 illustrated below (Figure 3) shows a series of threshold breaches which do count.The project shows a CPI (or SPI) which has exceeded the upper threshold for three consecutive Periods. The trend for all three breaches is in the same, worsening direction. Therefore, this constitutes a threshold breach.


In computing the RBF the following rules apply:

1) All control accounts (CA) contribute toward the RBF trigger.

2) The number of control accounts (NCA) must be known.

3) CPI and SPI shall be used to derive an overall trigger score.

4) The acceptable range or threshold for both CPI and SPI shall use an agreed upon range of values centered about 1.0, such as shown in Figure 1.

5) A threshold is breached if either the CPI or the SPI exceeds the acceptable range.


In computing the RBF the following rules apply:1. All control accounts (CA) contribute toward the RBF trigger.2. The number of control accounts (NCA) must be known.3. CPI and SPI shall be used to derive an overall trigger score.4. The acceptable range or threshold for both CPI and SPI shall use an agreed upon

range of values centered about 1.0, such as shown in Figure 1. 5. A threshold is breached if either the CPI or the SPI exceeds the acceptable range.6. The CPI and SPI for each control account (CA) shall contribute to the count when its

CPI or SPI value breaches the predetermined thresholds.7. If the CPI for control accounts (CA) exceeds the acceptable range the count of

breached CPIs (BCPI ) is incremented.8. If the SPI for control accounts (CA) exceeds the acceptable value the count of

breached SPIs (BSPI ) is incremented. 9. Re-baseline Factor (RBF) scoring formula for each project is calculated as follows:

RBF = (BCPI + BSPI ) / (2 * NCA)Where:

BCPI = Number of breached CPI BSPI = Number of breached SPI NCA = Number of control accounts

RBF is always a value between 0.00 and 1.00. A new project baseline is triggered when the Re-baseline Factor (RBF) for a project, derived from each control account’s CPI and SPI exceeds 0.5 for three consecutive periods. The 0.5 has been chosen here based on the observation on a large number of portfolios of construction and rail projects as the best threshold. Other industries or projects may choose a different value for the trigger based upon the nature of the project and past history of similar projects.

NOTIONAL DATA EXAMPLEThe project calculation using the criteria defined above is explained below. The score table provides test data for the calculation (Figure 4);

The project calculation using the criteria defined above is explained below. The score table provides test data for the calculation (Figure 4);

6) The CPI and SPI for each control account (CA) shall contribute to the count when its CPI or SPI value breaches the predetermined thresholds.

7) If the CPI for a control accounts (CA) exceeds the acceptable range the count of breached CPIs (BCPI ) isn incremented.

8) If the SPI for control accounts (CA) exceeds the acceptable value the count of breached SPIs (BSPI ) is incremented.

9) Re-baseline Factor (RBF) scoring formula for each project is calculated as follows:



RBF is always a value between 0.00 and 1.00. A new project baseline is triggered when the Re-baseline Factor (RBF) for a project, derived from each control account’s CPI and SPIexceeds 0.5 for three consecutive periods. The 0.5 has been chosen here based on the observation on a large number of portfolios of construction and rail projects as the best threshold. Other industries or projects may choose a different value for the trigger based upon the nature of the project and past history of similar projects.

Notional Data Example


Activity ID

Control Account CPI CPI

Breach SPI SPI Breach

C1 CA100 1 NO 0.7 YESC2 CA101 0.7 YES 1.3 YESC3 CA102 0.8 NO 0.9 NOC4 CA103 1.1 NO 1.1 NO

N/A 1 N/A 2TOTAL

Figure 4

RBF = (1 + 2) / (4 x 2) = 0.375

Here: RBF > 0.5

The results of RBF in 4 successive periods are as follows (Figure 5 and 6):

Period P1 P2 P3 P4 P5RBF 0.37 0.56 0.59 0.62 RPMB

Figure 5

Figure 4

RBF = (1 + 2) / (4 x 2) = 0.375 Here: RBF > 0.5


6) The CPI and SPI for each control account (CA) shall contribute to the count when its CPI or SPI value breaches the predetermined thresholds.

7) If the CPI for a control accounts (CA) exceeds the acceptable range the count of breached CPIs (BCPI ) isn incremented.

8) If the SPI for control accounts (CA) exceeds the acceptable value the count of breached SPIs (BSPI ) is incremented.

9) Re-baseline Factor (RBF) scoring formula for each project is calculated as follows:



RBF is always a value between 0.00 and 1.00. A new project baseline is triggered when the Re-baseline Factor (RBF) for a project, derived from each control account’s CPI and SPIexceeds 0.5 for three consecutive periods. The 0.5 has been chosen here based on the observation on a large number of portfolios of construction and rail projects as the best threshold. Other industries or projects may choose a different value for the trigger based upon the nature of the project and past history of similar projects.

Notional Data Example


Activity ID

Control Account CPI CPI

Breach SPI SPI Breach

C1 CA100 1 NO 0.7 YESC2 CA101 0.7 YES 1.3 YESC3 CA102 0.8 NO 0.9 NOC4 CA103 1.1 NO 1.1 NO

N/A 1 N/A 2TOTAL

Figure 4

RBF = (1 + 2) / (4 x 2) = 0.375

Here: RBF > 0.5


Period P1 P2 P3 P4 P5RBF 0.37 0.56 0.59 0.62 RPMB

Figure 5Figure 5 Figure 6


SUMMARY

Figure 6

As it can be seen, RBF exceeded 0.5 in 3 successive periods (from period 2 to period 4). Therefore, at period 5 we can create a new baseline (RPMB) to use it for the time prediction purpose.

Summary and Conclusion

We proposed that project CPI and SPI values alone should not be used as triggers for rebaselining. Rather, one should look at the overall values of CPI and SPI at the control account level over a period of time. He does this by performing a count of the number of control account CPIs and SPIs that are a specified distance from 1.0.

Over time this count may increase indicating a failure to follow the baseline. An index iscreated and once this index exceeds a threshold a rebaseline trigger has occurred and rebaselining should be considered.

About the Authors

Mojtaba Zarei Kesheh is Director of EVMS Consultants Ltd., a consultancy focused on earned value management system and earned schedule implementation. He has published several papers and presented internationally at the EVA and EVM Europe Association in Switzerland (CERN), Belgium and Spain. He has a BSc in Construction Management with First Class Honours Degree from London South Bank University. He received the Construction Youth Trust Prize, The Charted Institute of Building Prize and The CIOB Certificate of Excellence for outstanding performance on the CIOB Accredited

Course of BSc (Hons) Construction Management at London South Bank University. Mojtaba Zarei-Kesheh can be reached at moj.zarei@ evms-consultants.com.

Mr. Stratton, PMP, EVP, is founder and president of Management Technologies, an earned value management training and consulting firm. He is the author of "The Earned Value Management Maturity Model®", published by Management Concepts, and “Ray Stratton’s Earned Value Professional (EVP) Exam Study Guide.” Mr. Stratton is also the editor of the monthly “The EVM Newsletter™.

He is presently the Executive Vice President of CPM.

Figure 6

As it can be seen, RBF exceeded 0.5 in 3 successive periods (from period 2 to period 4). Therefore, at period 5 we can create a new baseline (RPMB) to use it for the time prediction purpose.

We proposed that project CPI and SPI values alone should not be used as triggers for rebaselining. Rather, one should look at the overall values of CPI and SPI at the control account level over a period of time. He does this by performing a count of the number of control account CPIs and SPIs that are a specified distance from 1.0. Over time this count may increase indicating a failure to follow the baseline. An index is created and once this index exceeds a threshold a rebaseline trigger has occurred and rebaselining should be considered.

ABOUT THE AUTHORSMojtaba Zarei Kesheh is Director of EVMS Consultants Ltd., a consultancy focused on earned value management system and earned schedule implementation. He has published several papers and presented internationally at the EVA and EVM Europe Association in Switzerland (CERN), Belgium and Spain. He has a BSc in Construction Management with First Class Honours Degree from London South Bank University. He received the Construction Youth Trust Prize, The Charted Institute of Building Prize and The CIOB Certificate of Excellence for outstanding performance on the CIOB Accredited Course of BSc (Hons) Construction Management at London South Bank University. Mojtaba Zarei-Kesheh can be reached at moj.zarei@ evms-consultants.com.

Mr. Stratton, PMP, EVP, is founder and president of Management Technologies, an earned value management training and consulting firm. He is the author of “The Earned Value Management Maturity Model®”, published by Management Concepts, and “Ray Stratton’s Earned Value Professional (EVP) Exam Study Guide.” Mr. Stratton is also the editor of the monthly “The EVM Newsletter™.

He is presently the Executive Vice President of CPM.

Ray W. Stratton has over twenty five years experience as a software program manager with a major aerospace defense firm. While there he managed the development of radar, communication, and command and control systems.

He can be reached at [email protected].

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The CPM Governing Board recently approved a new award to highlight and recognize an outstanding volunteer who has provided ongoing service to the College of Performance Management.

The award nominee must have demonstrated exceptional commitment to volunteerism by supporting the activities of CPM in a recognized volunteer position. The nominee should have demonstrated exemplary leadership, creativity, teamwork, and hard work in their service to CPM. The nominee should serve as a model and inspiration to other volunteers.

The nominee must have also demonstrated the ability to work in a collaborative manner with other CPM members, CPM board members, the CPM staff, or others.

Potential areas for CPM volunteer recognition include, but are not limited to:• Conferences, webinars, and educational programs• Research program• Certification program• Global collaboration in project performance management practice, education, and research

This award will normally be given at the CPM EVM World spring conference. Visit www.mycpm.org/about-us/awards for information on currently available volunteer positions, instructions on how to apply for a volunteer position or how to nominate a volunteer for this award.

CPM depends on member volunteers for a wide range of activities; and the board would like to encourage all members to serve your association in some role. More information about volunteering can be found at www.mycpm.org/about-us/volunteer. You may also contact the current conference chair, the CPM office – [email protected], or any board member.

ANNOUNCEMENT

NEW AWARD FOR CPM VOLUNTEERS By Eleanor Haupt, EVP

EVMLibrary.org: The CPM Online Library

A comprehensive, online library of resources about Earned Value Management (EVM) and related project management topics.The CPM library now contains well over 2,100 documents, such as articles and presentations, and is growing everyday. Each document has been catalogued by subject area, author, publication date, keywords, etc.

How You Can Contribute? Do you have topical articles, speeches, or presentations? Contact Gaile Argiro at [email protected] to have your contributions included in this online resource.


Microsoft Project offers flexible online and on-premises solutions for project portfolio management (PPM) and everyday work, enabling you to effectively execute and achieve strategic priorities. REGISTER NOW for our free Project Webcast Series.

Join us on the 3rd Tuesday of each month at 1:30pm EST / 10:30am PST for our whole series of 90-minute webcasts, or select an individual session. We will cover a broad range of topics, from Scrum and Agile planning, to sharing and collaborating, to integration with social networks in PPM. Don’t miss this opportunity to learn about the New Project!

Microsoft introduces flexible online PPM and client subscription services to achieve strategic priorities as well as manage tactical project execution and everyday work. Built on SharePoint, Project provides new choices for teams, departments, and large organizations to adopt lightweight or rigorous approaches to PPM. More secure and reliable service delivered through Office 365 or enhanced on-premises performance and management options reduce IT complexity while helping all types of people, including those with limited PPM experience, to get started, define and prioritize project portfolio investments and deliver with the intended business value.

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ANNOUNCEMENT We have begun establishing regional and global CPM chapters. The chapters will provide opportunities for performance management professionals to meet face-to-face, share ideas, problem solve, network and enhance their professional development. They are a continuation of the great experiences our community offers in connecting with each other and sharing expertise at in-person events, in the pages of the Measurable News and at our monthly webinar series.

Below is a list of current Chapter Initiatives. This information is also available online at www.mycpm.org/chapters. Please contact Lauren Bone ([email protected]) for more information on current initiatives or for information on contributing to a chapter in your area.

CPM HUNTSVILLE CHAPTER

Meeting InformationMeeting Topic: Kick-off MeetingOrganizer: Mr Bob Wasser, BCF SolutionsPresenters: Gary Troop, President of CPM Jerald Kerby, NASA EVM Program Executive Chuck Hanes, Boeing, Exploration Launch Systems LTC Tom Huff, US Army, ARSGM Product Manager Steelray Software, Presentation of Advancements in their toolsDate: Tuesday, 11th February 2014, 1:00 p.m.-5:00 p.m. Central Location: Holiday Inn Research Park,

5903 University Drive Huntsville, AL, 35806

Sponsor: Steelray Software: Business Intelligence Software for Project ManagersRSVP: [email protected]

CPM WASHINGTON, D.C. REGIONAL CHAPTER

Meeting InformationMeeting Topic: Kick-off MeetingOrganizers: Ms Barbara Phillips, Eagle One Solutions, Inc. and Mr Anthony Bone, Lexem

Strategy LLC / Biotech PCSPresenters: Gary Troop, President of CPM Date: Monday, 18th November 2013, 4:30 p.m.-5:00 p.m. Eastern. Meeting will begin

in the Linden Oak Room leading to a reception with a cash bar.Location: Bethesda North Marriott Hotel & Conference Center

5701 Marinelli Road Bethesda, MD 20852

RSVP: [email protected]

CPM CHAPTER INITIATIVES UPDATE


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WPI Services is a woman owned small business with expertise in systems engineering and logistics. We work to increase operational availability and cost efficiency. By performing expert analysis of technical systems and logistics resources, WPI Services has a proven ability to find the optimal balance between cost and capability and the resources needed. Through more effective system utilization, customers cut costs and increase profitability.

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SIMLOX is an event driven simulation tool that enables detailed analysis of how technical systems’ performance vary over time given dif-ferent operational and logistics support scenarios. Based on availability of maintenance resources, maintenance strategy and the operational profile, SIMLOX makes it possible to get very realistic simulations of systems operational efficiency – including identification of bottle necks and other negative factors.

Strategic Decision Support to Maximize Capability. Affordably.

Simply put, all aspects of system operations and its resulting capability will be optimized to fit the life cycle all in order to maximize mission effectiveness.

And, since WPI Services has the relevant expertise for all phases, we can follow you from concept to solution implementation through careful process management.

Clear and transparent resultsThe software suite is well established, proven and flexible. It enables modeling and analysis of key parameters, e.g. capability, OPEX, etc, for decision support in all phases of smart operations.

Higher confidence.Model and assess fleet capability over the system life time to generate OPEX results with confidence levels attached.

Our services and tools can assess and cost optimize your operation, preserving today's capabilityat tomorrow's lower cost. Adapting a Capabillity Management perspective is powerful in all phases, from development to operation. By optimizing cost and capability, we enable AFSO21 leaders to increase critical equipment availability rates across all systems types and to understand how increasing productivity of people and improving response time and agility ripples across a system to increase readiness and lower costs.

Optimize System Capability & Reduce Costs

OPUS10™ is the world leading software for spare parts optimization and logistics support analysis for complex technical systems within defence, transportation, energy and production.

A trusted and experienced partnerThe quality of services and products are proven from years of experience, quality training, and expert consultants. Our tool suite is used by defense leaders in over 30 countries.

CATLOC is exceptionally powerful software for Life Cycle Cost (LCC) /Life Cycle Profit (LCP) analysis and

cost estimation. The easy-to-use graphical analysis environment in CATLOC enables the user to compare different cont ractors, alternative system designs or logistics support solutions, as well as to identify cost drivers.

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