Performance Measurement and Performance Measurement and

Evaluation Evaluation
Project Monitoring System for Control Project Monitoring System for Control
What data are collected?
Current status of project (schedule and cost)
Remaining cost to compete project & Date that project will be complete
Potential problems to be addressed now
Out-of-control activities requiring intervention
Cost and/or schedule overruns and the reasons for them
Forecast of overruns at time of project completion
Collecting data and analysis
Who will collect project data?
How and when will data be collected?
Who will compile and analyze the data?
Reports and reporting
Who will receive the reports?
How will the reports be transmitted?
When will the reports be distributed?
Project Progress Report Format Project Progress Report Format
Progress Since Last Report
Current Status of Project
Schedule
Cost
Scope
Cumulative Trends
Problems and Issues Since Last Report
Actions and resolution of earlier problems
New variances and problems identified
Corrective Action Planned
The Project Control Process The Project Control Process
Control
The process of comparing actual performance against plan
to identify deviations, evaluate courses of action, and take
appropriate corrective action
Project Control Steps
1. Setting a baseline plan
2. Measuring progress and performance
3. Comparing plan against actual
4. Taking actions
Reporting Period Reporting Period
0 1 0 1 2 3 4 5 6 7 8 9 10 2 3 4 5 6 7 8 9 10
15 15
10 10
55
00
--55
--10 10
--15 15
today today
Ahead of Ahead of
schedule schedule
Behind Behind
schedule schedule
Out Out--of Control : Rules for Identification of Control : Rules for Identification
If a point lies outside the control limits If a point lies outside the control limits
If any two out of three consecutive If any two out of three consecutive
points fall in one of the A zones or points fall in one of the A zones or
beyond on the same side beyond on the same side
If four out of five consecutive points fall If four out of five consecutive points fall
in B zone or beyond in same direction in B zone or beyond in same direction
If eight or more consecutive points lie If eight or more consecutive points lie
in the same direction of centerline in the same direction of centerline
If eight or more consecutive values If eight or more consecutive values
move upward or downward in value move upward or downward in value
If there is an unusually small number of If there is an unusually small number of
runs on either side of centreline runs on either side of centreline
slack slack
Behind schedule Behind schedule
(below threshold) (below threshold)
Ahead Ahead
Use of control charts Use of control charts
Helps to identify systematic reasons Helps to identify systematic reasons
behind slippages behind slippages
Help to identify assignable vs natural Help to identify assignable vs natural
variations variations
Can be used to plot progress against Can be used to plot progress against
milestones milestones
Help to decide when corrective action is Help to decide when corrective action is
required required
Monitoring Time Performance Monitoring Time Performance
Tools Used to Catch Variances from Plan
and Communicate Project Schedule
Status:
Tracking and baseline Gantt charts
Show expected, actual, and trend data for event
duration performance
Baseline and Tracking Gantt Charts Baseline and Tracking Gantt Charts
How to measure project progress? How to measure project progress?
EARNED VALUE ANALYSIS
I f you c ant measur e i t ,
you c ant manage i t .
The project would not have been started
if the truth had been told about the cost
and timescale.
How to answer the question How to answer the question: :
Have we done what we said wed do? Have we done what we said wed do?
% complete estimating
% of Budget spent
% of work done
% of time elapsed
subjective, incomplete
draws false conclusions
Examples of informal Earned Value Analysis Examples of informal Earned Value Analysis
Its done informally without realizing it.
30% time used,
30% $$ spent
So, if 30% of the work is done, I must be OK ??
Shop floor estimates
Cost comparisons
Budget vs. Actual
What Is It ? What Is It ?
Why Do I Need It ? Why Do I Need It ?
How Do I Do It? How Do I Do It?
Earned Value Analysis Earned Value Analysis
Enter Earned Value Analysis Enter Earned Value Analysis
Earned Value Analysis is an industry standard way to:
measure a projects progress,
forecast its completion date and final cost, and
provide schedule and budget variances along the
way.
By integrating three measurements, it provides consistent,
numerical indicators with which you can evaluate and
compare projects.
Whats more Important? Whats more Important?
Knowing where you are on schedule?
Knowing where you are on budget?
Knowing where you are on work
accomplished?
EVA Integrates All Three EVA Integrates All Three
It compares the PLANNED amount of work with what
has actually been COMPLETED, to determine if
COST , SCHEDULE, and WORK ACCOMPLISHED
are progressing as planned.
Work is Earned or credited as it is completed.
EVM EVM What is it? What is it?
Earned value management (EVM) is a project control
process based on a structured approach to planning, cost
collection and performance measurement.
It facilitates the integration of project scope, time and cost
objectives and the establishment of a baseline plan for
performance measurement.
It is acknowledged as the best way to integrate time cost
and scope.
EVM is EVM is
The key point of focus is on how much of the
project has been produced and at what cost.
This is compared with how much was originally
envisaged.
It is the combination of the great attention to detail
in setting up the project and the interplay of the
variances produced and their interpretation that
makes earned value such a powerful managerial
instrument.
A New Criteria A New Criteria
Activities earn value as they are completed.
The value earned is the WBS budgeted cost
of the activity completed to date.
UK NAOs view (2005) UK NAOs view (2005)
Earned Value needed because... Earned Value needed because...
Different measures of progress for
different types of tasks
Need to roll up progress of many
tasks into an overall project status
Need for a uniform unit of measure
(dollars or work-hours).
Earned Value needed because... Earned Value needed because...
Provides an Early Warningsignal for prompt
corrective action.
Bad news does not age well.
Still time to recover
Timely request for additional funds
Hows this project doing? Hows this project doing?
0
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J an-03 Feb-03 Mar-03 Apr-03 May-03 J un-03 J ul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03
Projected
Actual
Lets Take A Look Under The Hood Lets Take A Look Under The Hood
But First! But First! -- We gotta get organized We gotta get organized
EVA works best when work is compartmentalized.
Compartmentalization is best achieved with a well-planned
Work Breakdown Structure.
So, how do I create a WBS for a really complex project?
But How Do I Do All This Stuff ? But How Do I Do All This Stuff ?
With an Earned Value Management System
Earned Value Analysis Earned Value Analysis
Set Up Project Baseline:
1. Prepare an expenditure
forecast
Convert the expenditure
forecast to a progress
forecast
Change the baseline only if
the contract is amended
Assess Project Status:
2. Estimate Progress for
Each Task
3. Compute Overall
Progress
4. Determine Actual Costs
5. Determine Schedule
Status (Step 3 vs. Step 1)
6. Determine Budget Status
(Step 3 vs. Step 4)
Earned Value Definitions Earned Value Definitions
BCWS: Budgeted Cost of Work Scheduled
Planned cost of the total amount of work scheduled to be
performed by the milestone date.
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Earned Value Definitions (cont.) Earned Value Definitions (cont.)
ACWP: Actual Cost of Work Performed
Cost incurred to accomplish the work that has been done to
date.
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BCWP
ACWP
Earned Value Definitions (cont.) Earned Value Definitions (cont.)
BCWP: Budgeted Cost of Work Performed
The planned (not actual) cost to complete the work that has
been done.
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BCWP
BCWS
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BCWS
BCWP
ACWP
The Whole Story The Whole Story
Earned Value Chart Earned Value Chart basis for evaluating basis for evaluating
cost & performance to date cost & performance to date
Some Derived Metrics Some Derived Metrics
SV: Schedule Variance (BCWP-BCWS)
Presents an overall assessment in dollar terms of the progress of all
work packages in the project scheduled to date
A comparison of amount of work performed during a given period of
time to what was scheduled to be performed.
A negative variance means the project is behind schedule
CV: Cost Variance (BCWP-ACWP)
Indicates if the work accomplished using labor and materials costs
more or less than was planned at any point in the project
A comparison of the budgeted cost of work performed with actual cost.
A negative variance means the project is over budget.
TV: Time variance (STWP-ATWP)
-- Difference between time scheduled for work performed (STWP) and
actual time to perform it (ATWP)
Schedule Variance & Cost Variance Schedule Variance & Cost Variance
Schedule Variance = BCWP-BCWS
$49,000
- 55,000
SV = - $ 6,000
Cost Variance = BCWP-ACWP
$49,000
56,000
CV = - $7,000
SPI: Schedule Performance Index = BCWP/BCWS
SPI<1 means project is behind schedule
CPI: Cost Performance Index = BCWP/ACWP
CPI<1 means project is over budget
Time Performance Index (TPI) = STWP/ATWP
CSI: Cost Schedule Index (CSI=CPI x SPI)
The further CSI is from 1.0, the less likely project
recovery becomes.
Some More Derived Metrics Some More Derived Metrics
Performance Metrics Performance Metrics
SPI: BCWP/BCWS
49,000/55,000 = 0.891
CPI: BCWP/ACWP
49,000/56000 = 0.875
CSI: SPI x CPI
.891 x .875 = 0.780
Making Projections Making Projections
Once a project is 10% complete, the
overrun at completion will not be less
than the current overrun.
Once a project is 20% complete,
the CPI does not vary from its current
value by more
than 10%.
The CPI and SPI are statistically accurate indicators of
final cost results.
Source: Defense Acquisition University
102000
90882
103865
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BCWS
BCWP
ACWP
Making Projections Making Projections
Today
Benefits of EVM are: Benefits of EVM are:
it demands the rigorous definition of the
projects scope,
it signals the precise status of a project in
terms of time cost and scope
it allows all stakeholders to share common
project information
it reduces risk on projects by insisting on
best practice project management methods.
Shortcomings of Earned Value Shortcomings of Earned Value
Quantifying/measuring work progress
can be difficult.
Time required for data measurement,
input, and manipulation can be
considerable.
Rules Applied to Short Rules Applied to Short--Duration Duration
Activities and/or Small Activities and/or Small--Cost Activities Cost Activities
0/100 percent rule: Assumes 100 % of budget credit is earned at once
and only when the work is completed
50/50 rule: Allows for 50% of the value of the work package budget to be
earned when it is started and 50% to be earned when the package is
completed
Critical input rule. This rule assigns progress according to amount of
critical input that has been used. Labor or skilled dependent, machine
critical input buy machine complete task may be misinformation
Proportional rule. This rule divides planned (or actual) time-to-date by
total scheduled time(or budgeted (or actual ) cost-to-date by total
budgeted cast] to calculate percent complete. This is commonly used
rule.
Forecasting the final cost Forecasting the final cost
Budgeted Cost at Completion (BAC)
Total budgeted cost of the baseline or project when done
Estimated or Forecasted Cost at Completion (EAC)
The sum of actual costs to date plus revised estimated costs for the work
remaining in the Work Breakdown Structure
ACWP+ (BAC-EV)/(EV/ACWP) EV=BCWP
Estimated Cost To Complete (ETC)
The projected costs for a project or task remaining until the task is
completed
(BAC-EV)/(EV/ACWP)
CPI
Accelerating the effort Accelerating the effort
To complete performance index
How much each dollar has to earn (after slippage) to
complete the project within budget
TCPI=(BAC-EV)/(BAC-ACWP)
If a project of 300,000 is 50% complete (EV) and spent
Rs 225,000 so far then
TCPI = (300000-150000)/(300000-225000) =2
You can spent on resources only half what you used to
spend earlier : increase productivity
Other Control Issues Other Control Issues
Issues In Maintaining Control Of Projects Issues In Maintaining Control Of Projects
Baseline Changes Baseline Changes
Contingency Reserve Contingency Reserve
Costs and Problems of Data Acquisition Costs and Problems of Data Acquisition
Scope Creep Scope Creep
Managing the Portfolio of Projects Managing the Portfolio of Projects
Scope Changes to a Baseline Scope Changes to a Baseline
Summary Summary
EVA & EVMS will help reduce guesswork in:
Measuring performance
Forecasting
Need to get beyond misleading measures of progress.
Reasons to use EVA and EVMS:
Good project management practice
Questions Questions