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Earned Value Management
Leading & misleading in Project Control
Prepared by:Engr. Mohamed Maged, PMP
Admin of: https://www.facebook.com/Prof.Planner
المكتسبة القيمة في– إدارة ومخادعة مفيدةالمشروعات في التحكم
Instructor: Mohamed Maged
Senior Project Control Engineer, B.Sc. of Civil engineering – Ain Shams University, with experience in MENA region of (construction, infrastructure, and roads) Mega projects, in professions of Contract administration, Procurement,Tender estimating, Cost control, Planning & Claim analysis.
Instructor of Planning & Project Management:- Construction Management Planning and Control (CMPC).- Delay, Claim and Dispute Resolution (DCDR) in PMBOK, FIDIC & SCL protocol.- Project Management Professional (PMP).- Free lectures with cooperation of Egyptian Engineers Association in Saudi:
- Product oriented construction management- Top 10 planning fundamentals- Scope creep – cases and preventive actions- Claims and dispute resolution in FIDIC
Mohamed Maged (Prof. Planner)
Admin of the biggest online community of Arab Planners (10,000+)
(Facebook Page: to be prof. planner, related group: Best Advice for Planners – Public group) Achievements of 3 Years: http://www.slideshare.net/MohamedMaged8/3-years-acheivements
P P&C Academy (recently launched): http://prof.planner.teachable.com/
SlideShare: www.slideshare.net/MohamedMaged8/
YouTube Channel: https://www.youtube.com/ArabPlanners.
Arranged Two Annual Conferences of Planning and Project Management (Anniversary of Facebook Page: Prof.Planner)- American University in Cairo, August 2014 & 2015.
References:1- A GUIDE TO THE PROJECT MANAGEMENT BODY OF KNOWLEDGE (PMBOK® Guide) – Fifth Edition.2- Practice Standard for EARNED VALUE MANAGEMET – PMI Global STANDARD.3- EARNED VALUE Project Management - QUENWT. FILEMNING and JOEL M. KOPPELMAN.4- Skills & Knowledge of Cost Engineering – AACE International.5- EARNED VALUE MANAGEMENT APM GUIDELINE FOR THE UK.6- Earned Value Professional (EVP) Certification Study Guide– AACE International.7- CMPC Course Material – Construction Management Planning & Control (Prof.Planner).8- Construction Project Scheduling and Control - Saleh Mubarak.9- Project Management, Planning, and Control - Albert Lester.10- Other posts and slide-shares from internet.
Lecture TopicsProject ControlPerformance M.
BaselineWBS & Control
AccountsConcept of Cost ControlWhy Earned Value?Earned Value Analysis
Earned Value Forecasting
Earned ScheduleFinance & Cash flowSchedule Total FloatTricky or MisleadingStudy & Practice
May 2, 2023
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Project control is the continuous practice of
1.monitoring work progress,
2. comparing it to baseline budget and schedule,
3.detecting any deviations and their causes, and
4. taking a corrective action wherever and whenever necessary.
Also called Project tracking, Project monitoring & Follow up.
Project Control
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Create WBS. subdividing project deliverables and project work (including management work) into smaller, more manageable components, can be used as communications tool.
Tools & Techniques:Decomposition. A technique used for dividing and subdividing the project scope and project deliverables into smaller, more manageable parts (e.g. by phase or by major deliverables).
Manageable Level of Control
8WBS Dividing – Scope Baseline
- Lowest level in WBS called Work Package, then it can be decomposed to Schedule Activities.
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معن--ى • المعتم--د ؟ Baseline Programmeم--ا الزمن--ي ال--برنامج ه--وaccepted ،تأخي-ر أ-و مطالب-ة أ-ي دراس-ة عن-د الي-ه الرجوع يت-م مس-تند ويعت-بر
عمل يت-م الزمن-ي ال-برنامج عل-ى يؤث-ر م-ا تغيي-ر اعتماد حال-ة revisedوف-يbaseline. للمتابعة
Baseline Schedule
10Cash Flow
Cost Baseline. The approved version of the time-phased project budget, excluding any management reserves.
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Cost Aggregation. Summing the lower-level cost estimates for a given cost control account.Planning Package. Control Account. A management control point to earned value.Reserve analysis. Budget reserve analysis can establish both the contingency reserves and the management reserves.Contingency Reserve. Allowance for identified risks that are accepted (known unknown).Management Reserve. for unforeseen work that is within scope (unknown unknown).Funding Limit Reconciliation. comparing the planned expenditure against any limits.
Cost Rolling-up
13Control Account Responsibility
There are three main types of organizational structures: functional, matrix, and project
The above organizational process flow ofwork authorization is captured in Work Authorization Documents (WADs) that take many forms.
May 2, 2023
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- Cost control is related to cash out of Contractor most probably.
- It is the process of comparing the estimated to be spent for each (CA / activity / work package) and the actual.
- Therefore, You are comparing apple to apple.
Cost Control
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Scheduling and estimating are related and their relationships is probably one of the most important relationships in project management. These two areas intersected in many ways such as the following:
1) The estimator need to know how long the project will last in order to estimate certain cost , particularly overhead.
2) Scheduling and Estimating department collaborate to provide information to the procurement department. 3) Resource allocation and resource leveling may be cost related, although these are scheduling issues.
Proper Estimating (planning) is Very Important for Control
May 2, 2023
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What is an updated schedule?A living copy schedule reflecting project performance data at a given data date regarding completed activities, in progress activities, and change in the logic, cost, and resources and allocated at any level.
What is data date?The data date is the date as of which all progress on a project is reported. It is also called as- of date, cut-off date and status date .
Schedule Update
May 2, 2023
17Output of Update
Baseline Cash Flow:
Time phased Budget Value of Planned
Work
Schedule Update: Up to date
Actual Value of Performed
Work & remaining
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Earned Value Management (EVM), started in 1800’s as a method for integrated project cost and schedule control, then in the 1960’s, was designed by the U.S. Air Force and named the Cost/Schedule Planning and Control System.
Earned Value History
May 2, 2023
19Earned Value Terminology
Earned Value (EV) Analysis: Earned Value analysis is an integrated cost-schedule approach to monitor and analyze the progress in a project.
May 2, 2023
20Earned Value Analysis
When EV is useless: If the WP = WS which happens for sure at the project completion if the scope is the same.
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Earned Value Management
This’s Why Earned Value…
EVM has been called “management with lights on”
May 2, 2023
22Earned Value Reporting - Costs
ACWPBCWPCPI
ACWPBCWPCV
CPI = 1, on budgetCPI < 1, over budgetCPI > 1, under budget
Budgeted Cost of Work Performed (BCWP) = earned value Actual Cost of Work Performed (ACWP) = actual cost Cost Variance (CV): Difference between earned and actual
costs for the completed work Cost Performance Index (CPI or CI): as following
May 2, 2023
23Earned Value Reporting - Schedule
Budgeted Cost of Work Performed (BCWP): earned value
Budgeted Cost of Work Scheduled (BCWS): planned value
Schedule Variance (SV): Difference between the value of work that was planned to be accomplished and the value of the work that was actually completed
Schedule Performance Index (SPI or SI): as following
BCWSBCWPSPI
BCWSBCWPSV
SPI = 1, on scheduleSPI < 1, behind scheduleSPI > 1, ahead of schedule
24Earned Value - Forecasting
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(earned)
(actual)
(budgeted)Forecasted cost variance (FCV) = CV ∕ % Complete = $400 ∕ 26.7% = $1, 500
Schedule variance in days (SV, days) = SV ($) ∕ Daily planned budget = $-1,067 ∕ $266.67 = - 4 daysForecasted schedule variance (FSV) = SV ∕ %Complete = -4 ∕ 26.7% = -15 days
May 2, 2023
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A simple problem will help to illustrate the application of the principles of earned value . A project has been defined that consist of 12 activities for which the estimated cost and duration have been defined see figure .After three and a half month , the activates 1,2,4,5,7 are completed and (6) is half complete and (8) is three–fourth complete and (3) is half complete. The incurred cost to date are 152000$ . What is the status of this project in terms of the schedule and the budget?
Example
Activity cost m1 m2 m3 m4 m5 m61 $220002 $100003 $180004 $300005 $500006 $400007 $60008 $160009 $1300010 $400011 $3400012 $14000
26Solution
ACWP =152000$
BCWS=22000+30000+50000+10000+18000+0.5(40000+6000+16000)=161000$
BCWP=22000+30000+50000+10000+6000+0,5(40000)+0.75(16000)+0.5(18000)= 159000$
SV= BCWP-BCWS= -2000$ its behind schedule
CV=BCWP-ACWP= 7000$ under the budget
EAC=ACWP+(BAC-BCWP)=152000+(257000-159000) = 250000$
May 2, 2023
27Earned Value: Cost and Time Status
Cost +CV
TimeSV
III
III IV
-
- +
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(Factors)
Earned Value Summary
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(Forecast & TCPI)
-Magnify the cost variance.-Maintain the variance till end.-More accurate.-Time (SV) affect he cost as well as (CV).
Budget value of remaining work / Value of cost to spend (up to Budget or to Estimate)
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(EV)
May 2, 2023
32Time-Based Measures: Earned Schedule
SPI(time) = PT / AT
AT: Actual Time of Work Performed (till Data date) (actual time expended to date (ATE) for a particular earned value)
PT: Planned Time of Work Performed (originally planned duration (OD) for that earned value)
May 2, 2023
33Scope & Time
Forecast Time:EAC (t) = BAC (t) / SPI
Scope Control:Schedule factors based on cost.Time Control:Schedule factors based on time.
Estimated Duration
May 2, 2023
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- We can measure: Earned Quantity, Earned Workhours & Credit ($) WH of actual quantity as per budget unit rate, then Productivity Index (PI)= $ / unit.
Physical Units - Resources
- EVM requires the recording of resource utilization in resource units (i.e. labor, materials, and the like) for the work performed to compare with budget of resource units , and capture the actual costs.
- Lump Sum Projects Measurements
35Cash flow: Cash-out vs Cash-in
Turnover: Inflation & interest
Economics, Estimating, Accounting & Finance
(EFCC – course)
Funding gap: budget overrun
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May 2, 2023
36Total Float Vs EVM Schedule Factors
Misleading in Each:
1- Out of sequence can disturb the results of EVM schedule factors specially if the progress of critical path is different.
2- Availability of resources and resource usage in remaining works can affect the rationality of the total float specially if many paths overlapped in the remaining duration.
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Some amount of knowledge brings more……
Earned Value Management - Tricky or Misleading
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Soon more courses in the regard at: http://prof.planner.teachable.com/
Economics, Estimating, Accounting, Finance & Cost Control Topics
Cost Engineering
Earned Value Basics - Arabic https://www.facebook.com/groups/prof.cost.engineers/
Study & Practice
Additional References:• https://www.humphreys-assoc.com/evms/EIA-748.php• https://
www.humphreys-assoc.com/uploads/commerce/images/pdf/HumphreysPMUsingEV3rd-2014-1006.pdf
• http://www.aacei.org/cert/EVP_CertificationChecklist.pdfCertificates:• EVP – AACE International• Control Account Manager (CAM)
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Mohamed Maged (Related Available Videos)
Thank YouDon’t Hesitate to contact….
mobile : 00966-580264968
