Project Performance Analysis
Earned Value Project Management Khalid Ahmad Khan, PE, PMP
Head of PMU Planning & Development Department Government of Punjab Lahore, Pakistan
Agenda
Understand basic concepts How to evaluate performance How to manage using Earned Value Questions
Questions to be Answered
PAST PRESENT FUTURE
How much work has been completed? How much work has been completed? How much should have been completed? How much should have been completed? How much has been spent? How much has been spent? How much should have been spent? How much should have been spent?
When will we finish? When will we finish? What will it cost at the end? What will it cost at the end? How can we control the trend? How can we control the trend?
We analyze the past performance………to help us control the future
Performance Assessment
Fund based analysis
Time based analysis
Earned Value analysis
Fund Base Analysis
Given Budget Cost Duration of the Project Funds used Assume Cost efficiency is 100%
No change in Unit Rates or Quantities
Uniform Cash Flow Rs. 1200m in 12 months is 100m/month
Calculate % Completion = (Funds used) / (Budget Cost) Weakness Late detection of Budget or Time Overruns
Limitations of Financial Monitoring
Assumes all money spent is used with 100% efficiency
Works fine only if the project is on-track Ignores Scope & Time
Physical Progress vs. Financial Progress
Budget
100.00
Utilized
70.00 Budget Utilized Physical-1 Physical-2 Physical-3 70.00
Physical-1
50.00
Physical-2
Physical-3 20.00 40.00 60.00
80.00 80.00 100.00 120.00
Spending is not uniform
x 1000 x 100000
18
Spending
16
Cumulative Spending
14
12
14
10 12
10
8
8
6
6 4
4
2 2
JUL
AUG
SEP
OCT 1999
NOV
DEC
JAN
FEB
MAR
APR
MAY
Detail scale (left):
JUN 2000
X 1000
JUL
AUG
SEP
OCT
NOV
Resource/Cost Profile Legend Total of All Resources Peak early cost per Week (Current Estimate) Current estimate curve Earned value curve Scheduled budget curve Cumulative scale (right): X 100000
Time Based Analysis
Given
Activity Sequence (Network) Activity Schedule (Gantt Chart)
Assume
Effort uniformly distributed over time
Calculate
% Completion = (Days used) / (Total duration)
Weakness
Late detection of Budget and Time Overruns
Level of effort in not uniform
Activity ID Activity Description Orig Dur Rem Dur % Early Start Early Finish AREA Budgeted Cost 2003 17 MAR 24 APR 31 7 14 21 28 5 12 MAY 19 26
Project 1
1000 1010 1020 1030 1040 1050 Project Start Activity A Activity B Activity C Activity D Project Finish 0 5 8 2 3 0 0 5 8 2 3 0 0 24MAR03 0 24MAR03 0 29MAR03 0 29MAR03 0 06APR03 0 28MAR03 05APR03 30MAR03 08APR03 08APR03 P1 P1 P1 P1 P1 P1 0.00 0.00 0.00 0.00 0.00 0.00 Project Start Activity A Activity B Activity C Activity D Project Finish
Project 2
2000 2010 2020 2030 2040 2050 Project Start Activity A Activity B Activity C Activity D Project Finish 0 5 8 2 3 0 0 5 8 2 3 0 0 24MAR03 0 24MAR03 0 29MAR03 0 29MAR03 0 06APR03 0 28MAR03 05APR03 30MAR03 08APR03 08APR03 P2 P2 P2 P2 P2 P2 0.00 0.00 0.00 0.00 0.00 0.00
x 10 Nos
Less activities more work
Project Start Activity A Activity B Activity C Activity D Project Finish
x 10
11
80
10 70
9 60 8
7
50
6 40 5
4
30
3 20
2 10
Resource/Cost Profile Legend WORK Total early usage per Day (Current Estimate) Current estimate curve Earned value curve Planned value curve
Start Date Finish Date Data Date Run Date 24MAR03 08APR03 24MAR03 24MAR03 20:02 Early Bar Float Bar Progress Bar Critical Activity EVPM
1
X 10Nos
Detail scale (left):
Cumulative scale (right): X 10Nos
17
24 MAR
31
7
14 APR
21 2003
28
5
12 MAY
19
26
Sheet 1 of 1
Expert Systems (Pvt) Ltd Earned Value Presentatin Examples Classic Schedule Layout
Date
Revision
Checked
Approved
© Primavera Systems, Inc.
Example: 1 day match
Scenario I: Score 230/3 Target 240 Scenario II: 3 wickets down 44 overs Scenario III: 230/3 in 44 overs Target 240
What is EVMS?
EVMS is the primary project
management tool... that integrates the scope, schedule, and cost parameters of the contract.
COST
SCHEDULE
Scope
What do we measure progress against?
Performance measurement baseline
budget that is spread over . . . time, to accomplish the scope of work and against which progress can be measured
Earned Value concept
how much progress did I make against my original plan?
FIVE BASIC PERFORMANCE DATA QUESTIONS & ANSWERS
QUESTION What was the total job supposed to cost? How much work should be done? How much work is done? ANSWER Budget at Completion ACRONYM BAC
Budgeted Cost for Work Scheduled Budgeted Cost for Work Performed Actual Cost of Work Performed
BCWS
BCWP
How much did the is done work cost?
ACWP
What do we now expect the total job to cost?
Estimate at Completion
EAC
The Project
It’s my pleasure to award you this contract for a new BHU
hmm...7,500 sft construction, 8 months to do it all....37.2 lakhs budget....This is going to be tough!
Budget Cost for Work Scheduled (BCWS)
BCWS for April Rs 3.16 lakhs
…Earthworks in April should cost 3.16 lakhs…
Budget at Completion (BAC)
BAC= 37.2 lakhs BAC= 37.2 lakhs
..If I add up all the individual BCWS I get the BAC…37.2 lakhs..
…
At the end...
At the end of the contract, when all work has been completed:
I’ve “earned” all of my budget (Rs. 37.2 lakhs)
BCWP (cumulative) =
Rs. 37.2 lakhs
BCWS (cumulative) =
Rs. 37.2 lakhs
Program Schedule System No. 1000
Prior Schedule
Subsystem Fiscal year 1985
therefore, schedule variance (Rs) = 0
Automated Equipment Fiscal year 1986
Type Program FY 1987 F M A M J J A S 1 FY 1988 2 3
As of June 1986 FY 1989 4 1 2 3 Compl date 4 1 2
L i n e
Program milestones Program direction Facility Modification
Mo Yr
O N
D J
F
M A M
J
J
A
S
O N D
J
1 2 3 4
Sys Integ Cintract award ADPE Instal & checkout Medical equip automatic checkout/test Equip Integration Software development Developmental testing System testing Facility mod (opn’l site) ADPE Instal & checkout (opn’l site) Med equip Installation Prototype test/evaluation Initial operational test and evaluation Engineering development
Formal schedule will reflect whether milestones were achieved on time
5 6 7 8 9 10 11 12 13 14 15
Now
Control Phase
So, your project has been base lined and work has started Is everything going according to plan? Next step in the process:
figure out your status figure out the problems figure out what you need to do to fix them figure out what the impact might be
Measuring Progress Be Discrete!
Discrete EV Techniques:
Method 0/100 50/50 Units Completed Equivalent Units Weighted Milestone How Value is Earned no EV at opening, 100% EV at close of WP 50% EV at opening, 50% EV at close of WP same budget value for identical units planned unit standards, allows partial credit each milestone weighted based on planned resources ideal to have a milestone each month subjective (least desirable)
Percent Complete
Budgeted Cost of Work Performed (BCWP)
the EARNED
VALUE concept
We’re at the end of the third month, we have completed earthworks, foundation…structure is in process….
You earn value the same way You earn value the same way as it was budgeted in baseline as it was budgeted in baseline
Status at Month 3
BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs
Activity ID
Activity Description
Orig Dur
Budget (BAC)
Planned (BCWS)
Earned (BCWP)
Actual (ACWP)
1
2
3
4
Months 5
6
7
8
9
Rural Health Clinic
Total 210 3,722,000.00 1,982,800.00 1,450,000.00 1,640,000.00
General
Subtotal 1000 1110 Project Start Project Complete 210 0 0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Project Start Project Complete
Foundation
Subtotal 1010 1020 Earthworks Foundation upto Plinth 54 18 24 850,000.00 50,000.00 800,000.00 850,000.00 50,000.00 800,000.00 850,000.00 50,000.00 800,000.00 950,000.00 60,000.00 890,000.00 Earthworks Foundation upto Plinth
Structure Work
Subtotal 1030 1040 Super-structure Block Masonry 51 50 15 1,536,000.00 1,440,000.00 96,000.00 1,132,800.00 1,036,800.00 96,000.00 600,000.00 504,000.00 96,000.00 690,000.00 584,000.00 106,000.00 Block Masonry Super-structure
Finishes
Subtotal 1050 1100 1090 1070 1060 1080 Plaster Plumbing Electrical Works Flooring Paint Wood Work 105 40 15 25 45 40 20 1,336,000.00 192,000.00 100,000.00 200,000.00 300,000.00 144,000.00 400,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
x 100000
Plaster Plumbing Electrical Works Flooring Paint Wood Work
x 100000
EAC
10
40
9
ACWP
BCWS BAC
36
8
32
7
28
6
24
5
20
4
16
3
BCWP
12
2
Resource/Cost Profile Legend Total of All Resources Total early cost per Month (Current Estimate) Current estimate curve Earned value curve Planned value curve Detail scale (left): X 100000 Cumulative scale (right): X 100000
8
1
4
1
2
3
4
5 Months
6
7
8
9
10
Sheet 1 of 1
Schedule Variance
BUDGET BASED
BC WS BC WP
Value of work that was planned to be completed Value of work that has been completed
BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs
SCHEDULE VARIANCE is the difference between work scheduled SCHEDULE VARIANCE is the difference between work scheduled and work performed (expressed in terms of budget dollars) and work performed (expressed in terms of budget dollars)
formula: formula:
example: example:
SV = BCWP --BCWS SV = BCWP BCWS
SV = BCWP --BCWS = 14.50 – 19.82 SV = BCWP BCWS = 14.50 – 19.82 SV= -5.32 (negative = behind schedule) SV= -5.32 (negative = behind schedule)
Schedule Performance Index
BUDGET BASED
BC WS BC WP
Value of work that was planned to be completed Value of work that has been completed
BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs
SCHEDULE Performance Index is the ratio between work SCHEDULE Performance Index is the ratio between work scheduled and work performed (expressed in terms of budget) scheduled and work performed (expressed in terms of budget)
formula: formula:
example: example:
SPI = BCWP //BCWS SPI = BCWP BCWS
SPI = BCWP / /BCWS = 14.5 / /19.82 SPI = BCWP BCWS = 14.5 19.82 SPI= 0.73 (only 27% of behind schedule) SPI= 0.73 (only 27% of behind schedule)
EV Analysis
BAC Data Date
Current COST Target
SV
AC
SPI (Schedule Performance) SPI (Schedule Performance) EV / /PV [1.0=On schedule] EV PV [1.0=On schedule] EV TIME
Cost Variance
PERFORMANCE BASED
BC WP AC WP
of the work I actually performed, how much did I budget for it to cost? of the work I actually performed, how much did it actually cost?
BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs
COST VARIANCE is the difference between budgeted cost COST VARIANCE is the difference between budgeted cost
and actual cost and actual cost
formula: formula:
example: example:
CV = BCWP --ACWP CV = BCWP ACWP
CV = BCWP --ACWP = 14.5 – 16.4 CV = BCWP ACWP = 14.5 – 16.4 CV= -1.9 (negative = cost overrun) CV= -1.9 (negative = cost overrun)
Cost Performance Index
PERFORMANCE BASED
BC WP AC WP
of the work I actually performed, how much did I budget for it to cost? of the work I actually performed, how much did it actually cost?
BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs
COST VARIANCE is the ratio between earned value COST VARIANCE is the ratio between earned value
and actual cost and actual cost
formula: formula:
example: example:
CPI = BCWP //ACWP CPI = BCWP ACWP
CPI = BCWP / /ACWP = 14.5 / /16.4 CPI = BCWP ACWP = 14.5 16.4 CPI= 0.88 CPI= 0.88 (we are overshooting budget by 12%) (we are overshooting budget by 12%)
EV Analysis
CPI (Cost Performance) CPI (Cost Performance) EV / /AC [1.0=On budget] EV AC [1.0=On budget]
BAC Data Date
COST
Target
CV AC
EV TIME
Budget Status
budget status budget status
% spent = ACWP = 16.4/37.2 = 44% % spent = ACWP = 16.4/37.2 = 44% BAC BAC
BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs
compare: compare: % spent vs. % complete % spent vs. % complete
example: example: 44% spent vs. 39% complete 44% spent vs. 39% complete
What will be the final cost?
Estimate at Completion (EAC)
defined as actual cost to date + estimated cost of work remaining contractor develops comprehensive EAC at least annually
reported by WBS in cost performance report
should examine on monthly basis consider the following in EAC generation
performance to date impact of approved corrective action plans known/anticipated downstream problems best estimate of the cost to complete remaining work
also called latest revised estimate (LRE), indicated final cost, etc.
ACWP + ETC = EAC
One method: statistical formulae
Common EAC Formulae:
EAC =
… 5.1 Million over Budget…
BAC CPI
37.2 = Rs. 42.3 lakhs 0.88
BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs
= =
ACWPcum + Budgeted Cost of Work Remaining CPI3 ACWPcum + Budgeted Cost of Work Remaining .8(CPI) +.2(SPI) ACWPcum + Budgeted Cost of Work Remaining CPI * SPI
=
Variance at Completion (VAC)
B AC E AC
what the total job is supposed to cost
BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs
what the total job is expected to cost
job is supposed to cost and what the total job is now expected to cost. job is supposed to cost and what the total job is now expected to cost.
VARIANCE AT COMPLETION is the difference between what the total VARIANCE AT COMPLETION is the difference between what the total FORMULA: FORMULA: Example: Example: VAC = BAC --EAC VAC = BAC EAC VAC = 37.2 – 42.3 VAC = 37.2 – 42.3 VAC = --5.1 (negative = overrun) VAC = 5.1 (negative = overrun)
VAC
EV Analysis
CPI (Cost Performance) CPI (Cost Performance) EV / /AC [1.0=On budget] EV AC [1.0=On budget]
BAC Data Date
Delay Current COST Target ETC SV CV AC SPI (Schedule Performance) SPI (Schedule Performance) EV / /PV [1.0=On schedule] EV PV [1.0=On schedule] EV TIME
BCWP Allows Isolation of Schedule and Cost Variances
BCWS ACWP
cv sv
Rs
BCWP
TIME
8 months
schedule variance = BCWP - BCWS = negative number cost variance = BCWP - ACWP = negative number
behind schedule, behind schedule, over cost over cost
Pop Quiz
BCWS BCWP
$
ACWP
TIME NOW
schedule variance = BCWP - BCWS = cost variance = BCWP - ACWP =
_______schedule, _______schedule, ___________cost ___________cost
Exercise 5
Performance Indices
COST PERF INDEX (CPI) = BCWP COST PERF INDEX (CPI) = BCWP ACWP ACWP
“GOOD”
1.2
SCHED PERF INDEX (SPI) = BCWP SCHED PERF INDEX (SPI) = BCWP BCWS BCWS
1.1
TIME
1.0 “BAD” .9
CPI SPI
.8
Project A
Weekly SPI
1.20
0.85
0.90 0.60
0.77
0.73
0.74
0.76
SPI
0.30 0.00 8Jan 15Jan 22Jan 29Jan 5Feb 12Feb 19Feb 26Feb 5Mar 12Mar
Complete
Remaining
Total
Required Weekly Run Rate (Rs.) 40,460,383 23,285,805
(Rs.) Closure Running Total 160,141,220 190,821,480 350,962,700
Days 98 321 419
(Rs.) 421,943,990 958,044,540 1,379,988,530
Day s 73 288 361
(Rs.) 582,085,210 1,148,866,020 1,730,951,230
Project B
SPI 1.20 1.00 0.80 0.60 0.40 0.20
3 n -Ja 1 -Ja 0 n 1 -Ja 7 n 2 -Ja 4 n 1 -N v 5 o 2 -N v 2 o 2 -N v 9 o 3 -Ja 1 n 1 o -N v 8 o -N v 7 e -F b 1 -D c 3 e 2 -D c 0 e 2 -D c 7 e 1 -F b 4 e 1 -O 8 ct 2 -O 5 ct 6 e -D c 0.63 1.08 0.88
0.81
0.77
0.76
0.75
0.69
0.68
0.67
0.64 0.53 0.31 0.53 0.56
0.62
0.60
SPI
0.00
Complete
Remaining
Total
Required Weekly Run Rate (Rs.) 43,634,122 1,476,955
(Rs.) Closure Running Total 59,203,840 9,815,350 69,019,190
Days 52 189 241
(Rs.) 62,334,460 21,099,350 83,433,810
Days 10 100 110
(Rs.) 121,538,300 30,914,700 152,453,000
Example: Weekly SPI
Sr. No.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Week Ending Dates
26-Dec-04 2-Jan-05 9-Jan-05 16-Jan-05 23-Jan-05 30-Jan-05 6-Feb-05 13-Feb-05 20-Feb-05 27-Feb-05 6-Mar-05 13-Mar-05 20-Mar-05 27-Mar-05 3-Apr-05 10-Apr-05 17-Apr-05 24-Apr-05 01-May-05 08-May-05
Planned Value (PV) (Rs.)
95,302,638 124,008,716 167,750,812 207,032,859 230,748,190 237,291,819 258,003,316 275,543,375 311,754,875 335,186,817 342,437,937 362,078,566 398,036,945 424,191,388 435,632,781 452,135,030 486,666,502 536,812,960 571,145,846 579,427,303
Earned Value (EV) (Rs.)
52,444,155 71,807,490 104,771,091 114,537,327 115,388,914 119,899,913 127,715,271 135,491,435 138,162,865 144,765,181 158,587,808 170,986,796 178,791,567 191,337,033 198,883,454 211,993,298 223,619,935 237,782,155 250,318,134 261,828,969
SPI Period
0.55 0.67 0.75 0.25 0.04 0.69 0.38 0.44 0.07 0.28 1.91 0.63 0.22 0.48 0.66 0.79 0.34 0.28 0.37 1.37
SPI Accumulated
0.55 0.58 0.62 0.55 0.50 0.51 0.50 0.49 0.44 0.43 0.46 0.47 0.45 0.45 0.46 0.47 0.46 0.44 0.44 0.45
TSPI
1.08 1.10 1.14 1.22 1.29 1.30 1.36 1.40 1.56 1.66 1.66 1.73 1.98 2.17 2.27 2.41 2.93 3.39 4.53 4.85
SPIe 0.56 0.59 0.69 0.64 0.56 0.52 0.50 0.48 0.44 0.43 0.43 0.42 0.42 0.40 0.39 0.38 0.38 0.37 0.37 0.37
Value
0.30
0.35
0.40
0.45
0.50
0.55
0.60
0.65
0.70
Example: SPI Trend
SPIe / SPI Trend
Week
12 /2 6/ 20 1/ 04 2/ 20 1/ 05 9/ 2 1/ 005 16 /2 1/ 005 23 /2 1/ 005 30 /2 0 2/ 05 6/ 2 2/ 005 13 /2 2/ 005 20 /2 2/ 005 27 /2 0 3/ 05 6/ 2 3/ 005 13 /2 3/ 005 20 /2 3/ 005 27 /2 0 4/ 05 3/ 2 4/ 005 10 /2 4/ 005 17 /2 4/ 005 24 /2 0 5/ 05 1/ 20 5/ 05 8/ 20 05
SPIe SPI
Projected Finish Date 16-Aug-05 27-Jul-05 17-Jun-05 7-Jul-05 28-May-05 8-May-05 18-Apr-05
Example: Predicted Finish
Prod vs. Proj Span
Period 5 10
26 -D ec -0 4 2Ja n05 9Ja n 16 -05 -J an 23 -05 -J an 30 -05 -J an -0 5 6Fe b13 0 -F 5 eb -0 20 -F 5 eb -0 27 -F 5 eb -0 5 6M ar 13 -05 -M ar -0 20 -M 5 ar -0 27 -M 5 ar -0 5 3A pr 10 -05 -A pr 17 -05 -A pr 24 -05 -A pr -0 15 M ay -0 85 M ay -0 5
15 Finish Date Productivity
Rs (million)
20
25
30
35
Portfolio Performance
Project Portfolio Performance
1.20 1.15
1.10
1.05 CsPr r a c o t e fo m n e
1.00 0.80 0.85 0.90 0.95 1.00 1.05 1.10 1.15 1.20
BAC
0.95
0.90
0.85
0.80 Schedule Performance
DoD experience shows…..
over 800 military programs show that ......
no program has ever improved performance better than the following EAC calculation
EAC =
BAC CPI
at 15% complete point in program early stages! no one pays enough attention in the
EARNED VALUE PROBLEM INDICATORS
GOAL: To Verify That Effective Variance Analysis Processes Are Applied To Identify, Correct, And Report Problems • POTENTIAL PROBLEM INDICATORS: – Zero variances – Monthly trends turning negative or downward – Schedule variances generally indicate cost will follow – Actuals > Latest Revised Estimates (LRE) – BCWP increases with no increase in ACWP – Negative data elements
Benefits of EVPM
Accurate picture of project status
cost, schedule, and technical
Early and accurate identification of trends and problems Basis for course correction Bring project in on schedule and cost
Q&A