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BACKUP CHARTS ANSI- 748 EVM PROCESS ELEMENTS

BACKUP CHARTS ANSI- 748 EVM PROCESS ELEMENTS. ESSENTIAL ELEMENTS OF EVM Origin (Industry Std – ANSI ESI 748) Organization Planning and Budgeting Accounting Analysis and Management Reports Revisions and Data Maintenance. ESSENTIAL ELEMENTS OF EVM.

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BACKUP CHARTS ANSI- 748 EVM PROCESS ELEMENTS

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  1. BACKUP CHARTS • ANSI- 748 EVM PROCESS • ELEMENTS

  2. ESSENTIAL ELEMENTS OF EVM • Origin (Industry Std – ANSI ESI 748) • Organization • Planning and Budgeting • Accounting • Analysis and Management Reports • Revisions and Data Maintenance

  3. ESSENTIAL ELEMENTS OF EVM • EARNED VALUE MANAGEMENT INFORMATION GUIDE AND INDUSTRY STANDARD ANSI-ESI 748 • 32 CRITERIA • Organization (5) • Work (WBS) • Program Organization (Staff) • Planning & Budgeting (10) • Assign the work • Schedule the work • Apply resources (time phased baseline) • Establish Management Reserves

  4. ESSENTIAL ELEMENTS OF EVM • EVMIG/ANSI ESI 748 CRITERIA Cont. • Accounting (6) • Accumulate cost (direct and overhead) of work and materials • Analysis and Management Reports (6) • Measure accomplishments (value earned) • Compare earned value to actual costs • Analyze variances, implement corrective actions • Develop revised estimates at completion • Revisions and Data Maintenance (5) • Incorporate changes in a timely manner • Control and document baseline changes

  5. ESSENTIAL ELEMENTS OF EVM • Origin • Organization • Planning and Budgeting • Accounting • Analysis and Management Reports • Revisions and Data Maintenance

  6. EVM ELEMENTS – ORGANIZATION • Define the authorized work – Work Breakdown Structure (WBS) • The WBS is a product oriented breakdown of the hardware and software to be provided to the customer/agency by the company/program and its major subcontractors • The WBS forms the basis for planning, scheduling, and assessing progress on contract effort • Define the organization – Organization Breakdown Structure (OBS) • The program organization structure reflects those departments and individuals responsible for the program’s technical, cost and schedule performance • Responsibility must be clearly defined

  7. Work Packages Planning Packages EVM ELEMENTS - ORGANIZATION WBS + OBS = RAM Responsibility Assignment Matrix WBS Program/Project ABC Software Upgrade - B Training - C 123 Module / Upgrade BB 456 Module / Upgrade BC Other Org. Code, Integrate And Test BBA O B S Code Devel’ment BBAA Directorate IA Design Software Arch Design Cost Account Module Interface Design Cost Account Software Eng Integration and Test Cost Account

  8. ESSENTIAL ELEMENTS OF EVM • Origin • Organization • Planning and Budgeting • Accounting • Analysis and Management Reports • Revisions and Data Maintenance

  9. EVM ELEMENTS – PLANNING & BUDGETING • SCHEDULE • Defines what must be done to complete the project on time • Provides a basis for: • Project definition • Communication • Work progress • Forecast for project completion

  10. EVM ELEMENTS - PLANNING & BUDGETING • Develop Schedules Major Milestones Master Schedule W B S Intermediate Milestones Intermediate Schedule W B S Detail Detail Schedule W B S Key milestones are identified and time phased at successively lower levels

  11. EVM ELEMENTS - PLANNING & BUDGETING Total Project Allocated Budget (Authorized + Unauthorized) Authorized / Performance Measurement Baseline (PMB) Unauthorized Cost Accounts Undist’d Budget (UB) CA Budgets Summary Planning Budgets Discrete WPs LOE WPs Appor WPs Pln WPs (Futures)

  12. Develop and Baseline Detailed Project Plan High Level WBS Develop/Baseline Detailed MS-Project Master Schedule Detailed Project Plan Concept of Operations/ And or Statement of Work Detailed BOEs • BOEs and Plans are reviewed internally and • with customer in an iterative process • to drive consensus. • Subjected to PM and EV PMO review prior • to final baseline agreement.

  13. EVM ELEMENTS - PLANNING & BUDGETING BUDGET BASELINE The assignment of budgets to scheduled segments of work produces a time-phased plan against which actual performance can be measured Good planning demands thoroughness and discipline at the outset with continuing discipline required in the maintenance and operation of the plan

  14. EVM ELEMENTS - PLANNING & BUDGETING BUDGET BASELINE • Essential items necessary for proper planning: • Program schedules • CWBS and CWBS Dictionary • Statement of work (ESOW, MESOW, etc.) • Work authorization • If any of the above items are missing or incorrect, • you will have industrial size problems!

  15. EVM ELEMENTS - PLANNING & BUDGETING • TYPE OF WORK • DISCRETE • Has a measurable output or accomplishment which can be scheduled in advance • APPORTIONED EFFORT • Planned and measured in direct proportion to one or more discrete work packages • LEVEL OF EFFORT • Defines a support activity without measurable output • PLANNING PACKAGES • Known work in the future not yet planned in detail

  16. EVM ELEMENTS - PLANNING & BUDGETING • EARNED VALUE METHODOLOGY • DISCRETE is preferred, “IF the effort can be objectively measured”. Types of discrete effort include milestone, standard hour content, units completed, managers assessment, and materials receipt • APPORTIONED is usually preferred for many quality or commodity functions which directly relate the other tasks • LEVEL OF EFFORT (LOE) should be used sparingly, primarily for support-type functions • PLANNING PACKAGES are used for future work that budget has been accounted for, but not fully planned out. This work typically is outside of the current performance periods and guidelines are established to determine when efforts must be converted to one of the other types of cost accounts above

  17. EVM Methodologies • Milestone - Objective, measurable deliverablesestablished (1 or more per • month) for each subtask, and a budget Earned value of the budgeted amount • is claimed only when a milestone is completed estimated for each milestone. • Percentage Complete - The amount of subjectively estimated progress on each • subtask is claimed as a percent of the total task or work package. • Milestone plus Percentage Complete - Combination of Milestone and Percentage • Complete methods (for tasks that lack milestones). Same as milestone method • except the percentage complete is estimated for tasks that lack any milestones. • Percentage Start / Percentage Complete – Percentage values are claimed when • deliverable tasks begin and end. The budget percentage is claimed for every subtask • in the month it starts ant the rest in the month work is completed at • 25/75, 50/50 percentages) • Units Complete - Values that are claimed for each unit completed • Level of Effort (LOE) - No defined deliverables; value claimed equals budget

  18. Determine Proper Tracking Levels • Detailed program plan contains 5th/6th level details • Tracking performed at 2nd/3rd levels

  19. EVM ELEMENTS - PLANNING & BUDGETING • COST ACCOUNT • Summation of work packages and planning packages • Represents the intersection of the lowest level of the organizational breakdown structure (Cost Account Manager) with the WBS • Is the level where cost and schedule variances are analyzed

  20. Cost Account: Functional Responsibility Variance Analysis IPT Cost Account: Multi-functional Responsibility Variance Analysis EVM ELEMENTS – PLANNING & BUDGETING COST ACCOUNT VS IPT COST ACCOUNT

  21. EVM ELEMENTS & PLANNING & BUDGETING • WORK PACKAGE • Subdivision of a cost account used in planning, controlling, and measuring contract cost and schedule performance • Lowest budgeted element where work is to be performed • Describes the work to be accomplished by a specific performing organization (i.e., manufacturing) • Should be reasonably short in duration, however no time limit is imposed as long as the duration and scope is appropriate for effective management • Collection point for earned value and actual costs

  22. EVM PLANNING & BUDGETING ELEMENTS • PLANNING PACKAGE • DEFINITION – Future effort not fully defined or detail scheduled • Sub-Division of a cost account • General scope of work • Assignable to a single organization • May be firm planned incrementally • Firm planning must occur prior to scheduled start of effort: • Goal = 6 months; no later than 1 month • Budget must accompany scope

  23. Establishing the Baseline is an Iterative Process Define The Work 1 Contract Budget Base MR Schedule The Work 2 $ Performance Measurement Baseline Allocate Budgets 3 100 40 60 15 25 Time 30 30

  24. ESSENTIAL ELEMENTS OF EVM • Origin • Organization • Planning and Budgeting • Accounting • Analysis and Management Reports • Revisions and Data Maintenance

  25. EVM ELEMENTS - ACCOUNTING • Direct costs should be charged in a manner consistent with budgets • Network activity numbers are authorized at the lowest level of the WBS and are summed up to successively higher levels to the project level • Timely correction of errors

  26. ESSENTIAL ELEMENTS OF EVM • Origin • Organization • Planning and Budgeting • Accounting • Analysis and Management Reports • Revisions and Data Maintenance

  27. EVM ELEMENTS - REVISIONS • BASELINE CHANGES • Customer/Agency directed changes • Allocation of Undistributed Budget • Replanning • Internal • Single point adjustment • Over Target Baseline (OTB)

  28. EVM ELEMENTS – REVISIONS • BASELINE CHANGES • Are documented by schedule/budget baseline revision (S/BBR) • Reviewed and approved by Cost & Schedule Program Managers and Program Managers • Budget and scope must go together • CCB and BER’s provide audit trail and system discipline

  29. EVM ELEMENTS - REVISIONS • MANAGEMENT RESERVE • Established by Program Manager for contingencies • Overhead rate adjustments • “Unknown unknowns” – unanticipated or unplanned, but within scope of the project • Used for scope changes only (not for performance issues) • Cannot commit more MR than is in MR (No negative MR) • Budgeted MR versus EAC MR

  30. EVM ELEMENTS - REVISIONS • REPLANNING • Internal: • To maintain a baseline which represents work being performed • Maintain integrity of EV data • Limited to future work • Requires approval when it affects a major portion of remaining work scope • Agency / Project EV requirements – customer • Internal EV requirements – EVM PMO Focal Point

  31. EVM ELEMENTS – REVISION • REPLANNING • Single Point Adjustment: • To maintain a baseline which represents work being performed • Maintain integrity of EV data • Changes to open work packages that affect cumulative BCWS or BCWP and/or affect current period BCWS or BCWP • Requires approval • Contractual EV requirements – Customer • Internal EV requirements – EV Focal Point • Selective replans to open work packages not materially affecting performance measurement – Agency or EV Focal Point approval is not required

  32. ESSENTIAL ELEMENTS OF EVM • Origin • Organization • Planning and Budgeting • Accounting • Analysis and Management Reports • Revisions and Data Maintenance

  33. EARNED VALUE TERMS ACWP = Actual cost of work performed (Basically costs extracted from work in process) BCWP = Budgeted cost of work performed (Earned Value) BCWR = Budgeted cost of work remaining BCWS = Budgeted cost of work scheduled (Budget spread to time) BAC = Budget at completion (Total budget for a given task) CPI = Cost performance index CVAR = Cost variance (BCWP-ACWP) EAC = Estimate at completion IEAC = Independent estimate at completion SPI = Schedule performance index SVAR = Schedule variance (BCWP-BCWS) TCPI = To complete performance index

  34. EVM ELEMENTS - ANALYSIS • Monthly Status and Forecast • Status • Estimate to Completion • Variance analysis • Performance metrics • Estimate at completion

  35. EVM ELEMENTS - ANALYSIS • MONTHLY STATUS & FORECAST • Assess progress against the plan • Compare work performed (BCWP) to work scheduled (BCWS) and actual cost of work performed (ACWP) • Evaluate estimate to complete (ETC) • Determine work remaining • Estimate resources and time required to accomplish remaining work • Revise ETC if necessary • Note: EAC changes are documented, then approved by Project Manager • Compare total budget (BAC) to estimate at completion (EAC)

  36. EVM ELEMENTS - ANALYSIS MONTHLY STATUS & FORECAST Variance Analysis BCWSBCWPACWPSVARCVARBACEACVAC 600 700 800 100 (100) 1000 1150 (150) BCWP – BCWS = SVAR BCWP – ACWP = CVAR BAC – EAC = VAC

  37. EVM ELEMENTS - ANALYSIS • VARIANCE ANALYSIS REPORTING • Cause: • Discuss cost and schedule variances separately • Clearly identify problem/s • Emphasize the quantative, not the qualitative • Address significant – not all problems

  38. EVM ELEMENTS - ANALYSIS • VARIANCE ANALYSIS REPORTING • Impact: • Describe specific cost, schedule and technical impacts to project • Address schedule impact (master and detail) • Describe effect on other cost accounts or WBS elements

  39. EVM ELEMENTS - ANALYSIS • VARIANCE ANALYSIS REPORTING • Corrective Action: • Describe specific actions being taken to alleviate or minimize the impact of the problem • Include estimate of “get well” dates if known • If no corrective action is possible, explain why

  40. EVM ELEMENTS - ANALYSIS MONTHLY STATUS & FORECAST Performance Metrics BCWSBCWPACWPSVARCVARBACEACVAC 600 700 800 100 (100) 1000 1150 (150) What is our status, our schedule efficiency, our cost efficiency? Where are we headed? Is the EAC realistic?

  41. CV EV SV BCWS X 100 = CV % X 100 = SV % (100) 700 100 600 X 100 = (14.3%) X 100 = 16.7% EVM ELEMENTS - ANALYSIS Performance Metrics BCWSBCWPACWPSVARCVARBACEACVAC 600 700 800 100 (100) 1000 1150 (150) Schedule Variance (SV) Cost Variance (CV) EV – BCWS = SV 700 – 600 = 100 EV – ACWP = CV 700 – 800 = (100) Schedule Variance % Cost Variance %

  42. VAC BAC (150) 1000 X 100 = VAC X 100 = (15%) EVM ELEMENTS - ANALYSIS Performance Metrics BCWSBCWPACWPSVARCVARBACEACVAC 600 700 800 100 (100) 1000 1150 (150) Percent Complete Percent Spent ACWP EAC 800 1150 ACWP BAC BCWP BAC 700 1000 X 100 = % Complete EAC: X 100 = % Spent X 100 = 69.6 % X 100 = 70% 800 1000 BAC: X 100 = X 100 = 80% Variance at Completion Variance at Completion % BAC – EAC = VAC 1000 – 1150 = (150)

  43. ACWP BCWP 800 700 = CPIp (spend rate) = 1.14 EVM ELEMENTS - ANALYSIS Performance Metrics BCWSBCWPACWPSVARCVARBACEACVAC 600 700 800 100 (100) 1000 1150 (150) Schedule Performance Index Cost Performance Index BCWP BCWS 700 600 BCWP ACWP 700 800 = SPI = CPIe (efficiency) = 1.17 = .875 (Greater than 1.0 is positive schedule/cost performance)

  44. BCWP BCWS 700 600 SPI = = = 1.17 Schedule Performance Index (CPI) Compares the value of the work completed against how much work was planned to be completed SPI > 1 = Ahead of Schedule SPI < 1= Behind Schedule

  45. Cost Performance Index (CPI) Earned Value 700 CPI = = = 0.875 Actual Cost 800 Prior to time now, for every $1.00 I spent, I only accomplished $0.87 worth of work. CPI > 1 = Cost Under-run CPI < 1= Cost Over-Run

  46. EAC: BAC – BCWP EAC – ACWP BCWR ETC 1000 - 700 1150 - 800 EVM ELEMENTS - ANALYSIS Performance Metrics BCWSBCWPACWPSVARCVARBACEACVAC 600 700 800 100 (100) 1000 1150 (150) To complete Performance Index (TCPI) BAC: BAC – BCWP BAC – ACWP BCWR BAC - ACWP 1000 - 700 1000 - 800 = TCPIBAC = TCPIEAC = TCPIEAC = TCPIBAC 300 350 300 200 = = 1.5 = = .86 Measures efficiency required to meet EAC Measures efficiency required to meet BAC

  47. $% SV = 100 16.7 SPI = 1.17 CV = (100) (14.3) CPIe = .875 VAC = (150) (15) CPIp = 1.14 % Complete = 70.0 % Spent EAC = 69.6 % Spent BAC = 80.0 EVM ELEMENTS - ANALYSIS Performance Metrics BCWSBCWPACWPSVARCVARBACEACVAC 600 700 800 100 (100) 1000 1150 (150) TCPIEAC:.86 TCPI BAC:1.50 What is our status: Ahead of schedule, overrunning Where are we headed: Complete early, overrun budget Is the EAC realistic: ?

  48. EVM ELEMENTS - ANALYSIS ESTIMATE AT COMPLETION (EAC) An EAC represents the expected final costs of a cost account, WBS, or program By Formula EAC = ACWP + ETC

  49. EVM ELEMENTS - ANALYSIS • EAC FREQUENCY • Quarterly updates at the work package level • “Grassroots” updates usually twice a year or when directed by the program manager • EAC’s must be justified and approved by the Project Manager

  50. EVM ELEMENTS - ANALYSIS • CONSIDER EVERYTHING YOU KNOW: • Performance to date • Remaining work (complexity) • Contract schedules • Funding constraints

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