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Apply Earned Value Management Principles to Case Study Scenario: Completing the Great Pyramid © Dale R. Geiger 20111
If Only the Pharaoh Had the Corps of Engineers © Dale R. Geiger 20112
Terminal Learning Objective Task: Apply Earned Value Management Principles to Case Study Scenario Condition: You are training to become an ACE with access to ICAM course handouts, readings, and spreadsheet tools and awareness of Operational Environment (OE)/Contemporary Operational Environment (COE) variables and actors. Standard: with at least 80% accuracy Identify key variables from case study data Calculate BAC, schedule and cost variances, and EAC © Dale R. Geiger 20113
Building the Great Pyramid Case A: The Air Force Approach Read the paper If the Pharaoh Had Only Used an Earned Value System in Building the Pyramids By LTC Neimann (USAF Ret) found at https://acc.dau.mil/CommunityBrowser.aspx?id=19572 https://acc.dau.mil/CommunityBrowser.aspx?id=19572 Using the tools learned: Build and verify the BAC presented in the paper Determine schedule variance at Year 12 Determine the cost variance at Year 12 Calculate EAC at Year 12 © Dale R. Geiger 20114
Budget at Completion: BAC YearDesignMfg Comp Test Assemble Intg Test TotalCum © Dale R. Geiger BAC (Note: your chart may look a little different as there is some ambiguity about start/end dates)
Schedule and Cost Variances: Design at Year 12 © Dale R. Geiger BCWS Schedule Variance BCWP Cost Variance ACWP Design111 Cost per Unit Design444 Cost for Design4--4 4
Schedule and Cost Variances: Manufacture at Year 12 © Dale R. Geiger BCWS Schedule Variance BCWP Cost Variance ACWP Blocks Cost per Block Cost for Manufacture6(2)4 6
Schedule and Cost Variances: Component Test at Year 12 © Dale R. Geiger BCWS Schedule Variance BCWP Cost Variance ACWP Component Test100%50% Cost per Component Test446 Cost for Component Test4(2)2(1)3
Year 12 Results We are now behind schedule and over cost: terrible!! ACWP is 130% of BCWP so EAC can be projected at 130% of BAC: (1.30)20M = 26M © Dale R. Geiger BCWS Schedule Variance BCWP Cost Variance ACWP Cost for Design Cost for Manufacture6(2)4 6 Cost for Component Test4(2)2(1)3 Cost at end of Year 1214(4)10(3)13
Building the Great Pyramid Case B: Corps of Engineers The Pharaoh was quite displeased with the Air Force Pyramid Building Projects AAR results LTC Neimann was re-assigned to flying carpets and moved to a lovely tent in the Sinai where he soon retired The Pharaoh turned to the Corps of Engineers He asked for project proposals to complete the Great Pyramid within four years Army-ized The Corps of Engineers tasked six teams to make proposals to complete an enhanced, Army-ized pyramid © Dale R. Geiger
The U.S. Army Corps of Engineers Is the Nations number one federal provider of outdoor recreation Owns and operates more than 600 dams Operates and maintains 12,000 miles of commercial inland navigation channels Dredges more than 200 million cubic yards of construction and maintenance dredge material annually Maintains 926 coastal, Great Lakes and inland harbors Restores, creates, enhances or preserves tens of thousands of acres of wetlands annually under the Corps Regulatory Program Provides a total water supply storage capacity of million acre-feet in major Corps lakes Owns and operates 24 percent of the U.S. hydropower capacity or 3 percent of the total U.S. electric capacity Manages an Army military construction program between 2006 and 2013 totaling approximately $44.6 billion betweenthe largest construction effort since World War II © Dale R. Geiger
Team Design Options: Pick Two from Left and Three from Right Take advantage of Corps Core Competencies Add a dam and lake to provide recreational venue for tourists and pilgrims Divert the Nile River to ease transportation to site Build levees around pyramid to eliminate any flooding threat Build barracks facilities for workers and guests Up to one more of your choice Army-ize the project in the interests of National Defense Camouflage the pyramid Add armor Build system of mutually supporting archer nests Build roads for rapid reaction chariot forces Up to two others of your choice © Dale R. Geiger
Task 1: Build Your BAC Build your work breakdown structure given your choices from the previous page Assume each task takes two years Dont ignore need for more blocks and the assembly task You should have seven tasks (blocks, assembly, two corps core competency, and three Army-ize) Estimate cost for each task for years 1, 2, 3, 4 (in year 3000 BC shekels) Present your design, work schedule and graph of BCWS to the class Make sure you dont exceed the $13M the Air Force had estimated for added cost to completion © Dale R. Geiger
Budgeted Cost of Work Scheduled: Fill in the Blanks BlockAssemblyCorps 1Corps 2Army 1Army 2Army 3TotalCum Year 1 Year 2 Year 3 Year 4 Total © Dale R. Geiger
Graph of Pyramid Completion Project © Dale R. Geiger $000
Team Proposal Presentations © Dale R. Geiger
Task 2: AAR for the Pharaoh Generate actual cost and schedule per following pages instructions Present to class Cost and schedule variances for each year until completion (4+ slides) BAC and EAC for the first year (1 slide) Graph of BCWS, BCWP, ACWP (1 slide) A reconciliation of your variance results at completion (1 slide) Suggestions for continuous improvement (1 slide) A view of what your finished pyramid looks like (1 slide) © Dale R. Geiger
Task 2: Developing Actual Cost and Schedule Use the randbetween formula in Excel to generate a random number between 1 and 10 for each task: =RANDBETWEEN(1,10) Follow the instructions on the next page to find what happened to the actual cost and schedule for that task Determine the actual results of the project year by year © Dale R. Geiger
Task 2: Reality Hits 1Freak rain storms wash out a years progress: add year at same cost 2Assyrians attack but are easily defeated: however, add 20% to task cost 3Engineering error: task takes a third year at same average cost per year 4Outsourcing accelerates progress, raises 1 st year cost 50% but completes task 5Slaves rebel: add 50% to task cost 6Conquests add slaves to workforce: cut task cost 30% & finish one year early 7Dust storms disrupt work: add 20% to task cost 8Hidden Air Force funds discovered: reduce task cost 50% 9LSS improves process: eliminate 2 nd year and its cost 10Finance Corps ACES assigned to project: reduce cost of all tasks 10% © Dale R. Geiger
Team AAR Presentations © Dale R. Geiger
Teachers Notes: Example © Dale R. Geiger totalcum block assemble divert nile dam and lake camo armor roads total bcws BAC BCWS Selected tasks Budget for tasks
Teachers Notes: Actual Costs © Dale R. Geiger random # impact1234Totalcum 41st +50% no 2ndblock % more costassemble % less all tasksdivert nile add yr at same costdam and lake % more costcamo % less costarmor % less costroads total
Teachers Notes: Example 1 st Year Results © Dale R. Geiger bcws schedule variancebcwp cost varianceacwp units completed blockcost per unit332 cost at point in time units completed0.5 assblycost per unit cost at point in time5000 (40)540 year 1 total acwp/bcwp81% bac13000 eac10530
Teachers Notes: 2 nd Year Results © Dale R. Geiger schedulecost bcwsvariancebcwpvarianceacwp units completed blockcost per unit330 cost at point in time500(500)000 units completed0.5 assblycost per unit cost at point in time5000 (40)540 units completed0.5 nilecost per unit cost at point in time units completed lakecost per unit cost at point in time2000(667)1333(467)1800 units completed0.5 roadcost per unit cost at point in time year 2 total4500(1167)3333(132)3465 after 2 years5500(667)
© Dale R. Geiger Teachers Notes: 3 rd Year Results schedulecost bcwsvariancebcwpvarianceacwp units completed0.5 nilecost per unit cost at point in time units completed lakecost per unit cost at point in time1000(333)667(233)900 units completed0.67 camocost per unit cost at point in time20000 (160)2160 units completed0.50 armorcost per unit cost at point in time units completed0.5 roadcost per unit cost at point in time year 3 total5500(333) after 3 years11000(1000)
Teachers Notes: 4 th Year Results © Dale R. Geiger schedulecost bcwsvariancebcwpvarianceacwp units completed lakecost per unit0000/ cost at point in time00/ 1000 (1350)/ (350)1350 units completed0.33 camocost per unit cost at point in time10000 (80)1080 units completed0.50 armorcost per unit cost at point in time year 4 total20000/ / 3000 (880)/ after 4 years
Graphing the Pyramid Project © Dale R. Geiger ACWP BCWS BCWP
Graphing the Pyramid Project © Dale R. Geiger ACWP BCWS BCWP
Teachers Notes: Reconciliation © Dale R. Geiger Budgeted at Completion13000 Actual Cost at Completion12195 Cost Variance 805 Reconciliation: Army audit agency discovered hidden Air Force funds1500 Added ACES to project1300 Block outsourcing continuous improvement250 Engineering error on dam task(1500) Disruption from Assyrian attacks(800) Miscellaneous rounding effects55 Total Explained805
Teachers Notes: Continuous Improvement Suggestions © Dale R. Geiger Get more ACES and involve them more Check Engineering designs before they create major cost overruns Double check Engineering designs Look for more outsourcing opportunities
Camouflaged Pyramid on Lake: Excellent Camouflage, Isnt It?! © Dale R. Geiger
Verify Unit of Measure in a Multivariate Equation ©
Project Sales or Production Levels Using the Rolling Average ©
Course Introduction © Dale R. Geiger Even Super Powers Can Lose a Cost War Kamchatka Peninsula, Russia Aral Sea, Kazakhstan Soviet military installation.
Calculate Cost of Goods Sold and Ending Overhead Balance © Dale R. Geiger
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