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Copyright 1995-2009, Dennis J. Frailey CSE7315 – Software Project Management CSE7315 M29 - Version 9.01 SMU CSE 7315 Planning and Managing a Software Project.

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Presentation on theme: "Copyright 1995-2009, Dennis J. Frailey CSE7315 – Software Project Management CSE7315 M29 - Version 9.01 SMU CSE 7315 Planning and Managing a Software Project."— Presentation transcript:

1 Copyright 1995-2009, Dennis J. Frailey CSE7315 – Software Project Management CSE7315 M29 - Version 9.01 SMU CSE 7315 Planning and Managing a Software Project Module 29 Earned Value

2 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 2 Objective of This Module  To introduce earned value techniques – a powerful tool for tracking and oversight

3 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 3 Some of the Values Typically Known for a Project  The project schedule in days or weeks or months or years –We will denote this as SCHED  The project budget in dollars or labor hours –We will denote this as BAC or BCWS BAC  The current estimate for the final project cost –We will denote this as EAC or BCWS EAC  The amount of money that has actually been spent so far –We will denote this as ACWP or AV

4 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 4 How Accurate Are Estimates Of the Following?  How much time is left before we pass all of the tests? –Is it always “just a little more”?  What percent of the work is complete? –Are you always “90% done”?  How much more money or labor does the project need?

5 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 5 Earned Value is a Way to Measure These Things Information Needed: –Amount of work actually performed –Projections for duration of project Measures: –Earned Value = the value of the total work performed –Performance indices for cost & schedule

6 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 6 Most Projects Keep Track of Plan and Actual Cost and Schedule  Your Plan or Planned Value - how much time or money you expect or estimate you will spend –In Earned Value, this is denoted: BCWS or PV  Your Actual Expenses or Actual Value - how much it has actually cost you –In Earned Value, this is denoted: ACWP or AV But these do not tell you whether the plan is realistic or when you will finish the work

7 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 7 Earned Value Techniques Use These Data  Your Plan or Planned Value - how much you expect or estimate you will spend –BCWS or PV  Your Actual Expenses or Actual Value - how much it has actually cost you –ACWP or AV  Your Earned Value - the value of the work you have performed –BCWP or EV This is the new measure that makes this a powerful technique

8 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 8 Earned Value Terminology  BCWS (Budgeted Cost of Work Scheduled) or PV (Planned Value) –Your plan. How much work should have been done by now, according to the schedule?  ACWP (Actual Cost of Work Performed) or AV (Actual Value) –Actual. How much has been spent?  BCWP (Budgeted Cost of Work Performed) or EV (Earned Value) –Earned. How much should have been spent for the work actually performed?

9 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 9 Units  “Budget” and “work” can be measured in money (example: dollars), effort (example: staff-hours), or other units  Effort is usually the easiest way to measure  But money can be adjusted to include overhead costs and non-labor costs, so it may be a more accurate unit

10 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 10 Each Value Metrics are Computed Several Ways  “CTD” or “current, to date” values indicate what you have spent or earned or planned as of the current date  “BAC” or “budget at completion” values indicate what you have budgeted to complete the entire project  “EAC” or “estimate at completion” values indicate what you estimate you will spend for the entire project

11 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 11 Example  BCWS CTD is the “current, to date” value of the project budget - the amount budgeted to be spent up to the current date.  BCWS BAC is the total project budget. This is sometimes represented as BAC.  ACWP EAC is the “estimate at complete” for the actual cost - your estimate of what you will actually spend. This is sometimes just represented as EAC.

12 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 12 Example, Shown in a Rate Chart BCWS BAC Typically, EAC = BAC when you start ACWP EAC BCWS CTD

13 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 13 Example: Actual Costs Exceed Budget ACWP CTD BCWS CTD BCWS BAC

14 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 14 EAC is Current Estimated Cost BCWS CTD EAC is your current estimate of actual cost ACWP EAC ACWP CTD BCWS BAC

15 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 15 Actual Cost vs. Budget  By plotting actual cost against budget, you can tell how much you are spending compared with your plan  But you cannot tell … … whether you are running ahead or behind schedule … whether the work will actually be done by the time the budget is spent … whether the work will be done by the scheduled completion date

16 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 16 In Other Words … … you could be spending exactly according to budget, yet be running very far behind in actual work completed … you could be spending more than budget, yet be running ahead in actual work completed

17 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 17 Earned Value Answers Those Questions  BCWP or Earned Value tells how much you have earned for the money you have spent  And thus tells you whether you have a problem or not

18 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 18 Questions You Can Answer with Earned Value  Are we getting the work done on schedule?  Are we overspending?  Will we overrun or under run the budget?  What is a realistic end date?  What performance level is required to meet the budget or the deadline?

19 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 19 Earned Value Provides Insight Early in the Project  You can tell if there are problems after completing 5-10% of the work  You have time to make adjustments  You can communicate the problems and their scope using quantitative methods rather than guesswork

20 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 20 Earned Value Measures are a way to Quantify Progress, Predict Future Performance and Manage Project Risk

21 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 21 Top Level View of Earned Value Measure Earned Value $ Spent vs. $ Planned $ Spent vs. thresholds of what should have been spent Budget “Are we overspending?” WBS or Requirements “Are we getting the work done?”

22 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 22 A Simple Way to Determine Earned Value  This method avoids a lot of the jargon and just focuses on the substance  If you understand this method you will find it easier to understand the definitions of earned value metrics found in other places

23 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 23 Develop a Micro Schedule for the Next Part of the Project Top Level Schedule Micro Schedule for the Next Phase Micro Schedule is the locally-managed schedule, defined by those doing the work

24 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 24 What Is a Micro Schedule  A schedule of small tasks or “inch stones” whose duration can be measured in days or a few weeks  This represents the work tasks assigned to individuals  Have the individuals who will do the work develop their micro schedule

25 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 25 Task Characteristics  Defined durations (specific schedules)  Defined values (labor effort required for each task)  Objective criteria for task completion

26 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 26 Earned Value Micro Schedule Basic Task Estimates TaskEffort PlannedComplete DateResp. (days)(week #) Set Up31Joe Get Specs22Mary Design Output105Pete & Joe Plan Tests36Joe Code57Mary Unit Test38Joe Integrate29Mary Beta Test310Pete Total31

27 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 27 CMMI Maturity Level and Micro Schedule  At level 1 or 2 –Micro schedule is typically developed by individuals, with little organizational knowledge  At level 3 –Organizational process is often a major factor in defining the schedule  At level 4 or higher –Organizational process and past performance data are typically major factors

28 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 28 Convert Micro Schedule to a Running Total of Effort Planned WeekTotal Effort Planned to be Complete 13 25 35 (*) 45 (*) 515 618 723 826 928 1031 (*) Does not allow partial credit for progress on “design output” task

29 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 29 The Total Planned Effort is the Budgeted Cost of Work Scheduled WeekTotal Effort Planned to be Complete 13 25 35 45 515 618 723 826 928 1031 BCWS

30 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 30 WeekTotal Effort Planned to be Complete 13 25 35 45 515 618 723 826 928 1031 BAC is Ending Value of Budgeted Cost of Work Scheduled BCWS BCWS BAC

31 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 31 WeekTotal Effort Planned to be Complete 13 25 35 45 515 618 723 826 928 1031 CTD Value of Budgeted Cost of Work Scheduled Corresponds to Where We Are Today BCWS BCWS BAC BCWS CTD

32 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 32 Earned Value Plan Graph (BCWS) BCWS

33 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 33 What About Partial Credit?  The whole point of having “inchstones” is to define the work in small enough chunks so that there is no partial credit. –This avoids judgment about what portion of the work task is complete  But as seen from the previous graph, it can understate the amount of work that has actually been performed

34 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 34 Solutions to the Understating Problem  Break every task into small pieces so you can take credit for completing parts of the task (next several slides)  Allow partial credit for larger tasks –But ONLY in LARGE portions, such as:  25%, 50%, 75% or 100%  33%, 67%, or 100% (see Appendix A) Even with these techniques, earned value does tend to slightly underestimate the actual work performed.

35 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 35 Revisiting with More Uniform Inchstones (Basic Task Estimates) TaskEffort PlannedComplete DateResp. (person-days)(week #) Set Up31Joe Get Specs22Mary Design Output 1 23Pete & Joe Design Output 2 44“ Design Output 3 45“ Plan Tests36Joe Code57Mary Unit Test38Joe Integrate29Mary Beta Test310Pete Total31

36 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 36 Convert to Running Total of Effort Planned WeekTotal Effort Planned to be Complete 13 25 37 411 515 618 723 826 928 1031

37 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 37 The Total Planned Effort is the Budgeted Cost of Work Scheduled WeekTotal Effort Planned to be Complete 13 25 37 411 515 618 723 826 928 1031 BCWS

38 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 38 WeekTotal Effort Planned to be Complete 13 25 37 411 515 618 723 826 928 1031 BAC is Ending Value of Budgeted Cost of Work Scheduled BCWS BCWS BAC

39 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 39 WeekTotal Effort Planned to be Complete 13 25 37 411 515 618 723 826 928 1031 CTD Value of Budgeted Cost of Work Scheduled Corresponds to Where We Are Today BCWS BCWS BAC BCWS CTD

40 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 40 Earned Value Plan Graph (BCWS) BCWS

41 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 41 Shortcut Version of Earned Value Plan Graph (BCWS) Some systems estimate BCWS by drawing a straight line from 0 at start to total project budget at end. BCWS

42 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 42 Budget  Your actual budget should match this plan  If the actual budget does not match, you can negotiate what to do before beginning the work –Reduce plan to match available budget –Increase budget to match plan –Somewhere in between –Renegotiate plan with developers –Track twice - against budget and against plan

43 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 43 TaskEffort (days)% CompleteEarned Set Up31003 Get Specs2501 Design Output10252.5 Plan Tests300 Code500 Unit Test300 Integrate200 Beta Test300 Total316.5 BCWP CTD Earned Value Data for a Given Week

44 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 44 Earned Value Procedure  Each week you compute a new “% complete” value for each task –Perhaps allow only 0 or 100% –Or perhaps allow 50% or 33% or 25%, but you should avoid smaller increments  Then compute the total work performed so far  Plot the total each week in the plan graph, representing an “earned” line

45 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 45 Earned Value Typical Graph BCWPBCWS

46 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 46 Earned Value Applications  You can spot deviations from plan and project completion dates  You can also plan overtime or other contingency activities  You can show your management that you know where you are and are not suffering from the “always 90% done” syndrome

47 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 47 Earned Value Advantages  By using only small tasks, it is easier to tell what is actually complete  Developers can use the data to manage their work - it is their plan –The data gives them insight on what they are accomplishing  The detailed work sequence does not matter. All completed work is “earned” –Developers can make the right decisions about work sequencing

48 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 48 ACWP vs BCWP  ACWP (Actual Cost of Work Performed) is what you have actually spent  Whereas BCWP (Budgeted Cost of Work Performed) is what you have “earned” or accomplished BCWP = Work Completed (earned value) ACWP = Money Spent (or effort spent)

49 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 49 Typical Graph Showing Work Behind but On Budget

50 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 50 Typical Graph Showing Work Behind but On Budget BCWS (plan)

51 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 51 Typical Graph Showing Work Behind but On Budget BCWS (plan) BCWP (earned)

52 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 52 Typical Graph Showing Work Behind but On Budget BCWS (plan) ACWP (spent) BCWP (earned)

53 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 53 Typical Graph Showing Work Behind but On Budget This project is probably understaffed.

54 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 54 You Can Be “On Budget” But Behind in Your Work This project is not as productive as planned. ACWP

55 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 55 This Project is Over Budget but Behind in Work This project has big trouble. ACWP

56 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 56 Summary of Module  Earned Value helps you understand more than you can learn by tracking expenses vs budget  You can tell how much you have actually performed  You can tell this early in the project, so you have time to take action, if needed

57 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 57 References  Bent, James A (1982). Applied Cost and Schedule Control. New York, NY: Marcel Dekker, Inc.  Brandon, Daniel M. (1998, June ) "Implementing Earned Value Easily and Effectively." Project Management Journal. Vol 29. Number 2.  Christensen, David S. Comprehensive Bibliography of Earned Value Literature. http://www.suu.edu/faculty/christensend/e v-bib.html

58 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 58 END OF MODULE 29

59 Copyright 1995-2009, Dennis J. Frailey CSE7315 – Software Project Management CSE7315 M29 - Version 9.01 Appendix Revisiting Earned Value with Partial Credit

60 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 60 Revisiting with Partial Credit Basic Task Estimates TaskEffort PlannedComplete DateResp. (person-days)(week #) Set Up31Joe Get Specs22Mary Design Output105Pete & Joe Plan Tests36Joe Code57Mary Unit Test38Joe Integrate29Mary Beta Test310Pete Total31

61 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 61 Convert Micro Schedule to a Running Total of Effort Planned WeekTotal Effort Planned to be Complete 13 25 37 (*) 411 (*) 515 618 723 826 928 1031 (*) Assumes partial progress on “design output” task

62 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 62 The Total Planned Effort is the Budgeted Cost of Work Scheduled WeekTotal Effort Planned to be Complete 13 25 37 411 515 618 723 826 928 1031 BCWS

63 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 63 WeekTotal Effort Planned to be Complete 13 25 37 411 515 618 723 826 928 1031 BAC is Ending Value of Budgeted Cost of Work Scheduled BCWS BCWS BAC

64 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 64 WeekTotal Effort Planned to be Complete 13 25 37 411 515 618 723 826 928 1031 CTD Value of Budgeted Cost of Work Scheduled Corresponds to Where We Are Today BCWS BCWS BAC BCWS CTD

65 Copyright 1995-2009, Dennis J. Frailey CSE7315- Software Project Management CSE7315 M29 - Version 9.01 65 Earned Value Plan Graph (BCWS) BCWS

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