Implementing EV in IT A Three Step Approach John Chapman Touchstone Ltd john.chapman@touchstone.co.uk

EV in IT Implementing Earned Value Management requires a change of working practice. Not only do Project managers need educating in EV but Project accounting has to be setup to track the financial values Project delivery methods have to take into account how to ‘Earn the Value’ i.e. how do we evidence that we have completed the deliverable by type of work Tools implemented to track items such as Schedule Variance against baseline plan

A way of approaching Instead of trying to achieve all these at once a proposal is to split this into three levels representing three levels of maturity Level 01: Focus on the financial values Level 02 : Implement changes to the delivery method so the BCWP can be calculated (i.e. how are you going to earn the value by the type of work) Level 03: Track schedule variance, SPI, TCPI and so forth

Level 01: The Financials Work out how you are going to calculate 8 elements: ACWP BAC CV CWBS (do your PMs produce a WBS?) EAC ETC PMB

Level 01: Planning From a planning perspective you need: Planned time (for each WBS element) Actual time (by WBS) Remaining effort (so you can calculate ETC) Baseline (to calculate the spend over a period of time) Planning package (so you know what to do when) Work Package (to get individuals to do their work)

Level 01: Planning From a planning perspective you need: Planned time (for each WBS element) Actual time (by WBS) Remaining effort (so you can calculate ETC) Baseline (to calculate the spend over a period of time) Planning package (so you know what to do when) Work Package (to get individuals to do their work)

Level 02: Earning the value This takes more work as for each activity you need to define how you are going to ‘Earn the value’ Is it going to be 50 – 50 Budget Milestone 100 – 0 etc

Level 02: Earning the value For example on an IT Project Training is 0-100 : either you are trained or not trained! Design could be by budgeted milestone 25% on completion of a design workshop 50% on issuing a design document 25% on design signoff

Level 02: The financials There are 6 elements to this: BCWP (Earned) BCWS (Planned) Cost Variance % CPI Management Reserve Undistributed budget

Level 02: Planning From a planning perspective you need: Duration Variance % Complete how are you going to identify the physical % complete? What skills do your team need to say whether they are 50% or 60% complete? How will this be proved?

Level 03: The financials At level 03 we are calculating values compared to time and productivity SV SV % SPI TCPI

Level 03: The financials The TCPI ‘provides a projection of the anticipated performance required to achieve either the BAC or the EAC’1 The TCPI might tells us what we need to do – but how are we going to achieve improvements in Productivity? 1. http://en.wikipedia.org/wiki/Earned_value_management

Summary Level 01: is about calculating the financial values Level 02: is about confirming the method of ‘earning the value’ Level 03: is about understanding the schedule and changes to the schedule