1. Management & Development of Complex Projects Course Code - 706 MS Project Management Earned Value Concepts Lecture # 19

2. In previous Lecture, we have discussed about  Activity resource estimation  Activity duration estimation  CPM  PERT Summary of Previous Lecture

3. Feedback / Monitoring Feedback is critical to the success of any project. Timely and targeted feedback can enable project managers to identify problems early and make adjustments that can keep a project on time and on budget.

4. Project Monitoring Provides an “Early Warning” signal for prompt corrective action.  Bad news does not age well.  Still time to recover  Timely request for additional funds

5. Project Control Project control focuses mostly on monitoring and reporting the execution of project management plans related to scope, schedule, and cost, along with quality and risk. Hence, project control is a process for keeping work performance and results within a tolerable range of the work plan. 1.0 1.1 1.2 0.9 0.8 Lower Control Limit Upper Control Limit

6. Earned Value Management Earned Value Management (EVM) is a project performance measurement technique that integrates scope, time, and cost data.

7. Earned Value Management Earned Value Management (EVM) has proven itself to be one of the most effective performance measurement and feedback tools for managing projects. EVM has been called ‘‘management with the lights on’’ because it can help clearly and objectively illuminate where a project is and where it is going—as compared to where it was supposed to be and where it was supposed to be going.

8. Earned Value Management Concept

9. Steps in EVM – Prepare WBS First step in EVMS is to develop a WBS Project work needs to be broken down using a work breakdown structure into executable tasks and manageable elements often called control accounts

10. Steps in EVM – Integration of WBS & OBS Then, All of the work needs to be assigned to the workforce for execution using an organization breakdown structure (OBS) Control Account Matrix

11. Steps in EVM – Establishment of Work Plan Work Plan is developed with time and Cost for activities

12. Steps in EVM – Establishment of PMB EVM requires the establishment of a performance measurement baseline (PMB) Project work needs to be logically scheduled and resourced in a work plan; the work scope, schedule, and cost need to be integrated and recorded in a time-phased budget known as a performance measurement baseline (PMB)

13. Steps in EVM – Establishment of PMB

14. Earned Value Management: Summarizing the Steps The key practices of EVM include:  Establish a performance measurement baseline (PMB) Decompose work scope to a manageable level Assign unambiguous management responsibility Develop a time-phased budget for each work task Select EV measurement techniques for all tasks Maintain integrity of PMB throughout the project  Measure and analyze performance against the baseline Record resource usage during project execution Objectively measure the physical work progress Credit EV according to EV techniques Analyze and forecast cost/schedule performance Report performance problems and/or take action

15. Earned Value Management: Basic Elements There are three basic elements of Earned Value Management System (EVMS) / Earned Value Analysis (EVA)  Planned Value  Earned Value  Actual Cost

16. Earned Value Management: Basic Elements Planned Value (PV) describes how far along project work is supposed to be at any given point in the project schedule. Also known as the Budgeted Cost of Work Scheduled (BCWS), Planned Value is the “ Planned cost of the total amount of work scheduled to be performed by the specific point in time or by some milestone date”. It is a numeric reflection of the budgeted work that is scheduled to be performed, and it is the established baseline (also known as the performance measurement baseline, or PMB) against which the actual progress of the project is measured

17. Earned Value Management: Basic Elements Planned Value (PV)

18. Earned Value Management: Basic Elements Earned Value (EV) is a snapshot of work progress at a given point in time. Also known as the Budgeted Cost of Work Performed (BCWP), it reflects the amount of work that has actually been accomplished to date (or in a given time period), expressed as the planned value for that work. Hence Earned Value is “the planned (not actual) cost to complete the work that has been done”

19. Earned Value Management: Basic Elements Earned Value (EV)

20. Earned Value Management: Basic Elements Actual Cost (AC), also known as the Actual Cost of Work Performed (ACWP), is an indication of the level of resources that have been expended to achieve the actual work performed to date (or in a given time period). Hence Actual Cost is “cost incurred to accomplish the work that has been done to date”

21. Earned Value Management: Basic Elements Actual Cost (AC)

22. In this Lecture, we have discussed about  Earned Value Management  EVM & WBS  OBS & WBS  PMB  EV, PV, AC Summary of This Lecture

23. End Note Those who cannot remember the past are condemned to repeat it

24. THANK YOU!