Project Performance Analysis

Earned Value Project Management Khalid Ahmad Khan, PE, PMP

Head of PMU Planning & Development Department Government of Punjab Lahore, Pakistan

Agenda
Understand basic concepts How to evaluate performance How to manage using Earned Value Questions

Questions to be Answered
PAST PRESENT FUTURE

How much work has been completed? How much work has been completed? How much should have been completed? How much should have been completed? How much has been spent? How much has been spent? How much should have been spent? How much should have been spent?

When will we finish? When will we finish? What will it cost at the end? What will it cost at the end? How can we control the trend? How can we control the trend?

We analyze the past performanceto help us control the future

Performance Assessment
Fund based analysis

Time based analysis

Earned Value analysis

Fund Base Analysis

Given Budget Cost Duration of the Project Funds used Assume Cost efficiency is 100%
No change in Unit Rates or Quantities

Uniform Cash Flow Rs. 1200m in 12 months is 100m/month

Calculate % Completion = (Funds used) / (Budget Cost) Weakness Late detection of Budget or Time Overruns

Limitations of Financial Monitoring

Assumes all money spent is used with 100% efficiency

Works fine only if the project is on-track Ignores Scope & Time
Physical Progress vs. Financial Progress

Budget

100.00

Utilized

70.00 Budget Utilized Physical-1 Physical-2 Physical-3 70.00

Physical-1

50.00

Physical-2

Physical-3 20.00 40.00 60.00

80.00 80.00 100.00 120.00

Spending is not uniform

x 1000 x 100000

18

Spending
16

Cumulative Spending

14

12

14

10 12

10

6 4

2 2

JUL

AUG

SEP

OCT 1999

NOV

DEC

JAN

FEB

MAR

APR

MAY
Detail scale (left):

JUN 2000
X 1000

JUL

AUG

SEP

OCT

NOV

Resource/Cost Profile Legend Total of All Resources Peak early cost per Week (Current Estimate) Current estimate curve Earned value curve Scheduled budget curve Cumulative scale (right): X 100000

Time Based Analysis

Given
Activity Sequence (Network) Activity Schedule (Gantt Chart)

Assume
Effort uniformly distributed over time

Calculate
% Completion = (Days used) / (Total duration)

Weakness
Late detection of Budget and Time Overruns

Level of effort in not uniform

Activity ID Activity Description Orig Dur Rem Dur % Early Start Early Finish AREA Budgeted Cost 2003 17 MAR 24 APR 31 7 14 21 28 5 12 MAY 19 26

Project 1
1000 1010 1020 1030 1040 1050 Project Start Activity A Activity B Activity C Activity D Project Finish 0 5 8 2 3 0 0 5 8 2 3 0 0 24MAR03 0 24MAR03 0 29MAR03 0 29MAR03 0 06APR03 0 28MAR03 05APR03 30MAR03 08APR03 08APR03 P1 P1 P1 P1 P1 P1 0.00 0.00 0.00 0.00 0.00 0.00 Project Start Activity A Activity B Activity C Activity D Project Finish

Project 2
2000 2010 2020 2030 2040 2050 Project Start Activity A Activity B Activity C Activity D Project Finish 0 5 8 2 3 0 0 5 8 2 3 0 0 24MAR03 0 24MAR03 0 29MAR03 0 29MAR03 0 06APR03 0 28MAR03 05APR03 30MAR03 08APR03 08APR03 P2 P2 P2 P2 P2 P2 0.00 0.00 0.00 0.00 0.00 0.00
x 10 Nos

Less activities more work

Project Start Activity A Activity B Activity C Activity D Project Finish

x 10

11

80

10 70

9 60 8

50

6 40 5

30

3 20

2 10
Resource/Cost Profile Legend WORK Total early usage per Day (Current Estimate) Current estimate curve Earned value curve Planned value curve
Start Date Finish Date Data Date Run Date 24MAR03 08APR03 24MAR03 24MAR03 20:02 Early Bar Float Bar Progress Bar Critical Activity EVPM

1
X 10Nos

Detail scale (left):

Cumulative scale (right): X 10Nos

17

24 MAR

31

14 APR

21 2003

28

12 MAY

19

26

Sheet 1 of 1

Expert Systems (Pvt) Ltd Earned Value Presentatin Examples Classic Schedule Layout

Date

Revision

Checked

Approved

Primavera Systems, Inc.

Example: 1 day match

Scenario I: Score 230/3 Target 240 Scenario II: 3 wickets down 44 overs Scenario III: 230/3 in 44 overs Target 240

What is EVMS?
EVMS is the primary project
management tool... that integrates the scope, schedule, and cost parameters of the contract.
COST
SCHEDULE

Scope

What do we measure progress against?

Performance measurement baseline
budget that is spread over . . . time, to accomplish the scope of work and against which progress can be measured

Earned Value concept

how much progress did I make against my original plan?

FIVE BASIC PERFORMANCE DATA QUESTIONS & ANSWERS

QUESTION What was the total job supposed to cost? How much work should be done? How much work is done? ANSWER Budget at Completion ACRONYM BAC

Budgeted Cost for Work Scheduled Budgeted Cost for Work Performed Actual Cost of Work Performed

BCWS

BCWP

How much did the is done work cost?

ACWP

What do we now expect the total job to cost?

Estimate at Completion

EAC

The Project

Its my pleasure to award you this contract for a new BHU

hmm...7,500 sft construction, 8 months to do it all....37.2 lakhs budget....This is going to be tough!

Budget Cost for Work Scheduled (BCWS)

BCWS for April Rs 3.16 lakhs

Earthworks in April should cost 3.16 lakhs

Budget at Completion (BAC)

BAC= 37.2 lakhs BAC= 37.2 lakhs

..If I add up all the individual BCWS I get the BAC37.2 lakhs..

At the end...
At the end of the contract, when all work has been completed:
Ive earned all of my budget (Rs. 37.2 lakhs)
BCWP (cumulative) =

Rs. 37.2 lakhs

BCWS (cumulative) =

Rs. 37.2 lakhs

Program Schedule System No. 1000
Prior Schedule

Subsystem Fiscal year 1985

therefore, schedule variance (Rs) = 0

Automated Equipment Fiscal year 1986

Type Program FY 1987 F M A M J J A S 1 FY 1988 2 3

As of June 1986 FY 1989 4 1 2 3 Compl date 4 1 2

L i n e

Program milestones Program direction Facility Modification

Mo Yr

O N

D J

M A M

O N D

1 2 3 4

Sys Integ Cintract award ADPE Instal & checkout Medical equip automatic checkout/test Equip Integration Software development Developmental testing System testing Facility mod (opnl site) ADPE Instal & checkout (opnl site) Med equip Installation Prototype test/evaluation Initial operational test and evaluation Engineering development

Formal schedule will reflect whether milestones were achieved on time

5 6 7 8 9 10 11 12 13 14 15

Now

Control Phase
So, your project has been base lined and work has started Is everything going according to plan? Next step in the process:
figure out your status figure out the problems figure out what you need to do to fix them figure out what the impact might be

Measuring Progress Be Discrete!

Discrete EV Techniques:
Method 0/100 50/50 Units Completed Equivalent Units Weighted Milestone How Value is Earned no EV at opening, 100% EV at close of WP 50% EV at opening, 50% EV at close of WP same budget value for identical units planned unit standards, allows partial credit each milestone weighted based on planned resources ideal to have a milestone each month subjective (least desirable)

Percent Complete

Budgeted Cost of Work Performed (BCWP)

the EARNED

VALUE concept

Were at the end of the third month, we have completed earthworks, foundationstructure is in process.

You earn value the same way You earn value the same way as it was budgeted in baseline as it was budgeted in baseline

Status at Month 3

BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs

Activity ID

Activity Description

Orig Dur

Budget (BAC)

Planned (BCWS)

Earned (BCWP)

Actual (ACWP)

Months 5

Rural Health Clinic

Total 210 3,722,000.00 1,982,800.00 1,450,000.00 1,640,000.00

General
Subtotal 1000 1110 Project Start Project Complete 210 0 0 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Project Start Project Complete

Foundation
Subtotal 1010 1020 Earthworks Foundation upto Plinth 54 18 24 850,000.00 50,000.00 800,000.00 850,000.00 50,000.00 800,000.00 850,000.00 50,000.00 800,000.00 950,000.00 60,000.00 890,000.00 Earthworks Foundation upto Plinth

Structure Work
Subtotal 1030 1040 Super-structure Block Masonry 51 50 15 1,536,000.00 1,440,000.00 96,000.00 1,132,800.00 1,036,800.00 96,000.00 600,000.00 504,000.00 96,000.00 690,000.00 584,000.00 106,000.00 Block Masonry Super-structure

Finishes
Subtotal 1050 1100 1090 1070 1060 1080 Plaster Plumbing Electrical Works Flooring Paint Wood Work 105 40 15 25 45 40 20 1,336,000.00 192,000.00 100,000.00 200,000.00 300,000.00 144,000.00 400,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
x 100000

Plaster Plumbing Electrical Works Flooring Paint Wood Work

x 100000

EAC

10

40

ACWP

BCWS BAC

36

32

28

24

20

16

BCWP

12

2
Resource/Cost Profile Legend Total of All Resources Total early cost per Month (Current Estimate) Current estimate curve Earned value curve Planned value curve Detail scale (left): X 100000 Cumulative scale (right): X 100000

5 Months

10

Sheet 1 of 1

Schedule Variance
BUDGET BASED

BC WS BC WP

Value of work that was planned to be completed Value of work that has been completed

BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs

SCHEDULE VARIANCE is the difference between work scheduled SCHEDULE VARIANCE is the difference between work scheduled and work performed (expressed in terms of budget dollars) and work performed (expressed in terms of budget dollars)

formula: formula:
example: example:

SV = BCWP --BCWS SV = BCWP BCWS

SV = BCWP --BCWS = 14.50 19.82 SV = BCWP BCWS = 14.50 19.82 SV= -5.32 (negative = behind schedule) SV= -5.32 (negative = behind schedule)

Schedule Performance Index

BUDGET BASED

BC WS BC WP

Value of work that was planned to be completed Value of work that has been completed

BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs

SCHEDULE Performance Index is the ratio between work SCHEDULE Performance Index is the ratio between work scheduled and work performed (expressed in terms of budget) scheduled and work performed (expressed in terms of budget)

formula: formula:
example: example:

SPI = BCWP //BCWS SPI = BCWP BCWS

SPI = BCWP / /BCWS = 14.5 / /19.82 SPI = BCWP BCWS = 14.5 19.82 SPI= 0.73 (only 27% of behind schedule) SPI= 0.73 (only 27% of behind schedule)

EV Analysis

BAC Data Date

Current COST Target

SV

AC

SPI (Schedule Performance) SPI (Schedule Performance) EV / /PV [1.0=On schedule] EV PV [1.0=On schedule] EV TIME

Cost Variance
PERFORMANCE BASED

BC WP AC WP

of the work I actually performed, how much did I budget for it to cost? of the work I actually performed, how much did it actually cost?
BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs

COST VARIANCE is the difference between budgeted cost COST VARIANCE is the difference between budgeted cost
and actual cost and actual cost

formula: formula:
example: example:

CV = BCWP --ACWP CV = BCWP ACWP

CV = BCWP --ACWP = 14.5 16.4 CV = BCWP ACWP = 14.5 16.4 CV= -1.9 (negative = cost overrun) CV= -1.9 (negative = cost overrun)

Cost Performance Index

PERFORMANCE BASED

BC WP AC WP

of the work I actually performed, how much did I budget for it to cost? of the work I actually performed, how much did it actually cost?
BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs

COST VARIANCE is the ratio between earned value COST VARIANCE is the ratio between earned value
and actual cost and actual cost

formula: formula:
example: example:

CPI = BCWP //ACWP CPI = BCWP ACWP

CPI = BCWP / /ACWP = 14.5 / /16.4 CPI = BCWP ACWP = 14.5 16.4 CPI= 0.88 CPI= 0.88 (we are overshooting budget by 12%) (we are overshooting budget by 12%)

EV Analysis
CPI (Cost Performance) CPI (Cost Performance) EV / /AC [1.0=On budget] EV AC [1.0=On budget]

BAC Data Date

COST

Target

CV AC

EV TIME

Budget Status
budget status budget status
% spent = ACWP = 16.4/37.2 = 44% % spent = ACWP = 16.4/37.2 = 44% BAC BAC

BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs

compare: compare: % spent vs. % complete % spent vs. % complete

example: example: 44% spent vs. 39% complete 44% spent vs. 39% complete

What will be the final cost?

Estimate at Completion (EAC)
defined as actual cost to date + estimated cost of work remaining contractor develops comprehensive EAC at least annually
reported by WBS in cost performance report

should examine on monthly basis consider the following in EAC generation

performance to date impact of approved corrective action plans known/anticipated downstream problems best estimate of the cost to complete remaining work

also called latest revised estimate (LRE), indicated final cost, etc.

ACWP + ETC = EAC

One method: statistical formulae

Common EAC Formulae:
EAC =
5.1 Million over Budget

BAC CPI

37.2 = Rs. 42.3 lakhs 0.88

BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs

= =

ACWPcum + Budgeted Cost of Work Remaining CPI3 ACWPcum + Budgeted Cost of Work Remaining .8(CPI) +.2(SPI) ACWPcum + Budgeted Cost of Work Remaining CPI * SPI

Variance at Completion (VAC)

B AC E AC

what the total job is supposed to cost

BAC = 37.22 lakhs BCWS = 19.82 lakhs BCWP = 14.50 lakhs ACWP = 16.40 lakhs

what the total job is expected to cost

job is supposed to cost and what the total job is now expected to cost. job is supposed to cost and what the total job is now expected to cost.

VARIANCE AT COMPLETION is the difference between what the total VARIANCE AT COMPLETION is the difference between what the total FORMULA: FORMULA: Example: Example: VAC = BAC --EAC VAC = BAC EAC VAC = 37.2 42.3 VAC = 37.2 42.3 VAC = --5.1 (negative = overrun) VAC = 5.1 (negative = overrun)

VAC

EV Analysis
CPI (Cost Performance) CPI (Cost Performance) EV / /AC [1.0=On budget] EV AC [1.0=On budget]

BAC Data Date

Delay Current COST Target ETC SV CV AC SPI (Schedule Performance) SPI (Schedule Performance) EV / /PV [1.0=On schedule] EV PV [1.0=On schedule] EV TIME

BCWP Allows Isolation of Schedule and Cost Variances

BCWS ACWP
cv sv

Rs

BCWP

TIME

8 months

schedule variance = BCWP - BCWS = negative number cost variance = BCWP - ACWP = negative number

behind schedule, behind schedule, over cost over cost

Pop Quiz

BCWS BCWP

$
ACWP

TIME NOW

schedule variance = BCWP - BCWS = cost variance = BCWP - ACWP =

_______schedule, _______schedule, ___________cost ___________cost

Exercise 5

Performance Indices
COST PERF INDEX (CPI) = BCWP COST PERF INDEX (CPI) = BCWP ACWP ACWP

GOOD

1.2
SCHED PERF INDEX (SPI) = BCWP SCHED PERF INDEX (SPI) = BCWP BCWS BCWS

1.1
TIME

1.0 BAD .9

CPI SPI

.8

Project A
Weekly SPI

1.20
0.85

0.90 0.60

0.77

0.73

0.74

0.76

SPI

0.30 0.00 8Jan 15Jan 22Jan 29Jan 5Feb 12Feb 19Feb 26Feb 5Mar 12Mar

Complete

Remaining

Total

Required Weekly Run Rate (Rs.) 40,460,383 23,285,805

(Rs.) Closure Running Total 160,141,220 190,821,480 350,962,700

Days 98 321 419

(Rs.) 421,943,990 958,044,540 1,379,988,530

Day s 73 288 361

(Rs.) 582,085,210 1,148,866,020 1,730,951,230

Project B
SPI 1.20 1.00 0.80 0.60 0.40 0.20
3 n -Ja 1 -Ja 0 n 1 -Ja 7 n 2 -Ja 4 n 1 -N v 5 o 2 -N v 2 o 2 -N v 9 o 3 -Ja 1 n 1 o -N v 8 o -N v 7 e -F b 1 -D c 3 e 2 -D c 0 e 2 -D c 7 e 1 -F b 4 e 1 -O 8 ct 2 -O 5 ct 6 e -D c 0.63 1.08 0.88

0.81

0.77

0.76

0.75

0.69

0.68

0.67

0.64 0.53 0.31 0.53 0.56

0.62

0.60

SPI

0.00

Complete

Remaining

Total

Required Weekly Run Rate (Rs.) 43,634,122 1,476,955

(Rs.) Closure Running Total 59,203,840 9,815,350 69,019,190

Days 52 189 241

(Rs.) 62,334,460 21,099,350 83,433,810

Days 10 100 110

(Rs.) 121,538,300 30,914,700 152,453,000

Example: Weekly SPI

Sr. No.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Week Ending Dates

26-Dec-04 2-Jan-05 9-Jan-05 16-Jan-05 23-Jan-05 30-Jan-05 6-Feb-05 13-Feb-05 20-Feb-05 27-Feb-05 6-Mar-05 13-Mar-05 20-Mar-05 27-Mar-05 3-Apr-05 10-Apr-05 17-Apr-05 24-Apr-05 01-May-05 08-May-05

Planned Value (PV) (Rs.)

95,302,638 124,008,716 167,750,812 207,032,859 230,748,190 237,291,819 258,003,316 275,543,375 311,754,875 335,186,817 342,437,937 362,078,566 398,036,945 424,191,388 435,632,781 452,135,030 486,666,502 536,812,960 571,145,846 579,427,303

Earned Value (EV) (Rs.)

52,444,155 71,807,490 104,771,091 114,537,327 115,388,914 119,899,913 127,715,271 135,491,435 138,162,865 144,765,181 158,587,808 170,986,796 178,791,567 191,337,033 198,883,454 211,993,298 223,619,935 237,782,155 250,318,134 261,828,969

SPI Period
0.55 0.67 0.75 0.25 0.04 0.69 0.38 0.44 0.07 0.28 1.91 0.63 0.22 0.48 0.66 0.79 0.34 0.28 0.37 1.37

SPI Accumulated
0.55 0.58 0.62 0.55 0.50 0.51 0.50 0.49 0.44 0.43 0.46 0.47 0.45 0.45 0.46 0.47 0.46 0.44 0.44 0.45

TSPI
1.08 1.10 1.14 1.22 1.29 1.30 1.36 1.40 1.56 1.66 1.66 1.73 1.98 2.17 2.27 2.41 2.93 3.39 4.53 4.85

SPIe 0.56 0.59 0.69 0.64 0.56 0.52 0.50 0.48 0.44 0.43 0.43 0.42 0.42 0.40 0.39 0.38 0.38 0.37 0.37 0.37

Value

0.30

0.35

0.40

0.45

0.50

0.55

0.60

0.65

0.70

Example: SPI Trend

SPIe / SPI Trend

Week

12 /2 6/ 20 1/ 04 2/ 20 1/ 05 9/ 2 1/ 005 16 /2 1/ 005 23 /2 1/ 005 30 /2 0 2/ 05 6/ 2 2/ 005 13 /2 2/ 005 20 /2 2/ 005 27 /2 0 3/ 05 6/ 2 3/ 005 13 /2 3/ 005 20 /2 3/ 005 27 /2 0 4/ 05 3/ 2 4/ 005 10 /2 4/ 005 17 /2 4/ 005 24 /2 0 5/ 05 1/ 20 5/ 05 8/ 20 05

SPIe SPI

Projected Finish Date 16-Aug-05 27-Jul-05 17-Jun-05 7-Jul-05 28-May-05 8-May-05 18-Apr-05

Example: Predicted Finish

Prod vs. Proj Span

Period 5 10

26 -D ec -0 4 2Ja n05 9Ja n 16 -05 -J an 23 -05 -J an 30 -05 -J an -0 5 6Fe b13 0 -F 5 eb -0 20 -F 5 eb -0 27 -F 5 eb -0 5 6M ar 13 -05 -M ar -0 20 -M 5 ar -0 27 -M 5 ar -0 5 3A pr 10 -05 -A pr 17 -05 -A pr 24 -05 -A pr -0 15 M ay -0 85 M ay -0 5

15 Finish Date Productivity

Rs (million)

20

25

30

35

Portfolio Performance
Project Portfolio Performance
1.20 1.15

1.10

1.05 CsPr r a c o t e fo m n e

1.00 0.80 0.85 0.90 0.95 1.00 1.05 1.10 1.15 1.20

BAC

0.95

0.90

0.85

0.80 Schedule Performance

DoD experience shows..

over 800 military programs show that ......
no program has ever improved performance better than the following EAC calculation

EAC =

BAC CPI

at 15% complete point in program early stages! no one pays enough attention in the

EARNED VALUE PROBLEM INDICATORS

GOAL: To Verify That Effective Variance Analysis Processes Are Applied To Identify, Correct, And Report Problems POTENTIAL PROBLEM INDICATORS: Zero variances Monthly trends turning negative or downward Schedule variances generally indicate cost will follow Actuals > Latest Revised Estimates (LRE) BCWP increases with no increase in ACWP Negative data elements

Benefits of EVPM
Accurate picture of project status
cost, schedule, and technical

Early and accurate identification of trends and problems Basis for course correction Bring project in on schedule and cost

Q&A