UsingUsing EarnedEarned ValueValue toto TrackTrack ProgressProgress TheThe PB&JPB&J ProjectProject CLIENT PROJECT SUCCESS ® ON TARGET ON TIME ON BUDGET Last Revision: November 2008 © 2000-2009 Edwards Project Solutions. All rights reserved. UsingUsing EarnedEarned ValueValue toto TrackTrack ProgressProgress WhatWhat cancan youyou telltell meme aboutabout thisthis project?project? Is it… on schedule, ahead schedule, or behind schedule? Is it… on budget, over budget, or under budget? Will the project finish on time? THE XYZ PROJECT Budget at Completion 4.9M 5 C 4 Budget Plan 3.8M O Actuals 3.2M S 3 T 2 S 1 (M) Project Current Status Point 0 0 6 12 18 24 Time (Months ARO) Last Revision: February 2009 © 2000-2009 Edwards Project Solutions. All rights reserved. UsingUsing EarnedEarned ValueValue toto TrackTrack ProgressProgress WeWhatWeWhat knowknow dodo we we thethe knowknow originaloriginal aboutabout budgetbudget thethe projectproject (the(the plan)plan)…… WeWe knowknow whatwhat wewe spentspent toto datedate ----BUTBUT---- WithoutWithout additionaladditional informationinformation toto showshow thethe projectproject statusstatus ---- ---- wewe DONDON’’TT knowknow whatwhat progressprogress wewe havehave mademade (if(if any)any) EarnedEarned valuevalue metricsmetrics cancan givegive usus thethe wholewhole picturepicture THE XYZ PROJECT Budget at Completion 4.9M 5 C 4 Budget Plan 3.8M O Actuals 3.2M S 3 T 2 S 1 (M) Project Current Status Point 0 0 6 12 18 24 Time (Months ARO) Last Revision: February 2009 © 2000-2009 Edwards Project Solutions. All rights reserved. UsingUsing EarnedEarned ValueValue toto TrackTrack ProgressProgress WhatWhat isis EarnedEarned ValueValue An earned value management system (EVMS) integrates the project work scope with the schedule and cost elements of the project to optimize status and control. Last Revision: February 2009 © 2000-2009 Edwards Project Solutions. All rights reserved. UsingUsing EarnedEarned ValueValue toto TrackTrack ProgressProgress WhatWhat isis EarnedEarned ValueValue -- AA BriefBrief SynopsisSynopsis EVMS is based upon breaking the project into manageable pieces called “Work Packages” X Each work package defines a piece of the work to be performed. It can define several activities or tasks and the resources required to perform them X Each activity (task) will have one to several resources assigned Therefore the activity’s “Work” may be greater than the duration X Work packages may also have “Other Direct Costs” (ODC) assigned such as materials, subcontractors, vehicles, etc. X WP Budget = (work assigned to each resource) x (resource’s rate) + (ODCs) X The work package will also describe how this “Budget” will be expended across time - i.e.; The Work Schedule X Each work package must have an evaluation criteria for determining the percent completion of the activity (task) – “what means done” Last Revision: February 2009 © 2000-2009 Edwards Project Solutions. All rights reserved. UsingUsing EarnedEarned ValueValue toto TrackTrack ProgressProgress WhatWhat isis EarnedEarned ValueValue -- AA BriefBrief SynopsisSynopsis The work packages are then added together across time to create a “Plan” for the project As the work packages are completed and the performance evaluated (against the WP evaluation criteria), value is “Earned” against the planned cost (the“WP Budget”) of the work package X The value “Earned” against work packages is NOT linked to the actual cost to perform or complete the work Status -- I have spent 50% of the budget so therefore I am 50% complete -- Status Last Revision: February 2009 © 2000-2009 Edwards Project Solutions. All rights reserved. AnAn EarnedEarned ValueValue ExampleExample Project:Project: BuildingBuilding aa PeanutPeanut ButterButter andand JellyJelly SandwichSandwich (PB&J) Primary Resource: Mom (Rate: $0.02) ButBut WaitWait aa Minute!Minute! X that’s $0.02/sec and… X $0.02/sec = $1.20/min X $1.20/min = $72.00/hr X $72.00/hr = $150,000/year IsIs thatthat better??better?? Last Revision: February 2009 © 2000-2009 Edwards Project Solutions. All rights reserved. AnAn EarnedEarned ValueValue ExampleExample Project:Project: BuildingBuilding aa PeanutPeanut ButterButter andand JellyJelly SandwichSandwich (PB&J) Materials and Tools: X Bread; Peanut Butter; Jelly; X Knife; Cutting Board Tasks: X Lay out Bread onto the Cutting Board X Obtain and Open Peanut Butter Jar X Spread Peanut Butter on Each Slice of Bread X Obtain and Open the Jelly Jar X Spread the Jelly onto One Slice of Bread X Place 2 Slices of Bread together and Cut the Sandwich in Half X Deliver the Sandwich Last Revision: February 2009 © 2000-2009 Edwards Project Solutions. All rights reserved. AnAn EarnedEarned ValueValue ExampleExample OurOur ProjectProject TaskTask Estimates:Estimates: Cumulative Planned Task Estimated Work Estimated Cost Task Description Project Costs No. (Seconds) (Work x Rate) Planned Value (PV) Lay out Bread onto the Cutting 1 60 sec. $1.20 $1.20 Board Obtain and Open Peanut Butter 2 30 sec. $0.60 $1.80 Jar Spread Peanut Butter on Each 3 40 sec. $0.80 $2.60 Slice of Bread 4 Obtain and Open the Jelly Jar 30 sec. $0.60 $3.20 Spread the Jelly onto One Slice of 5 20 sec. $0.40 $3.60 Bread Place 2 Slices of Bread together 6 30 sec. $0.60 $4.20 and Cut in Half 7 Deliver the Sandwich 60 sec. $1.20 $5.40 Totals: 270 sec. $5.40 Task 1 Task 2 Task 3 Task 4 Task 5 Task 6 Task 7 Last Revision: February 2009 © 2000-2009 Edwards Project Solutions. All rights reserved. AnAn EarnedEarned ValueValue ExampleExample PlotPlot thethe CumulativeCumulative PlannPlanneded ProjectProject CostsCosts (PV):(PV): $6.00 5.40 $5.00 4.20 $4.00 3.20 3.60 $3.00 Total Estimated Project Costs Cost ($) 2.60 $2.00 (BAC): $5.40 1.80 $1.00 1.20 PV $0.00 0 60 90 130 160 180 210 270 Time (Seconds) Our Project Budget Planning is Now Complete We are Ready to Start our Project Last Revision: February 2009 © 2000-2009 Edwards Project Solutions. All rights reserved. AnAn EarnedEarned ValueValue ExampleExample TheThe ProjectProject isis nownow UnderwayUnderway 180 seconds has elapsed and we are requested to provide status on our project X According to our original plan, at Planned Task Estimated 180s we should have completed Task Description Elapsed No. Work Tasks 1 through 5 Time Lay out Bread onto the 1 60 sec. 60 sec. Cutting Board Obtain and Open Peanut X We should be ready to start task 2 30 sec. 90 sec. Butter Jar 6, “Place 2 Slices of Bread Spread Peanut Butter on 3 40 sec. 130 sec. together and Cut in Half” Each Slice of Bread Obtain and Open the 4 30 sec. 160 sec. Jelly Jar Spread the Jelly onto 5 20 sec. 180 sec. One Slice of Bread 180 sec. Place 2 Slices of Bread 6 30 sec. 210 sec. X Unfortunately, we ran into a together and Cut in Half problem! 7 Deliver the Sandwich 60 sec. 270 sec. Last Revision: February 2009 © 2000-2009 Edwards Project Solutions. All rights reserved. AnAn EarnedEarned ValueValue ExampleExample TheThe ProblemProblem andand SolutionSolution The problem: X When Mom opened the jar of jelly, she discovered it to be moldy and could not use it. The solution: X Fortunately, Mom had an extra jar of jelly in the closet and sent Dad to get it. Dad retrieved the new jar and placed it on the counter next to Mom. X However -- It took an extra 20s to retrieve the second jelly jar by Dad and the jar is still not opened. X Therefore: Task 4, “Obtain and Open the Jelly Jar” is only 50% completed; It has taken 50s to complete half (50%) of Task 4; And, Dad (an unplanned resource) has worked 20s on the project. Dad’s Rate is also $0.02/Sec. Last Revision: February 2009 © 2000-2009 Edwards Project Solutions. All rights reserved. AnAn EarnedEarned ValueValue ExampleExample LetsLets summarizesummarize ourour currentcurrent statusstatus Clearly we are now behind schedule and we still have to perform the 2nd half of Task 4, “Opening the Jelly Jar” Planned Actual Actual Task Estimated Status Task Description Elapsed Time Time No. Work (% Completion) Time Spent Spent Lay out Bread onto the 1 60 sec. 60 sec. 100% 60 sec. 60 sec. Cutting Board Obtain and Open Peanut 2 30 sec. 90 sec. 100% 30 sec. 90 sec. Butter Jar Spread Peanut Butter on 3 40 sec. 130 sec. 100% 40 sec. 130 sec. Each Slice of Bread Obtain and Open the 4 30 sec. 160 sec. 50% 50 sec. 180 sec. Jelly Jar Spread the Jelly onto 5 20 sec. 180 sec. --- One Slice of Bread Place 2 Slices of Bread 6 30 sec. 210 sec. - -- together and Cut in Half 7 Deliver the Sandwich 60 sec. 270 sec. - -- Last Revision: February 2009 © 2000-2009 Edwards Project Solutions. All rights reserved. AnAn EarnedEarned ValueValue ExampleExample LetsLets determinedetermine ourour actualactual costscosts toto datedate forfor thethe projectproject (AC)(AC) We know Mom has charged full-time since the beginning of the project and has worked on ALL the tasks (180s x $0.02 = $3.60) Dad got involved on the 4th task and spent 20s obtaining the extra jelly jar (20s x $0.02 = $0.40). Actual Actual Cumulative Task Task Description Estimated Time Time Actual Costs No. Work (Mom) (Dad) Actual Costs (AC) Lay out Bread onto the 1 Cutting Board 60 sec. 60 sec. 0 sec. $1.20 Obtain and Open Peanut 2 Butter Jar 30 sec. 30 sec. 0 sec. $1.80 Spread Peanut Butter on 3 Each Slice of Bread 40 sec. 40 sec. 0 sec. $2.60 Obtain and Open the 4 Jelly Jar 30 sec. 50 sec. 20 sec. $4.00 Spread the Jelly onto 5 One Slice of Bread 20 sec. - - - Place 2 Slices of Bread 6 together and Cut in Half 30 sec. - - - 7 Deliver the Sandwich 60 sec.