EVENGINE ADVANCED EARNED VALUE THEORY AND PRACTICE TRADEMARKS: Microsoft® is a registered trademark of the Microsoft Corporation. Project, Excel, Windows and the Windows logo are the trademarks of the Microsoft Corporation. Primavera ®is a registered trade mark of the Oracle Corporation. The Supertech Logo is a trademark of Supertech Project Management. EVENGINE is a trademark of Supertech Project Management. All persons, companies, and organizations listed in examples and case studies herein are purely fictitious for teaching purposes, unless the example expressly states otherwise. Any resemblance to existing organizations or persons is purely coincidental. ABOUT THIS PUBLICATION This publication is a companion to the EVEngine Project Control product range and designed to introduce subscribers to the Theory and Practice of Earned Value and Schedule Performance Management and Control, and the benefit it can bring to your organization. The publication also serves as an introduction to the general interest readers to appraise themselves to the subject of Earned Value and Schedule and to describe the benefits it can bring to your organization. EARNED VALUE GRAPHS AND REPORTS All graphs and reports used in this publication are generated using EVEngine Project Control Software. For EVEngine product information go to www.evengine.net Contact Details: Web Site: http://www.evengine.net E-Mail: [email protected] © Supertech Project Management Pty. Ltd. 1998-2014 Page 2 TABLE OF CONTENTS TABLE OF CONTENTS ......................................................................................................................... 3 CHAPTER 1 EARNED VALUE BASICS .................................................................................................. 5 OVERVIEW .......................................................................................................................................... 5 DEVELOPMENT HISTORY, GUIDELINES AND STANDARDS .......................................................................... 5 PROJECTS SUITABLE FOR EARNED VALUE TREATMENT ............................................................................. 6 PROJECTS NOT SUITABLE FOR EARNED VALUE TREATMENT ...................................................................... 6 BENEFITS GAINED FROM EARNED VALUE IMPLEMENTATION ..................................................................... 7 BENEFITS GAINED FROM THE IMPLEMENTATION EVEngine PROJECT CONTROL SOFTWARE .......................... 7 EARNED VALUE METRICS ...................................................................................................................... 8 CALCULATION AND USE OF PHYSICAL PERCENTAGE COMPLETE IN THE TREATMENT OF EARNED VALUE ....... 11 EARNED VALUE INDICATORS AND PREDICTORS .................................................................................... 12 INTERPRETATION OF EARNED VALUE INDICATORS ............................................................................... 13 INTERPRETATION OF EARNED VALUE INDEX BASED INDICATORS ........................................................... 14 INTERPRETATION OF INDEPENDENT ESTIMATES .................................................................................... 15 OTHER EARNED VALUE BASED METRICS AND INDICATORS .................................................................... 15 CHAPTER 2 FINANCIAL PERFORMANCE BASICS .............................................................................. 16 OVERVIEW ........................................................................................................................................ 16 FINANCIAL BASED METRICS ................................................................................................................ 16 FINANCIAL INDICATORS ..................................................................................................................... 17 INTERPRETATION OF FINANCIAL INDICATORS ....................................................................................... 17 PROFIT PERFORMANCE INDEX (PPI) ..................................................................................................... 18 OTHER FINANCIAL BASED METRICS AND INDICATORS ........................................................................... 18 CHAPTER 3 EARNED SCHEDULE BASICS .......................................................................................... 19 OVERVIEW ........................................................................................................................................ 19 EARNED SCHEDULE METRICS .............................................................................................................. 19 EARNED SCHEDULE INDICATORS AND PREDICTORS .............................................................................. 20 INTERPRETATION OF EARNED SCHEDULE INDICATORS AND PREDICTORS ................................................ 20 INTERPRETATION OF EARNED SCHEDULE PREDICTORS .......................................................................... 21 THE EARNED SCHEDULE p FACTOR ...................................................................................................... 22 CHAPTER 4 COST BASED ANALYTICS ............................................................................................... 23 OVERVIEW ........................................................................................................................................ 23 COMBINED PERFORMANCE INDICATORS INTERPRETATION ..................................................................... 23 USING THE INDICES TO INITIATE CORRECTIVE ACTION ......................................................................... 23 INDICATORS AND PREDICTORS FOR EXECUTIVE REPORTING .................................................................. 24 USING VARIANCE INDICATORS ............................................................................................................ 24 USING INDICES ................................................................................................................................. 24 USING ESTIMATES TO COMPLETION ..................................................................................................... 24 SUCCESSFUL EVPM REPORTING ........................................................................................................... 25 EXAMPLES OF GRAPHICAL INTERPRETATION OF INDICATORS ................................................................. 25 GRAPHING FINANCIAL PERFORMANCE FOR PROFIT ................................................................................ 25 GRAPHING FINANCIAL INDICES ........................................................................................................... 26 INTERPRETATION OF PERFORMANCE VARIANCE INDICATORS ................................................................. 26 INTERPRETATION OF PERFORMANCE INDICES ....................................................................................... 27 INTERPRETATION OF COST AND SCHEDULE PERFORMANCE INDICES ...................................................... 28 CHAPTER 5 EXTENDING EVM TO UNITS OF WORK & MATERIAL USAGE ........................................... 29 OVERVIEW ........................................................................................................................................ 29 BASIS OF EXTENDED PERFORMANCE METRICS AND INDICATORS ............................................................ 29 BASIS OF EXTENDED PERFORMANCE METRICS AND INDICATORS ............................................................ 30 CHAPTER 6 THE EVEngine RANGE OF PRODUCTS ............................................................................. 32 OVERVIEW ........................................................................................................................................ 32 EVENGINE STANDARD ........................................................................................................................ 32 EVENGINE PREMIUM ........................................................................................................................... 32 EVENGINE PROJECT CONTROL ............................................................................................................. 32 EVENGINE PRODUCT RANGE FEATURES ................................................................................................ 32 VERSION FUNCTIONALITY COMPARISON TABLE ..................................................................................... 33 BUSINESS CASE FOR LICENCE SUBSCRIPTION TO EVENGINE PROJECT CONTROL ..................................... 33 The Requirement................................................................................................................................ 33 The Solution ...................................................................................................................................... 34 THE NEXT STEP ............................................................................................................................... 35 ACKNOWLEDGEMENTS .................................................................................................................... 35 ABOUT THE EVENGINE DEVELOPERS ...................................................................................................... 35 CONSULTING, SUPPORT AND EDUCATIONAL SERVICES .......................................................................... 35 QUALITY ASSURANCE ........................................................................................................................