Earned Value Management (EVM) – To Do or Not To Do

by Ten Six

Why should we do Earned Value Management (EVM)? For those of us who implement Earned Value Management Systems (EVMS) regularly within many different organizations, we hear plenty of reasons why an organization shouldn’t do EVM. At the end of the day, most organizations implement an EVMS because they need to comply with a government contract.

Why We Shouldn’t?

Here are some of the most common reasons why organizations don’t want to implement an EVMS:

· Too bureaucratic.

· Too expensive to implement.

· Too many people are required to administer an EVMS.

· Special IT tool-sets are required.

· The Baseline cannot be established early…development programs have too much uncertainty, let’s wait and see.

· “This program is too small to need such an intrusive tool.”

· “We’re only a small company and can’t afford this.”

· “This program is too big…Earned Value is meaningless to us.”

Those are some of the quoted reasons and more often than not, there are other hidden issues that are not shared so readily. These include:

· The objectivity an EVMS provides leaves nowhere to hide.

· We’ll have to do detail planning ahead of the game and are not willing to make that much effort.

· EVM will reveal more details about actual costs than we want Internal or Customer Management to know.

· We don’t want to undergo a Customer based Integrated Baseline Review (IBR) to prove our baseline is valid.

Number 4 above is amusing as it implies that they have a choice whether or not to conduct an Integrated Baseline Review with their customer.

Why We Should?

It won’t be a surprise to anyone that the number one reason to implement a robust EVMS is because it’s a contractual requirement. In fact, the government and agencies have different contract Dollar thresholds where EVM must be a contractual requirement. You can see some examples of these in the table chart here.

Here are some reasons why you should not only implement an EVMS but also embrace it for all programs:

· The Government requires EVM to see cost and schedule variances in order to mitigate issues before they are too large.

· Non-compliance with the Government could be very costly and they do have deep pockets to pursue you.

· The 32 Guidelines reflected in ANSI/EIA-748 represent sound project management principles. Of these Guideline groupings, which do you think should not be reflected in your company’s processes to effectively set up and manage your programs?

• Organizing: Defining the work and assigning responsibility/accountability for its performance?
• Planning & Budgeting: Developing a definitive plan to monitor how you’re going to get there and the costs required?
• Accounting: Establishing cost charge numbers to accrue direct & indirect costs by major element. This will help in comparing actual to planned costs?
• Analysis: Routine review of cost & schedule performance to date to see where you’ve gone off target, understand how it’s going to get fixed and what it’ll ultimately cost?
• Revisions: Maintaining a track record of changes made to the contract with the impact to the cost and schedule baselines to use for the next similar program?

It’s true that implementing and executing an ANSI-748 EVM compliant project management plan does require effort by both the project team and senior management. The alternative of not establishing a solid plan to manage a contract’s scope, schedule, budgetary and risks could result in project failure and a financial pressure on your organization. Is it worth the risk to not do EVM?

What about Firm Fixed Price?

Firm Fixed Price (FFP) contracts often do not require EVM as all the risk is on the contractor. But it does beg one question. Why would a company that’s taking on a FFP contract that has them bearing all the cost and schedule risks not do EVM? They are effectively in a position to not know their potential cost and schedule exposure risks. Are you willing to bet your company that everything will work out OK?

Summary

Earned Value Management is essentially best practice project management. Getting bad news on project performance early enough to take action is a lot less painful than the consequences of project failure and contractual non-compliance.

In complement to this post read this.

Why won’t my activities Start/End on the correct day?

From primaverablog.in

There have been times when activities in Primavera don’t Start or End on correct dates despite the math saying otherwise . There are several reasons that can cause this to happen, lets look at them in this post.

1) Out of Sequence Activities – These are activities that have started before the predecessor activities are completed. These activities are created when you using “Retained Logic” as your scheduling preference. This creates non-working periods and this can cause the activity to be pushed out of the normal calculated dates. You can check which activities are being pushed Out of Sequence by checking. You can choose “Progress Override” to schedule and correct these dates or change relationships for these activities. For a better explanation on these option check this blog post Scheduling Options – Progressing Activities .

2) The activity calendar contains non-work time that is pushing the finish date out.

3) Resource Leveling – “Level resources during scheduling” option should be unchecked in “Schedule Options” when you schedule the project.

4) Multiple calendars – If you are using multiple calendars and the number of working hours do not match the Time Period settings under Admin Preferences then the activities might end on a different time of the day.

5) Constraints - If an Activity has an “As late as possible” constraint. The As late as possible constraint allows an activity to start or finish as late as possible without delaying its successors. This constraint sets the early dates as late as possible without affecting successor activities. Even if the activity is started, the Finish date can be pushed later in time if positive total float exists when the As late as possible constraint is applied. This will make the Finish date appear to be later than it would be based on the remaining duration.

6) Project has Activities with Actual Dates > Data Date – To check if any of your activities has this problem you need to go to Tools, Schedule open schedule log. In the schedule log, you need to check and see if any activities are listed in the Activities with Actual Dates > Data Date section. If yes, then you can either remove the actual dates, or move the data date after the actual dates.

Primavera P6 Percent Complete Types

by TheP6Pro

When adding activities to a Primavera P6 EPPM or Professional schedule, you have three possible percent complete types to choose from: Duration, Physical and Units. Which one you choose depends on your desired outcome. This article explains each of the Primavera P6 activity percent compete choices, when you should use a particular percent complete type and how they affect your process for entering status to your project’s schedule.

The Activity % Complete Field

Before we get into the specifics of the percent complete types, we need to take a quick look at the Activity % Complete field. This field’s existence can be a little confusing because it sounds like another percent complete type. However it is, in fact, a field (column) into which a value can be placed to update the value in the activity’s selected percent complete type field. In other words you don’t need to add a column for all three percent complete types that you might be using within a schedule, rather you just add the Activity % Complete field, and enter your values there.

Any option that reduces the number of columns you need to have displayed in your P6 table area is a good thing.

Duration % Complete

This option is used to calculate progress from the planned and remaining duration values. For example, if you enter 6 days of remaining duration for a 10 day duration activity, Primavera P6 will calculate 40% complete. Transversely, if you enter 40% in the Activity % Complete field, P6 will calculate a remaining duration of 6 days.

Original or Planned Duration – Remaining Duration = Percent Complete

Usage:

Enter a percent complete value in the Activity % Complete column or directly into the Duration % Complete column. Primavera P6 will automatically calculate the Remaining Duration for the activity. Or enter a Remaining Duration value and let P6 calculate the percentage.

This percent complete type is best used for more level of effort type activities where measurable deliverables are not expected and the percent complete represents elapsed time more than deliverables completed.

Physical % Complete

The percent complete values will be entered by the user manually. Entering a value in the Activity % Complete field will update the Physical % Complete value. The Physical % Complete type is required if you wish to use Steps to drive progress.

Caution: When Physical % Complete is used, you must adjust the Remaining Duration as this is not calculated by Primavera P6. You must enter a Remaining Duration manually, or set an Expected Finish date on the activity.

If you don’t adjust the Remaining Duration, P6 will add the Actual Duration to the Remaining Duration. This will cause unnecessary variance in the project and will likely alter your critical path. As you can see in the following figure, the Remaining Duration remained at 10 days, the Actual Duration was added to it, giving an At Completion Duration of 14 days, and pushing all successor activities out but that amount.

You can use the Expected Finish date option to help control the remaining duration of Physical % Complete activities. Adding a date in the Expected Finish date field locks down the end date of the activity and forces P6 to calculate the Remaining Duration.

In the above image you can see that an Expected Finish date of 27-Jan-15 has pulled the end date back to its original date and caused P6 to calculate a 6 day remaining duration.

Physical % Complete and Steps

An additional advantage when using the Physical % Complete technique is the ability to progress the activity using weighted steps. Weighted Steps are simply a checklist of things that must be completed before the activity can be considered finished.

Continuing with our Mobilize activity example, weighted steps have been added from a Step Template.

The weights values entered will be calculated to a percentage value by Primavera P6 and will drive the Physical % Complete value of the activity. The weight values can be any decimal number and thus spare the user from manually calculating the Percent Complete values; they just enter some arbitrary value based on whatever factor they choose; number of hours, relative degree of difficulty, whatever.

As Steps are checked off as Completed, so they will drive the Percent Complete for the activity. The user will still need to manually update the remaining duration or expected finish date values as previously described.

Note: the “Calculate Activity % Complete from the activity steps” must be set in the “Calculations” tab of the “Set Project Preferences” dialog must be set in order for this feature to work.

Usage:

The Physical % Complete progress type should be used when dealing with discrete work that equates to one or more measurable delivery items.

Units % Complete

The Units % Complete type is used when resources are assigned to an activity and actual units worked will be tracked. Actual Units may be entered manually or via the Apply Actuals feature that loads actual units from a timesheet module such as Primavera Progress Reporter.

As with Physical % Complete, Units % Complete doesn’t calculate the remaining duration for activities, so you will need to use either the Remaining Duration field or an Expected Finish date to manually control the calculated end date for your activity.

Usage:

Use Units % Complete when resources are assigned to the activity and actual units will be tracked. The only drawback of this method is that hours expended doesn’t necessarily equate to progress achieved, so this method is not very discrete.

Summary

I hope this article helps give you a better understanding of each of the Primavera P6 activity percent complete choices, when they should be applied and what the outcome will be when statusing your project.

The original post is on here! On Ten Six Consulting blog.