Category Archives: EVM & ES

Earned Value Management and Earned Schedule

New White Paper on the value of TCPI

The To Complete Performance Index is one of the least understood metrics available as part of an EVM system which in recent months seems to have been given prominence in both the PMP and PMI-SP examinations.

Download this White Paper for a straightforward explanation of this long-established (but little understood) metric and its value as an indicator of project outcomes from: http://www.mosaicprojects.com.au/WhitePapers/WP1097_TCPI_in_EVM.pdf

To access all of our WPs and other published papers available for free downloads, start at: http://www.mosaicprojects.com.au/PM-Knowledge_Index.html

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Trends in Project Controls – AIPM Update

Last night I gave a presentation to the AIPM Project Controls SIG in Melbourne summarising some of the key ideas and thoughts I brought away from the Project Governance and Controls Symposium in Canberra and the Project Zone Congress in Frankfurt.

miracle2

The presentation covered three main areas:

  • Predicting project completion
  • Governance and usage of controls, the ROI
  • Communication, complexity and the ‘soft stuff’! CPM and EVM are not sufficient in the increasingly complex world of mega projects.

You can download the presentation from:  http://www.mosaicprojects.com.au/PDF_Papers/P183_Trends_in_Project_Controls.pdf

I’ve also published several other posts covering specific aspects of these two events: https://mosaicprojects.wordpress.com/category/project-management-conferences/

PGCS 2014 Update – I’ve been proved wrong!!

G-C_SymposiumThe Project Governance and Controls Symposium 2014, Canberra, is in full swing with wall-to-wall interesting presentations!

The focus of this post is the presentation by Stephan Vandevoorde on the work he is involved in at Ghent University, Belgium focused on developing  processes for the validated testing of project control tools entitled ‘If Time is Money, then Accuracy is Important’.

The problems with studying the effect of project control processes in live projects are many, the most significant being:

  • The control function generates information that influences management action causing different outcomes.
  • The ‘Hawthorne Effect’ where people being ‘observed’ change behaviour because they are being observed.
  • The uniqueness of each project, its team dynamics, luck, and the overall operating environment making replication of an ‘experiment’ difficult.

As part of their on-going work to validate Earned Schedule (ES) the Ghent team have developed a set of project networks using different topologies to emulate schedules ranging from those that are largely sequential, through to those that have a high level of parallel working.  The models are updated with a range of 9 different progress options leading to a total of 2.8 million unique data sets. This resource provides a unique test bed for evaluating the effectiveness of various predictive and preventative tools and techniques.  For more on this valuable resource, which is available for research, see http://www.or-as.be/research/database

One of the earlier studies (on a smaller simulation) focused on testing the effectiveness of various techniques in predicting the final schedule outcome of a project. And this research has proved me wrong!  In a blog post following last year’s PGCS ‘Earned Schedule comes of Age’  I lamented the fact that a detailed study proving Earned Schedule (ES) was significantly better at predicting project completion than the traditional Earned Value SPI had not taken the extra step and also demonstrated its predictive effectiveness compared to traditional CPM.  My paper Why Critical Path Scheduling (CPM) is Wildly Optimistic highlights the issues but lacks statistical validation.  As it happens, the ‘missing’ studies had been done and the outcomes presented by Stephan showed the results of a 2008 study by Prof. M. Vanhoucke (also of Ghent University) that demonstrate the superiority of Earned Schedule as a predictive tool designed to complement the true focus of CPM which should be the optimisation of resources and workflow (rather than the projection of the overall project completion – for more on this read my paper).

ES Table

So the basic research has been done, the results are conclusive and based on the research the effective controlling of projects needs a combination of CPM, EV and ES for optimum results!  The research frontier is moving towards effective early indicators such as the ‘P factor’ and intervention and with the data tools now available, statistically  significant analysis becomes feasible.

With the steady stream of papers validating Earned Schedule, I hope the flow of misleading information from a few die-hard traditionalists in the USA is finally extinguished and comments from leading authors such as Quentin Fleming and Joel Koppelman in the  4th Edition of ‘Earned Value Project Management’ (2010), that ‘The authors do not endorse [earned schedule]. Nor have they ever read any scientific studies that support [it]’ disappear.  It really does not matter what Fleming and/or Koppelman have bothered to read, making misleading statement like this helps no one.

The challenge is developing tools and techniques that help manage projects in an environment of increasing complexity – and as one of the other presenters, Stephen Hayes from the International Centre for Complex Project Management (ICCPM), traditional tools such as CPM and EV are important, but simply not sufficient in the emerging domain of complex project management, or  as my paper to the PGCS suggests, Agile projects.

Earned Schedule comes of Age

2013 is the 10th anniversary of the publication in The Measurable News (March & Summer 2003) of Walt Lipke’s seminal paper Schedule is Different, introducing the concept of Earned Schedule (ES) to the world. This milestone was celebrated at the inaugural Governance and Controls Symposium held in Canberra earlier this month.

One of the notable features around ES has been the amount of hostility towards the concept generated by traditional Earned Value advocates (for an overview of ES see: http://www.earnedschedule.com/).

Everyone who understands EV recognises traditional EV is a very useful cost predictor and also recognises that the traditional SPI and SV calculations lose relevance later in the life of a project and fail completely if the project overruns time (ie, in approximately 80% of projects SPI and SV are less then optimal). To resolve this problem, the traditionalists suggest ‘looking to the CPM schedule’ for answers and decry ES.

Unfortunately, whilst a reliable and accurate CPM schedule is a critical underpinning of any competent EV system, CPM itself is a ‘wildly optimistic process’, see: http://www.mosaicprojects.com.au/Resources_Papers_117.html

One step towards eliminating this destructive debate was achieved this month – at last there is definitive research that validates ES as a technique. A research thesis from the AFIT (US Air Force Institute of Technology) Masters student, Capt Kevin Crumrine compares EVM and Earned Schedule indicators on US DoD ACAT 1 programs (for non-military types – ‘big’ programs). The thesis documents a series of five descriptive statistical tests conducted on the Earned Value data for 64 Acquisition Category (ACAT) I MDAP’s. The research found that Earned Schedule was a more timely predictor of schedule overages than Earned Value Management.

Unfortunately the statistical data did not compare ES with the CPM predictions. The thesis notes ‘One shortcoming to this research is the inability to map the Earned Schedule data to the critical path, but we consider Earned Schedule to be a strong tool for schedule prediction at the summary/contract level.’ The stated reason was ‘Our example produced earned value data no deeper than the Work Breakdown Schedule (WBS) level 3 (ex: WBS Element 1.2.3). The Critical Path data is collected much deeper, as detailed as WBS level 7 (ex: WBS Element 1.2.3.4.5.6.7). This disconnect prevented us from conducting a detailed analysis’

My feeling is the detailed nature of Capt Crumrine’s analysis meant the researcher could not see the ‘wood for the trees’. The only date that really matters on most projects/programs is the completion date! The level the data is collected at does not matter; neither does the activity/work package that that actually drives the final completion. What matters is the end date!!! The fact ES is a better predictor then EV should be 100% accepted and proved by now, and if not this detailed thesis should remove any residual doubts.

What is not proved is does ES provide a more reliable end date than CPM? My assessment outlined in Why Critical Path Scheduling (CPM) is Wildly Optimistic is that ES should be more accurate. Given the mass of data collected by Capt Crumrine it would be a pity if this last step is not applied by a future researcher.

The key role of CPM is (or should be) making the best use of the currently available resources on a project – this is the antitheses of predicting outcomes based on current trends in the way ES does. All that’s needed is another Masters candidate!!

Capt Kevin Crumrine’s thesis, ‘A Comparison of Earned Value Management and Earned Schedule as Schedule Predictors on DoD ACAT I Programs’ is now in the CPM electronic library at http://www.evmlibrary.org/library/Crumrine%20Final%20Thesis.pdf. If you are into analysis it is well worth the read.

Earned Schedule

In the March 2003 edition of the PMI College of Performance Management journal, The Measurable News Walt Lipke published his seminal paper “Schedule Is Different” and introduced the world to Earned Schedule (ES).

The challenge of predicting the likely completion date for a project is fraught with issues. There are no established protocols for scaling the remaining durations in a CPM schedule to take account of actual performance to date and there is no way of dealing with the consequences of a ‘bow wave’ of non-critical tasks consuming float until after they hit the critical path.

Re-scheduling the project is the same as re-estimating the work, a practice long discredited by Earned Value (EV) professional as being less accurate and more expensive than using EV formula to calculate a predicted cost outcome. And, the SPI and SV calculations cease to have any validity as the original project completion date is approached. In short, SPI does not work and CPM is wildly optimistic.

Earned Schedule

Earned Schedule

Walt solved this problem at least in part with the invention of ES. ES uses standard EV data to calculate a set of schedule indicators, which behave correctly over the entire period of project performance. The methodology and spreadsheets needed for calculation are freely available from the ES website.

Now Walt has published a sensibly priced book that explains the concept of ES and additional advances to the theory and practice of ES including the “P” factor, a measure of schedule adherence and “Effective EV,” which discounts the EV accrued by EV earned out of the correct process sequence.

I downloaded a PDF version of Walt’s book from Lulu Publishing for under $15; printed paperback books are available from Amazon, Lulu and a range of other book sellers.

Used properly, ES is the bridge between EVM cost and network schedule analysis, improving and providing the base for further developments in cost-schedule integration. ES can’t replace scheduling (and does not seek to) but it does provide a useful insight above and beyond what’s achievable using either traditional EV calculations or traditional CPM scheduling.

This is a book serious project control professionals cannot afford to ignore!

Earned Value, Courting the Law

Jarndyce and Jarndyce drones on. This scarecrow of a suit has, in course of time, become so complicated that no man alive knows what it means. The parties to it understand it least, but it has been observed that no two Chancery lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises. From the first chapter in the novel Bleak House by Charles Dickens. Jarndyce and Jarndyce is a fictional court case in Chancery but there is another court case that almost fits Dickens’ morbid description………

The A-12 “Avenger II” was to be a carrier-based stealth attack aircraft for the US Navy that has been in the courts since 1991. The plaintiffs (McDonnell Douglas and General Dynamics – since acquired by Boeing and Lockheed Martin respectively) sued for relief after the Navy terminated the A-12 development contract for default.

Based on the contractor’s Earned Value analysis that showed ‘catastrophic’ cost and schedule problems on this complex, multi-billion $ fixed price incentive contract, the then Sec. of Defense Dick Cheney withdrew his support for the program.

Wayne Abba was selected by the Department of Justice/Navy litigation team as a fact witness who could have an opinion about the EVM data because he had not been involved in the Government’s decision making process. Wayne testified in the 5th trial after the appellate court agreed with the government that performance (or lack thereof) was indeed an issue. His testimony helped set the stage for a reversal by the trial judge from his prior 4 decisions – a reversal that has been upheld by appellate courts since, most recently in June 2009; with further pleadings this month.

As Dickens continued…. Scores of persons have deliriously found themselves made parties in Jarndyce and Jarndyce without knowing how or why…… Fair wards of court have faded into mothers and grandmothers; a long procession of Chancellors has come in and gone out; the legion of bills in the suit have been transformed into mere bills of mortality; …… but Jarndyce and Jarndyce still drags its dreary length before the court, perennially hopeless.

This is an important decision for anyone involved in the proactive management of projects. If the US Governments position holds, reliable predictive data that clearly shows a ‘catastrophe’ in the making will allow project owners to take pre-emptive steps to protect their position. If the plaintiff contractors eventually prevail, the only safe option for owners will be to wait for the train wreck then try to pick up the pieces.

Hopefully we won’t have to wait another 18 years for an answer……….

Earned Value Confusion = No Value

I have just finished reading another article published in late 2008 where a proponent of Earned Value seems to deliberately set out to do as much damage to the general acceptance of the methodology as possible!

From its inception EV has been plagued with confusion generated by acronyms. EV ‘experts’ used to prove how knowledgeable they were by confusing business managers with a barrage of acronyms and formula. Before the turn of this Century, a decade ago, leaders in the profession recognised one of the major barriers to acceptance of EV was a general lack of understanding and sought to simplify the ‘alphabet soup’ that was making EV too hard for busy managers to understand.

ANSI EIA 748 A released in 2002, AS 4817 2003 released in 2003 and the 2000 version of the PMBOK® Guide all adopted a common, simple set of acronyms:

EV = Earned Value instead of BCWP (Budgeted Cost of Work Performed)

PV = Planned Value instead of BCWS (Budgeted Cost of Work Scheduled)

AC = Actual Cost instead of ACWP (Actual Cost of Work Performed)

These standards between them cover some 90% of the world’s Earned Value community! The intention was (and is) to demystify the process of Earned Value so managers could understand the data their project ‘controls’ staff were generating and use the information to make wise decisions. A really great idea! EV is an extremely useful and powerful tool if the data being presented to management is understood and acted upon.

What I cannot understand is why so many self professed advocates of EV are so keen to cause confusion by writing articles using the old, superseded acronyms.

  • Is it to try to look clever by confusing the ‘dumb reader’?
  • Is it to attempt to re-wind history back to the 1990s?
  • Are they actually opposed to the general use of EV and seek to prevent its general adoption by spreading confusion?

The UK (where EV is used to a very limited extent) is the only place that still published standards that use the old acronyms. These ‘standards’ are primarily from the Association for Project Management rather than British Standards.

Surely it’s time everyone used the same acronyms for the same item in an EV article and dragged themselves into the 21st century – it’s hard enough getting EV accepted in senior management circles without so-called experts and practitioners creating excuses for ‘not understanding’ by reverting to outdated acronyms, even in the UK??

What do you think?