Tag Archives: Earned Value

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

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.

Sydney workshops

There are a series of workshops planned for Sydney over the next few weeks we highly recommend:

Workshop 1: Applying Earned Value to Commercial [IT] Projects
This course has been crafted to allow project managers to decide for themselves whether they want to improve the performance of their projects by apply the principles of Earned Value without the overhead associated with large, complex Department of Defence acquisition contracts.

Workshop 2: Earned Schedule Masterclass
Earned schedule analysis is a breakthrough analytical technique that derives schedule performance measures in units of time, rather than cost. The same basic EVM data points are used. Indicators, similar to those for cost, are derivable from the earned schedule measure. These indicators provide a status and predictive ability for schedule, analogous to cost.

Workshop 3: Approaches to and Lessons Learned from “Internal Project Surveillance” with Lisa Wolf EVP, PMP. Lisa is the Earned Value Management (EVM) Focal Point for Booz Allen Hamilton, a leading USA global consulting firm that is committed to delivering results that endure.

This workshop focuses on the approaches which can be adopted and lessons learned in setting up an internal project management surveillance function which comes from Booz Allen Hamilton’s internal experience as well as extensive experience assisting US Government agencies and other clients. Best practices which are essential for successfully establishing this function including processes, procedures, and vital internal relationship-building will be explored.

For more information on these workshops see: ‘Upcoming Events’ at http://pmisydney.org/

Reframing the PMBOK® Guide

Is the  PMBOK® Guide a guide to the project management body of knowledge or is it a guide to the body of knowledge needed to manage a project? The traditional view is the PMBOK is special and the knowledge uniquely project focused; but is this true?? Consider these two challenges:

Challenge 1: name ANY process area that is unique to project management. Everyone plans; quality is ubiquitous, cost management and time management are practised by every home keeper, scope is fundamental to supplying anything etc.

Challenge 2: name ANY area of the PMBOK (or any other PM standard) that develops value without human interaction. The most perfect schedule is completely useless – has ABSOLUTELY NO VALUE AT ALL – unless its contents are first communicated to the right people and secondly, those people buy into the idea they need to implement the schedule and work to achieve it.

If we assume PMBOK = project specific body of knowledge the contents are likely to drop to a very few basic processes such as EV, WBS and maybe scheduling (but remember Henry Gantt was involved in manufacturing, not projects…).

I would suggest a reframing is needed PMBOK = the knowledge needed to manage a project successfully! This means allowing a range of useful management processes into the PMBOK such as motivation and leadership. Let’s face it, technical skills are the provenance of technicians. People skills are the provenance of management, and in case anyone has failed to notice, the person leading even the most technical of projects is called a project manager!

Numerous studies have shown that the core skills for any successful project manager are the ability to develop a successful ‘high performing’ team, and communicate effectively to influence key stakeholders. These are soft skills and very hard to achieve competence in. ‘Soft’ does not mean easy. Hard skills have an easy to learn framework that does not change. The ‘soft’ in soft-skills refers to the need to adapt their use to every new context. For more on this see: Confronting soft Skills

This reframing is important because well over 90% of project failures can be directly attributed to people issues, including headline disasters such as the original Hubble Space Telescope launch and Challenger (read the reports on the NASA web site). For IT read any of the Gartner reports on project failure.

The simple fact is we can continue to underplay the importance of soft skills because they are not ‘project specific’ and continue to see well over 50% of project fail every year or we can recognise the core elements that characterise projects are totally useless without people and start giving stakeholder management and the soft skills implicit in successfully managing them the prominence needed in the body of knowledge needed to successfully manage projects.

What do you think??

Cost Engineering is an Oxymoron!

Cost performance is a symptom of other management functions. It is impossible to ‘engineer costs’. The only way to change cost outcomes is to change the other processes that incur costs.

The three key areas of business operations and project management that incur costs and where a change in the process will cause a change in costs are:

  1. Changing the procurement / purchasing / supply chain processes that acquire the required inputs to the process being managed.
  2. Changing the way the work that transforms inputs to outputs is undertaken through enhanced management and leadership including skilling, motivating and directing the people involved in the work and ensuring they have the correct resources and equipment to undertake the work.
  3. Focusing on the quality of the outputs produces to ensure the ‘right scope’ has been delivered at the ‘correct quality’. Too low and there are cost consequences in rectification, too high and you may have spent money unnecessarily.

These three elements exist in a risk frame. Whilst risk management will not ‘control’ the future, it will allow opportunities to be identified and grasped and threats mitigated and avoided by changing the way the work is undertaken and as a consequence optimise cost outcomes.

The two key facets that permeate all of the above are stakeholder management and time management.

  • Stakeholder management both within the team and externally, (including effective communication) is central to achieving a successful outcome at the best price. Stakeholders are in the supply chain, include the project team and contractors and can have a major impact on the risk profile of the work. For more posts on stakeholder management see: http://www.stakeholder-management.com/blog/?cat=5
  • Time management focuses on ensuring the right people are in the right place at the right time, with the right resources and equipment to do the work in the optimum sequence. For more posts on time management see: https://mosaicprojects.wordpress.com/category/project-controls/scheduling-project-controls/

Both of the above need regular reviews and adjustment within the overall frame of the emerging risk profile.

Where ‘cost engineering’ adds value is via techniques such as Earned Value (EV). Applying EV effectively allows the symptoms of a deviation from the expected performance to be highlighted through Cost Variances and other reports.

As with medicine and diseases, it is capability to recognise and correctly interpret symptoms that allows diagnosis that leads to the effective treatment of the under-laying problem. In project and business management space, this should translate to the requirement for managers not only to report a cost variance, but also to identify the cause of the variance and to recommend and/or implement corrective actions.

Whilst it is impossible to directly manage or control costs; timely and accurate information on cost performance can be a valuable diagnostic tool to remedy the real issues. What’s needed is for senor managers to stop focusing on ‘cost’ and start asking deeper questions about performance and risk. I know many readers of this blog will say this already happens in their organisations, but I also know that far too many other managers focus on the symptom of cost performance rather than the under-laying problem to the detriment of their businesses.

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……….