HELL!!! WHAT IS THAT??
Earned Value Management (EVM) has been always used to measure both schedule and cost performance, half of its formulas are for cost and the other half is for measuring current performance and foreseeing future performance. this article is not intended to dig deep, we are just scratching the surface of a very important subject and the turn will be yours to do the heavy lifting.
EVM is a cost based methodology in which all formulas are based on three values; Planned Value (PV), Earned Value (EV), and Actual Cost (AC).
Now let's go straight to our point; EVM calculates two very important schedule measures the first is Schedule Variance (SV) which derived from this formula (SV = EV - PV) if the value of this formula is positive means a good news you are performing well and ahead of schedule by completing a work volume equal to the positive value of SV, and if it was negative means that you are behind schedule; the second measure is Schedule Performance Index (SPI) which calculated from this formula (SPI = EV/PV) note that both EV and PV are cash values, accordingly, the schedule which means (TIME) is measured in terms of (CASH) for example SV = $ 50,00; Planners, DO NOT YOU FEEL SOMETHING WRONG!!!
Don't you feel that if somebody asked about the schedule variance, your answer should be, for example, the project's schedule variance SV = 15 days ahead or behind?. EVM's answer to such question shall be "our schedule variance is $ 20,000".
One more problem with EVM's schedule measures is that both EV and PV are eventually PLANNED VALUES and their totals are equal, for example, if you are working on a $100,000 project, the value of EV at the project completion shall be $100,000, meaning that even I finished the project 10 years later, the schedule variance at completion shall equal ZERO!!!
In 2003 Walt Lipke introduced a new revolutionary concept, that should deal with these two problems, this concept is Earned Schedule (ES).
Using ES method shall give a reasonable and sensible answers for the schedule performance measures and indices, for example, SV values shall read durations not cash amounts and the SV at project completion shall not read zero..
Now, don't you think that using COST to speak TIME is like a trojan horse entered the scheduling city where people speak the the language of TIME.
Let me now give you a brief about Earned schedule way of calculating schedule variance (SV).
The idea behind ES is to determine the time at which the EV accrued should have been occurred. see the figure below
the black s curve represent the Baseline cumulative Cash curve (PV) and the purple is the earned value (EV), to calculate the ES, you just pull a horizontal line from the EV at the actual time (AT) to find the corresponding PV on baseline curve, then find the time corresponding to this PV; now you have ES which in our case equals 5 and the AT = 7
Both 5 and 7 are a time values, now you speak the language of TIME.
Schedule Variance (SVt) = ES -AT = 5 - 7 = -2; meaning that we are 2 time periods behind schedule.. now that makes sense!!!
the below videos illustrate earned value management fundamentals for Arabic speakers..
Thanks Mahmoud Eltahawy
Project Controls Director at The Middlesex Corporation
7 年Hoda another technique that can be used to determine an accurate SV is to measure the EV of the longest path only and determine the schedule variance. Thanks for the effort.
Area Vice President Global Accounts -- Global High Tech Division
7 年First, Earned Value -- whether it's the old C/SCSC used by DoD or simpler and more powerful variants thereof -- have been proposed long before 2003! (Try 1980's and 1990's). Second, the objective should be to relate and monitor the seemingly elusive relationship between resources budgeted and work accomplished -- in DISCRETE milestones and NOT on a percentage basis which invariably tends to be greater than zero and less than 100. Third, the most effective way to gauge earned value is to determine progress as a function of actual accomplishment and NOT as a passage of time . Cumulative Planned Cost v. Cumulative "Milestone" accomplishment should be plotted and actuals should be compared to plans for a true "Earned Value" assessment. Lastly the advantages are many: a) Simplicity and ease of understanding b) greater degree of visibility and objectivity c) Inherently a greater degree of accuracy since cost is equated to actual task -- or milestone -- completion (and hence progress). To do a thorough and credible job, a CPM or Precedence Diagram that shows the start, desired end and interrelationship of the various milestones and their cost. The greater the number of Milestones generally speaking the greater the accuracy given for a given budget. Anything else, based on the passage of time and percentages of completion, is inherently inaccurate and an unnecessarily costly exercise.
It is a bit simplifying....because it assumes that every dollar of cost takes the same time.
The DoD approach to EVM actually converts the time slip from $ to time to talk time where time should be used. It is using unitless relative indices and you can convert those to whatever time unit you like. Check out "Cost Estimation - methods and tools" by Mislick & Nussbaum p.71. Or DoD Forms 1921
Chief Scientist at Main Sail, LLC
7 年I attended Walt's presentation in Long Beach. Not sure if the PMI article is available, but a presentation he gave elsewhere is at: https://www.earnedschedule.com/Docs/Earned%20Schedule%20PMI-Tulsa.pdf