Setting Up & Integrating EVM Into A PMO
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1 Earned Value Project Management Michae l Gowlet ux
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I presented this presentation at the 6th Management Congress in Luxembourg On 1/12/2011. It describes what is earned value management and how it can be integrated into a PMO
Transcript of Setting Up & Integrating EVM Into A PMO
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Earned ValueProject
Management
Michael Gowlett
ux
Introduction
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Name
Position
Experience
Presentation By Michael Gowlett
PMO Manager at Kredietbank Luxembourg
18 Years of Financial Experience
Expertise PMO Implementations & Operational ManagementVirtualizing PMO’sProgramme Office AutomationEarned Value Management (EVM)
Certifications PMP & Prince 2 Practitioner
Based In Luxembourg for 2.5 years
EARNED VALUEPROJECT MANAGEMENT
MICHAEL GOWLETT
WWW.BANKING-ALLIANCE.COM
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AgendaInsight to Earned Value Management (EVM)?
Explain why you should use EVM?
I’ll describe some EVM tools that are available to us
How EVM can be implemented?
I’ll walk you through a Luxembourg case study
We’ll talk about a Plan Maturity Model & how its used
I’ll describe some of the core EV KPI’s
Highlight some of the PMO EV implementation challenges
I’ll walk you through the creation of an EVM architecture through multiple PPM tool integration and collaboration.
Advantages & Benefits
Finally, some good sources for understanding EVM & a Q&A4
What Is Earned Value Management?
EVM is a project management technique for measuring project performance and progress in an objective manner.
EVM has the ability to combine measurements of scope, schedule, and cost in a single integrated system.
EVM allows an organization to measure project time, cost & quality more effectively.
First developed by the US Government in 1960s
EVM is fast becoming the preferred technique for advanced cost & schedule tracking within organizations.
Recognized by the PMI as an industry standard tool since the first PMBOK edition in 1987
EVM is a mathematical analytical technique used to derive critical delivery KPI’s to the reviewer at a glance.
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Why should you use EVM?
Most projects have no mechanism to measure the value of the actual “work” being performed against plan & budget.
Tracking the progress against the planned spend and actuals are separate processes but a relationship needs to exist between them, and EVM accomplishes this.
Cost overruns or work schedule slippages are often not visible until a month end report is revealed
EVM can eliminate the “Good News” reporting culture we often see in projects and allows for early detection and intervention of schedule and cost problems.
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EVM TOOL OPTIONS
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EVM Tool Options
Tools Advantages Disadvantages
Excel • Low cost • Time consuming• Suitable for small projects
MS Project • Familiar business product.
• Built-in EVM system.
• Detailed plans above 200 lines can be complex to manage.
• Can be unreliable & time consuming
• No collaboration & automation
MS Project & MS Sharepoint
• Familiarity + EVM• Collaboration• Low up front cost• Automation Avail:
• Requires an integrator to set-up a MOSS site to the right level
• Partial Integration
PPM Tools• Clarity• Planview
• Rich feature set• Fully automated
• High purchase price €1.5m+ excluding year on year running costs.
• ROI can be hard to justify
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EVM Graph Standard
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HOW TO IMPLEMENT EVM
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Establish the objectives
Identify a suitable project (Typically start with a small project)
Identify a suitable partner to mentor on your PMO team
Arrange a planning workshop
Select the relevant PPM tools to fit your budget
Training
Knowledge Transfer
Support & Mentoring
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How to Implement EVM
CASE STUDY
KBL LUXEMBOURG PRIVATE BANK
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Case Study – Key Drivers
Adopt EVM without investing in a (€) 7 figure project & portfolio management system (PPM)
To develop a solution, using off the shelf current PPM tools that minimized additional training & the learning curve.
They wanted to automate 90% of the reporting process
To integrate desperate data sources, to derive meaningful management information and metrics
To provide early warning of project issues
To provide the management team with an exception based reporting tool
Case Study –Before EVM - Typical Tools
What PPM products do we typically see on a given project?
WBS (Work Breakdown Structure)
High Level Plan (Steering level)
MS Project Plan (Gantt Charts)
Milestone List
Resource Plans
Budget Reports
Timesheet Management Actuals
Financial Reports
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No Integration
No Automation
Labour Intensive
Case Study - Before Earned Value
Costs were captured in plans but spend to date was unclear
Resource actuals were tracked monthly by timesheets only
Performance of the actual work couldn’t be measured
Each department used its own processes & forms
No consistent measurements or KPI’s existed across multiple projects
No process of identifying early warning signs of cost over runs
Issues went un-noticed due to the frequency of reporting
No formal project methodology existed
No consistency to the project lifecycle
99% of the processes were manual.
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EVM Implementation Challenges
Knowledge of how to intepret an EV graph
At initiation choosing the right tools to consolidate the data
Set the appropriate tolerances to determine deviation
Standardize the reporting expectations
Know what measurements to monitor to indicate deviation or improvement in performance.
An EVM architecture is a key element to obtaining the most out of the EVM technique (Explained later)
For larger projects it can up to take 3 months to fully adopt
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Acronyms Listed In RED Are Deemed The Most Useful For Reporting Purposes
Understanding Core EV KPI’sAcronym Algebraic Equation Explanation of Equation Explanation
PV Plan % Comp x BAC
PV of work at a status date in time
Authorized budget assigned to the project or scheduled task
EVActual %
Complete * Project budget
EV<AC = Cost or effort overrun; EV>AC = Under
budget/effort
Represents the cost of work value performed at a given point in time i.e. when a status date is selected in MPP
AC No Derivation AC>EV=Cost overrun; AC<EV= Cost under budget
Total costs actually incurred to date in accomplished work performed for a
schedule or activity
CPI EV/AC If CPI is = to 1 = Within budget; If CPI <1 = Over
budget; If CPI >1 = Project costs are under budget
Measures cost efficiency. A value >1 indicates a favorable position. A value
<1 and a negative value equals an unfavorable position
SPI EV/PVIf SPI is = to 1, On Schedule ; SPI=<1 Schedule Delay; If SPI >1 Ahead Of Schedule
Efficiency of the time utilized on the project
PMO Challenges Of EVMEVM data can be time consuming to maintain if you don’t utilise collaborative content management databases to reduce the cost of data collection
A lot of organizations don’t have the knowledge to exploit the functionality benefits in our everyday PPM tools.
EVM is beyond the reach of most PMO teams, who have not been trained to implement this relatively complex technique.
It requires BI reporting skills to generate trend analysis, dashboards and ad-hoc reporting
Few training courses exist to acquire the skills to implement EVM
While EVM increases the likelihood of success, it can add to the cost
Requires an understanding of the EV equations to calculate EV
EVM can place a high demand on the PMO because the actual project plan needs to be at the advanced standard level of maturity
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Plan Maturity Level
Adopting Earned Value, you need to know that it requires
an good level of planning.
A pre-requisite is that your project plans are mature
enough.
Organisations with immature plans need to increase their
planning capabilities before implementing EVM
Case Study - Plan Maturity Level
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Low Level
Level 1 Level 2 Level 3 Level 4 Level 5High Level
Level 6
Level Plan Maturity Level Planning Requirements
6 EV technique is used & the MPP is being updated periodically?
EVA can be retrieved from the MPP to track, cost, time & quality and the reports are providing valuable information to senior management.
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Have the resources been leveled across the plan?
Resource are fully allocated (not generic and the plans have been leveled to achieve an agreed resource utilization
Is Work (effort) Vs Elapsed available? The plan will differentiate elapsed time (duration) from effort (work) to understand the resource utilization between each of its deliverables
Are the resource costs shown & are they being monitored?
Billable resource costs are captured for each resource
4 Has a contingency been included? The plans contain sufficient contingency for the phase and complexity of the projectAre holidays & sickness being tracked? The plans contain forecasted holidays and have contingency for sickness
3Has the MPP been base-lined? Has the plan been base-lined to measure efficiency & progress
Has a critical path been established? Has the critical path been established to understand the deliverables that closer monitoring
2Is the % Complete being maintained? Have the tasks % complete been updated & periodically are the they been tracked
daily/weekly/monthlyDoes the MPP contain dependencies? Does the plan have predecessors & successors (dependencies) captured?
Have valid milestone been agreed & are they shown?
Does the plan contain an adequate number of achievable milestones?
1Have tasks & elapsed times been
captured?At minimum are all the tasks and activities captured with resource assignment?
Has the project plan been derived from an estimating model/tool or a WBS
How, or what has been used to derive the estimates? Have you used a specific tool/technique?
EVM Architecture at KBL
PPM Tool Collaboration & Content Integration
Tools Adopted by KBLMS Project
MS Sharepoint
Reporting Tool (SQL Reporting Services)
Mindjet Mind Manager (WBS Development)
MS Visio
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WBS
Steering Level Plan
Project Plan
Task Assignment Level
EVM Reporting
Define Our Resources
Dashboard
Plan Our Resources
Baseline Our Project Plan
Assign Our Resources To Tasks In MPP
Export Our Project Plan Into
A Sharepoint List
Synchronize Our Actuals From
Sharepoint back Into Project
Triggering Work Assignments To
Resources
Now We Have Integration & Collaboration Between All PPM Tools
PPM Tool Usage Through The Planning Phase To Create An EVM Architecture
H
M
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Sharepoint Portfolio Dashboard
Example Of An EVM Report
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ADVANTAGES & BENEFITS
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Case Study – Overall EV Advantages
Tracking Perspective:PMO has the ability to identify a slipping project schedule or cost deviation as periodically as when the actuals are synchronized.
Reporting Perspective:We can track near real-time delivery against the plan (Schedule)Senior management can view a performance of a live dashboard that shows all EVM KPI’s allowing the viewer to drill down from Portfolio > Programme > Project & Task level.Historical databases of performance can be retrieved to tune future project estimates & assumptions.
Trends Perspective:We can have more control over early detection of schedule & cost deviation because you can accurately see when & where deviation is trending against your baseline.
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MS Access for automated reporting:
When used with SharePoint
It can replace large & unmanageable Excel spreadsheet DB’s
The integration of SharePoint, Project & Access together can
minimize financial reconciliation errors
We also have further automation with
Task & activity synchronization when using SharePoint & Project
The PMO has less manual intervention for retrieving actuals
because work assignments are delegated to owners via email, so
trigger alerts can be setup, for task timing reminders
Case Study – After – EV PMO Benefits
Overall EVM Benefits
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Provides advanced warning of cost and schedule overruns
Enables preventative measures and/or corrective actions to be undertaken at the earliest signs of project deviation.
Provides a mechanism to monitor the performance of suppliers and their staff in near real time.
Provides a direct link between budgets, plans, resources and delivery.
Provides statistics to stakeholders and steering groups showing past, current and predicted performance
Enhances management visibility, allowing you to drill down into a portfolio of projects & tasks to retrieve statistics, that can be measured against a baseline
Provides a management reporting methodology that encourages delegation and an exception based management style. Reduces Micro Management.
Removes the “good news” reporting culture
The PMO becomes more productive when it has the right PPM tools.
Further Reading
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http://www.amazon.co.uk/Earned-Value-Management-Microsoft-Project/dp/1932159983
http://en.wikipedia.org/wiki/Earned_value_managementWikipedia
QUESTIONS
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EARNED VALUEPROJECT MANAGEMENT
MICHAEL GOWLETT BANKING ALLIANCE LTD
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