Earned Value Analysis for Project Portfolios
Earned Value Analysis: Why ?
Earned Value Analysis (or Earned Value Management) is a widely used method for performance measurement of projects. These three areas are considered in this method:
- Scope
- Cost
- Time
With the EVA the following key questions can be answered:
- Is our schedule on track, do we have a delay ?
- When will be the project completed based on actual status ?
- Are we over or under the planned budget (over-/underspent)
- What are the estimated costs at termination of the project
- How efficiently are we using our resources ?
To achieve the EVA in an accurate way, the following preconditions are necessary:
- Accurate baselining of plan values (time, costs and scope) starting by a WBS, scheduling milestones and assigning Costs.
- Accurate actual cost information: prompt actuals, clear differentiations between booking types (outsourcing costs, person days, software licences …)
- Accurate progress measure: grad of completion calculated based on clear work/scope artefacts (e.g. user stories in agile Teams)
- Realistic estimates to complete gathered from project team
Key Values
- Budget At Completion – BAC: Total cost of the project
- Planned Value – PV (Called also: Budgeted Cost for Work Scheduled – BCWS): The amount of work expressed in € to be performed as per the schedule plan:
PV = BAC * Planned grad of completion in % - Planned Value – EV (Called also: Budgeted Cost for Work Performed – BCWP): The amount expressed in € on the actual worked performed:
EV = BAC * Performed grad of completion in % - Actual Cost – AC (Called also: Actual Cost of Work Performed (ACWP): The sum of all costs (in €) actually booked
The Quality of the Baseline for the Earned Value Analysis is a key sucess factor. The following approach could be helpfull:
- Define the initial scope of work based on the project charter (Projektauftrag)
- Document all deliverables in the WBS achieving a 100% View on high level
- Deviate all necessary work packages serving the Deliverables
- Assign activities to the work packages, define milestones and baseline the Schedule
- The short term work packages should have more details as the long term packages.
- If a roadmap plan exists, the WBS should be linked to it
- Estimate the costs for the whole project durance
- Estimate detailled short tern activities
- Estimate long term work packages
- Basline the Budget
- A BAC is defined for the whole project
- A BAC per fiscal year is defined, if this view is needed for the EVA
- A PV Curve is available
The following key indicators are mainly used in the context of EVA:
- CV (Cost Variance) = EV-AC
- SV (Schedule Variance) = EV – PV
- CPI (Cost Performance Index) = EV / AC
- CPI > 1 : Budget on track / Underspent
- CPI < 1: Over-Budget / Overspent
- SPI (Schedule Performance Index) = EV / PV
- SPI > 1: Schedule on Track
- SPI < 1: Schedule Delay
- EAC (Estimate at Completion) = BAC / CPI (Please see alternative Calculation below)
The IT project portfolio of our customer includes > 100 projects with different durations, cost structure, sizes and hierarchical organisations, Every project has to approve and implement several „Change Requests“ with different types (waterfall and agile), durations and complexity. The costs of the projects have to be calculated in the fiscal context.
For our customer EVA should be calculated:
- Based on approved deliverables plan for the smallest project entity: Change Request
- Based on actuals gathered in several systems (Jira, SAP…)
- Based on an automatic calculated completion of grad considering the status of standard milestones of Change Requests
For our customer the EVA results should be reported in a central dashboard allowing the portfolio and project managers to follow on daily base the calculated performance and forecasting values and start corresponding mitigations.
FUNCTIONAL PLACEMENT
The following concept has been specified:
- Jira Plattform is used as a front-end GUI for alls project managers to enter and maintain:
- Change requests data: Estimates, costs, milestones, gates …
- Project data: Configuration of projects including the plan budget values, organisation structure, mapping to change requests and budget vehicles
- Oracle database: A central database is used gathering of all project and booking data (retrieved also from SAP)
- EVA calculation engine: to retrieve basic data from oracle database, calculate the EV values for changes requests, accumulate them for projects and store the results in EVA tables
- Tableau: this software is used for a central visualised dashboard retrieving all necessary data from the oracle database
MILESTONE BASED PV/EV CALCULATION
The standard milestones of the change requests mapped to projects are used to calculate the earned values:
- Every milestone has a baselined plan date
- Every milestone presents a specific value in form of a completion grad of the BAC
- The planned value chart is a stepped one, the number of steps is the number of milestones
- When a milestone is marked as completed in Jira, the planned value of this milestone is considered as performed and the earned value is calculated
- When a milestone is achieved earlier as planned the SPI > 1, for this a back projection of the planned value is calculated
- When a milestone is achieved later as planned the SPI < 1 until the milestone is achieved (then SPI = 1)
- For the fiscal view a projection between the 2 border milestones is calculated to split the planned and earned value between the 2 years. The combination of fiscal year PV/EV/AC charts must lead to the „project“ PV/EV/AC chart
VISUALISATION WITH TABLEAU
Tableau has been used to visualise all results for the project managers and the senior management:
- Tableau charts are data driven
- Database views should provide the accurate information
- A data refresh is done on hourly base
- Tableau has several standard charts. A waterfall chart ist not supported. We achieved with a workaround on data source side
- Tableau charts are designed locally and published to a central server
- https://www.projectsmart.co.uk/earned-value-management-explained.php
- https://www.slideshare.net/WaHamdy/projects-control-using-earned-value-technique
- http://www.pmknowledgecenter.com/content/earned-value-management
- http://www.pmknowledgecenter.com/dynamic_scheduling/control/earned-value-management-forecasting-cost
- http://www.pmknowledgecenter.com/dynamic_scheduling/control/earned-value-management-forecasting-time
- https://www.tableau.com
- https://www.atlassian.com
