Performance Tracking in PMPlan 2017-01-17T19:59:02+00:00


Earned Value (EV) based performance measurement systems “Link Expenditures to Accomplishments”

For Project Management Systems, the development of the Earned Value Management (EVM) process has been a reflection of the need for the development of standardized methods for cost and schedule performance reporting on projects where project managers had been expected to establish cost/schedule information requirements as they saw fit. This resulted in inconsistent data outputs in the management of these projects.

The lack of standard formats for cost and schedule status reporting has led to a proliferation of project unique reports, where the application of inconsistent spreadsheets, or more complicated systems and reporting requirements that were developed to be operated, and administered, with or within the larger automated accounting systems. PMPlan is a full service PC based application enabling the project manager to plan, revise or update, status, and generate the data for similar projects, consistently.

An Earned Value Management System (EVMS) for program management will effectively integrate the work scope of a program with the schedule and cost elements for optimum program planning and control. The primary purpose of the system is to support Program management. The system is owned by the company and is governed by the company policies and procedures. The principles of an EVMS are:

  • Plan and price all work scope for the program to completion.
  • Break down the scope of the program work scope into finite pieces that can be assigned to a responsible person or organization for control of technical, schedule and cost objectives.
  • Integrate program work scope, schedule, and cost objectives into a performance measurement baseline plan against which accomplishment can be measured. Control changes to this baseline.
  • Use actual cost incurred and recorded in accomplishing the work performed.
  • Objectively assess accomplishments at the work performance level.
  • Analyze significant variances from the plan, forecast impacts, and prepare an estimate at completion based on performance to date and work to be performed.

PMPlanPro is an “EVM Lite” application, that meets most of the criteria for the Project Management and EVMS guidelines of ANSI/EIA-748 and can generate up to the Format 1 contract performance report in addition to other reports specific to earned value methodology.

 PMPlan Enterprise consists of Workforce” Planning and Forecasting tools, that meet all 32 Project Management and EVMS guideline criteria of ANSI/EIA-748, and  can generate all five contract performance reports in addition to twelve other reports specific to earned value methodology.

On June 20, 2012, the Data Item Description (DID) DI-MGMT-81861, for the Integrated Program Management Report (IPMR) was approved as the primary means of communicating program cost and scheduling information between the prime contractor and the Government. This requirement calls for seven (7) reporting formats as opposed to the five (5) reporting formats of the Contract Performance Reporting (CPR) requirement, with all 7 formats to be submitted electronically in accordance with the DOD-approved XML schemas.

AlNik’s PMPlan Enterprise system does meet and can provide the data requirements of all 7 data formats, and AlNik  is currently in the process of developing the electronic delivery process of the 7 data formats, that meet the associated XML guidelines. Our customers may be required to submit a sample of these electronic XML reports using their data, for their clients approval.

Key PMPlan Project Tracking Features and Benefits

PMPlan Enterprise is the primary full-up EVM application that has many features that allow project managers to quickly assess the status and health of the project without having to integrate tools for scheduling and forecasting, thereby freeing up your team to spend more of their time on the technical aspects of the project, including:

  • Cost Management — Can be integrated with company accounting systems to provide details of resource usage, other direct costs, and breakdown of the different types of money such as direct, overhead, general and administrative, and cost of money.
  • Summary Projects — Can combine multi-projects to create programs or to analyze and optimize resources across the enterprise.
  • Estimate-To-Complete Methodology — Allows for the periodic forecasting of the work to be completed, plus the ability to take snapshots for comparison of trends in the forecasts.
  • Earned Value Management — Analyze the status of the project using proven earned value performance measurement methodology, providing numerous EVM reports, and management of multiple baselines and comparisons.
  • Formal Change Request Process — Allows users to conduct a what-if change request where the instructions for changing the project plan are included within the change request form.  When the request is approved these saved instructions are applied to the project automatically thus saving time.

Below, is a simplified review of the Earned Value concept. EVM is a government concept, but the value of EVM goes well beyond performance reporting for the government. EVM, when practiced properly, can substantially improve a companies projects’ performance, that would have a positive impact on a companies bottom line, while improving the confidence level of the project managers and their upper management.

Earned Value Tracking in PMPlan

This review of Earned Value Concept will:

  • Describe a simple project and its progress
  • Define Earned Value and related terms
  • Show how Earned Value defines project performance

Earned Value System

Earned Value Can:

  • Provide early (Difficult to ignore) performance problem identification
  • Improve financial Reporting

Earned Value Does not:

  • Recognize Critical Paths

Earned Value Will not:

  • Take management action

Measurement Terminology

Budget at Completion (BAC)

  • The sum of the total budget for a work package, major task, or project.

Planned Value (PV)

  • The scheduled cost based on the allocation cost items such resources and material during the timeline of an activity
  • Also called Budgeted Cost for Work Scheduled (BCWS)

Earned Value (EV)

  • The value of the work performed to-date using any reasonably accurate, mutually acceptable methodology for determining value (i.e.; 0/100%, 50/50%, 30/40/40, ratio of units completed versus total units, manager estimate, level of effort, being some examples).
  • Also called Budgeted Cost for Work Performed (BCWP)

Actual Cost (AC)

  • Total incurred costs charged to a work package by the company’s accounting system, which can include labor costs, direct costs (overhead), and indirect costs (material, travel, and etc.)
  • Also called Actual Cost for Work Performed (ACWP)

These measurements are used to calculate performance.

Performance Terminology

Cost Variance (CV)

  • CV = EV – AC = BCWP – ACWP

Cost Performance Index (CPI)

  • The cost efficiency ratio of earned value to actual costs (CPI = EV/AV)
    In PMPlan, the CPI is used to calculate Estimate at Completion (EAC) (EAC = BAC/CPI)

Schedule Variance (SV)

  • SV = EV – PV =BCWP – BCWS

Schedule Performance Index (SPI)

  • The schedule efficiency ratio of earned value accomplished against planned value (SPI = EV/PV). The SPI describes what portion of the planned schedule was actually accomplished.

Variance at Completion (VAC)

  • The predicted magnitude of possible underrun or overrun at completion of work package, major task, or project (VAC = BAC – EAC)

Review of Earned Value Concept

Earned Value Will:

  • Describe a simple project and its progress
  • Define earned value and related terms
  • Show how earned value defines project performance

Sample Project Schedule

Planned Budget

The sample project is loaded with resources which results in an allocated spend plan.

Time-Phased Spend Plan

This shows the time-phased spend plan if the project proceeds as planned.

Typical Approach of Tracking of Actual versus Planned

  • This chart tells us we have spent less than planned to date, but
  • We cannot tell if we are behind schedule, nor if the cost for work completed matches the actual costs.

Using Earned Value Method

  • For Earned Value Method to work well you need to breakdown the project into measurable activities (Note: Cost Budgeting is done at the activity level not work package).
  • It is recommended that your work packages (where you accumulate actual costs) be one or two levels above the activities.
  • The following five scenarios show different performance results of our sample project.

Sample Earned Value Worksheet

  • The project manager enters either a earned percentage or value.
  • Cumulative Actual Cost is also entered. In this worksheet, actual cost can also include open commitments such as unpaid invoice for equipment.
  • The ‘Threshold’ is a percent the AC to BAC, which determines when the application uses the CPI to calculate VAC. If AC is less than ‘Threshold’, the VAC equals CV.
  • Based on the data entered, this project is both behind schedule and over budget. Even though the current CV = $3,000, the VAC indicates a potential overrun of $4,138.
  • The next graphic shows two other views of this data.

Project has Negative SV and CV

  • In the lower half of the graph, the EV is below both the PV and AC indicating problems with cost and schedule.
  • The upper half of the graph shows both CPI and SPI relative to a value of 1. It is showing that progress is being made to improve the schedule, but cost problem remains.
  • The black EV bars in the Gantt schedule at the right shows that ‘Design’ and ‘Prototype’ activities are behind schedule.

Why 50% Complete may not be half the schedule bar

  • In the above sample, all three activities have earned values of 50% of BAC, but the black earned bars are not the same length even though the planned bars are the same.
  • Task A is behind schedule, because 75% of the budget was to be spent by end of December.
  • Task B is ahead of schedule, because only 25% of the budget was to be spent by end of December.

In Summary – Earned Value System

Earned Value Can:

  • Provide early (Difficult to ignore) performance problem identification
  • Improve financial Reporting

Earned Value Does not:

  • Recognize Critical Paths

Earned Value Will not:

  • Take management action