Friday, December 25, 2009

Earned Value Management (EVM)

The aim of this article is to demonstrate usage of EVM in one of my project.

Before we start let us refresh EVM. What is EVM? NASA describes it.”EVM is an integrated management control system for assessing, understanding and quantifying what a contractor or field activity is achieving with program dollars”.

Some Key Terms:

Planned Value, PV describes how far along project work is supposed to be at any point in the project schedule. It is a numeric reflection of the budgeted work that is scheduled to be performed.

Earned Value, EV is a snapshot of work progress at a given point in time, it reflects the amount of work that has actually been accomplished to date.

Actual Cost, AC is an indication of the level of resources that have been expended to achieve the actual work performed to date.

Let us get back to my project. My goal was to check project heath and take remedial actions. We did Use Case based size estimation at Initial Stage of this Project. Based on Management priority and nature of the project we made the resource allocation plan. My first task was to convert that planning in planned value terms.

·         The total project effort which we calculated using UCP and productivity becomes Total planned value of the project
·         The resource plan we made gave us planned value graph against time.

Number of Allocated Resource
Cumulative Person Months

So the line graph of PV looks like

We calculated the Actual cost, by counting the number of person months we have spent on this project till now (at the end of month three)

The trickiest part of the calculation was the earned value, here we had to identify the estimated value of the finished work. It was easy to identify earned value of finished Use Cases but for the one not finished I had to go by some judgment. On Such Use Cases I applied the Percentage Completing technique, I used objective indicators like test build sent, design completed for arriving at the percentage completion figure. I calculated this figure for last three months and the complete picture looks like below

So what does this mean?

It means we have done work worth 27 person months by spending 33 person months at the end of month three of the project. Originally we planned to do 41 person months worth work by this time.

Some EVM indicators:

Project Question
EVM indicator
For my Project
Are we ahead or behind schedule?
Schedule Variance ,  SV = EV-PV
27 - 41  = -14
How efficiently are we using time?
Schedule Performance Index , SPI = EV / PV
27 / 41 = .65
Are we under or over Budget?
Cost Variance, CV = EV- AC
27 – 33 = -6
How efficiently are we using our resources?
Cost Performance Index ,
 CPI = EV / AC
27 / 33  = .81

I think EVM metrics add good value in project management. Now I have to work to get my project back on track….. I need to use time efficiently…. Resource utilization is still ok considering the holiday season we have been through.