Right Sizing: Shrink to Fit - One Size Does Not Fit All

The second of five essential frameworks (ANSI/EIA 748) is Planning, Scheduling, and Budgeting as it relates to Earned Value. (see first essential framework of five)

Isn’t it ironic that the groups responsible for planning and budgeting in an organization often don’t succeed in their own planning and budgeting the implementation of their EVMS?  Project controls and project managers are the experts in this field, so we would expect their planning and execution to be flawless, right?  Yet, many times these professionals fail because they succumb to daily distractions and time/budget constraints set by management—as many people do.  However, if they don’t adequately design and plan their EVMS project for their company’s needs, they can end up looking like a buffoon!  

So it is no surprise that we need to review and discuss the ANSI/EIA-748 area for planning, budgeting, and scheduling.  These requirements for a certified EVMS can be grueling and painful, but you’re in luck if you’re not required to be certified.  The trick to this effort is to review the criteria in the standard and take a look at it from a macro perspective.  Ask yourself, “What is the overall intention with these 10 criteria?”  Grouping them together and summarizing the results is how we’ll convert the Ferrari EVMS to a Ford EVMS:

1. Create realistic schedules for your projects and use sensible logic ties.  Despite the added complexity, you must load resources on activities for an accurate timephased budget.  At a minimum, apply resources by cost element (such as labor, materials, overhead, etc.).  To aid integration with other systems, add your WBS to your schedule.  This allows you to roll it up as needed, which allows you to easily check the WBS for mistakes.  Finally, status your schedule at least monthly; any frequency less than that won’t allow you to manage project performance adequately.

It’s a good time to pause and ironically say “Simple right?”  Actually this is the hardest part, as invariably, there will be someone who does not want to resource load the schedule in order to keep budget separate from schedule.  That is a great way to blindfold the Project Manager and line management.  They’ll be running around in circles yelling at people trying to determine the true performance of the project.  I can’t even begin to tell you how archaic and ignorant this practice is on a project.  Just don’t go there.  If you’re already set up this way, find a way to fix it.

More tips: Use common sense for the level of detail you need in order to see variances that could derail the project.  Remember not to schedule down to the gnat’s behind, but don’t make a four line summary schedule either.  Your schedule should add up to the total budget; therefore you must account for all work and materials in the schedule.  Many organizations fail here; their schedules don’t add up to the total project cost.  They keep that “separate”, which adds unnecessary potential for errors and difficulties into the visibility of project performance.  If you choose to keep overheads separately, at least maintain the unburdened, direct cost balance in the schedule.  This way, at any given point, you should be able to take your unburdened cost and add the overheads to calculate the total project cost for authorized work.

2. Add major milestones to the schedule and limit the number of Level Of Effort (LOE) activities so you can measure performance as objectively as possible.  If you not familiar with different types of earning methods, percent complete will be good enough for now. 

3. While Control Accounts are not mandatory for a non-certified EVMS, at least develop charge codes assigned to a single WBS element and use the OBS (or the groups or department responsible for that work) to put someone in charge of managing those accounts.

4. Set up a reserve budget for each project based on risk, which will be used for unknown scope that could be added to finish the project.  You may also want to have a contingency fund at the department level for those events when the project needs additional funding beyond the project budget.  Reconcile the sum of all budgets by WBS, OBS (or group responsible), cost element, and work package (if you have them).  This includes the indirect costs as well.  Reconciling budgets will assist you in slicing and dicing the data a multitude of ways. 

You can see I’m not as passionate about these last three items as I am about the resource loaded, logic driven schedule.  It isn’t because they aren’t important.  It’s because without that kind of schedule, these areas become almost a moot point.  I’ve seen very intelligent, complex organizations completely skip the integration of budget and schedule.  They ALWAYS end up having problems managing their projects on schedule, within budget, while performing high quality work scope.  Unfortunately, this can lead to people and scope getting jerked around to stay the course, which is unfair and unnecessary.  Here’s the bottom line: planning, scheduling, and budgeting is tantamount to project success - it is the Holy Grail of project management, so be sure to give it the effort it deserves.  

Please comment if you’ve had experience in these areas; I’d love to hear success stories (or miserable failures), and I’ll even take some major griping if you’ve experienced the pain of not implementing the above recommendations.

Stay tuned for my next article, where I’ll break down the Accounting section of the ANSI/EIA-748 and show you the elements, and ways to implement them, for a bigger bang for your buck. 

- Melissa Duncan (About Melissa)

Read the previous posting Shrink to Fit - How to Scale your EVMS

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Earned Value legend as there may be a few of us that don’t yet have this memorized…

CA=Control Accounts
CAM=Control Account Manager
CPI=Cost Performance Index

EVM=Earned Value Management

EVMS=Earned Value Management System

EAC=Estimate At Completion 
IPMR=Integrated Program Management Report
LOE=Level of Effort
OBS=Organizational Breakdown Structure
PC=Project Controls
PM=Project Manager
RAM=Responsibility Assignment Matrix
SPI=Schedule Performance Index
WBS=Work Breakdown Structure