Right Sizing: A Common Point of EVMS Failure - Revisions and Data Maintenance

This week we review the last set of criteria in the ANSI/EIA-748: Revisions and Data Maintenance

Have you ever seen or implemented a complicated, convoluted, nobody-can-understand-it-but-the-originator baseline change proposal?  The kind that makes you go cross-eyed just trying to sort out the pieces?  These beasts make it difficult to produce all the backup information; many times there are just too many renditions of before/after scenarios before the “right” one was found.  Scope was added and removed, resources and rates changed, the WBS and OBS were restructured, logic was refined, and then management took 10% right off the top!    In the end, no one remembers how they got from A to Z, but you’re still responsible for reconciling it, eh?  If you’re lucky, your EV software is friendly enough to aid you in your quest.  Even if it isn’t, the revisions and data maintenance criteria in the ANSI/EIA-748 will help prevent such a nightmare.

Revisions and data maintenance are common areas for the failure of an EVMS.  Why?  Well, to be frank, one reason is because the management of revisions and data maintenance is not fun and can be a pain in the rear (i.e. high PITA factor).  It can be time consuming and doesn’t “yield” any additional benefit beyond what is initially gained from the criteria in the other four frameworks of your EVMS.  It is a necessary evil—something you have to do in order to have valid EVMS data.  People don’t like spending time and money on things that don’t directly provide added benefit, so they tend to slack on the maintenance of the data.  This is a huge mistake, because it undermines your entire EVMS.  If you spent time and money to implement your EVMS, why not take care of it so it can continue to meet your needs in the future?

When it comes to implementing aspects of the ANSI/EIA-748 in a non-certified EVMS, you’ll find that really ALL of the criteria in this framework are necessary for your program.  The level of rigidity needed in their application is where you’ll find wiggle room.  Less formal programs may not need the strict guidelines that a formal program may need, but they still need the basics.  Either way, you can customize the methods and execution of the criteria through your procedures and implementation of them, including various approval levels for baseline changes.  Let’s take a look at the criteria and why they’re needed for any EVMS:

1. Incorporate authorized changes in a timely manner.  This maintains integrity of your Performance Measurement Baseline (PMB) and allows you to measure and report earned value based on reality (as much as possible).  It also helps ensure work, budget, schedule are aligned with each other.  Ask yourself, “Does it make sense to wait for a year to implement an authorized change?”  Imagine having several baseline changes that have been hanging out there for a year.  It suddenly becomes easy to see how this will make your analysis more difficult and compromise the integrity of the baseline.
2. Reconcile the new budgets with prior budgets - changes should only be made via baseline change requests that are authorized and have formal documentation and backup for traceability.  This is how you VERIFY the integrity of the PMB.
3. Control retroactive changes.  Ever heard the term “Don’t change history”?  Retroactive changes can mask variance trends and limit the ability to use Earned Value to forecast.  Controlling these changes protects the integrity and accuracy of the PMB and EV.  The exception would be data entry corrections or routine accounting adjustments.
4. Prevent revisions except for authorized changes.  Once again, the integrity of your PMB is at stake and you risk having an Over-Target Baseline (OTB) after the fact.  It’s always best to know if the proposed changes would create an OTB condition, before you implement it.  Additionally, implementing revisions that are unauthorized can make your project management technique the equivalent of Whack-A-Mole; complete with moving targets and ensuing frustration.
5. Document Changes thoroughly.  It may sound easy but proper documentation sometimes slips by when you’re in a rush.  Or, you may think you documented everything in sufficient detail within your before/after schedules, timephased budgets, etc., but then a new manager walks in and wants to know some tiny detail that you didn’t document.  And you can’t remember.  That’s not a good feeling!  I’ve also taken over projects where there was a total lack of documentation of changes and no one can figure out how the project got to that point.  This isn’t fun, and it’s taking away precious time that could be used to manage the project better.  So, the bottom line is: make sure any lunatic can follow your logic and come up with the same result.  A baseline change proposal should be a stand-alone document.

See a trend yet?  The main issue here is traceability and integrity of the PMB, supported by adequate documentation.  Never undermine your EVMS by delaying or reducing project performance visibility through improper change control and data maintenance. The tools you’ll need to successfully manage and implement the 5 criteria listed above can include: change control logs, change management procedures, an active change control board, documentation showing impacts on budget, schedule, and scope.  And, if able, use your EV software to print reports that show exactly what changed—which is fabulous for reconciling the before and after scenarios.  The rule of thumb for revisions and data maintenance is “proceed with caution and leave a clear trail of breadcrumbs”.

Do you have any war stories cause by inadequate management of revisions and data maintenance?  Please share in the comments!  Stay tuned for my next blog where I’ll discuss Finding EV Software with a Low PITA Factor.  

- Melissa Duncan (About Melissa)

Read the previous posting - Right Sizing:  Analysis and Management Reports Showcase 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
EAC=Estimate At Completion  

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
OTB=Over Target Baseline
PC=Project Controls
PM=Project Manager
PMB=Performance Measurement Baseline
RAM=Responsibility Assignment Matrix
SPI=Schedule Performance Index
WBS=Work Breakdown Structure

Right Sizing: Analysis and Management Reports Showcase Your EVMS

This week we tackle the fourth of five in our five essential frameworks discussion; we will review the Analysis and Management Reports from the ANSI/EIA-748 guidance.

The analysis and reporting aspects of your EVMS are where the rubber meets the road.  They are your crystal ball that allows you to “see” into the future and make course corrections in your projects.  In this way, they are the very essence of Earned Value Management; they are the reason it exists in its current form.  The other criteria in the standard are set up to support the EVMS framework, but the analysis and reporting criteria are where you actually use the tool to better manage your projects.  Not surprisingly, selecting an Earned Value Management software that can generate the information you need—quickly and easily, becomes crucial.  I started my career as a very spoiled Project Controls Engineer and then became a very unspoiled Project Manager; so I can tell you firsthand, easy access your EV data can be a luxury.  So do your due diligence and take the time to find the reports and software that fits your needs.

Speaking of needs, what exactly do you need for analysis and reporting in your EVMS?  If you’re operating under a certified EVMS, then you have some prescribed analysis techniques and reports that must be completed for your customer (and your organization).  However, if you’re NOT required to be certified, where do you start?  There are so many different reports and ways to analyze the data—how do you know what’s right?  Let’s dive into the criteria contained in the ANSI standard and see which items are most critical to your success.

1. At least on a monthly basis, review variances.  Compare your planned work against your earned work to obtain the schedule variance.  Then compare your earned work against the actual cost of that work to obtain the cost variance.  If you have control accounts, compare the numbers at this level; if you don’t, compare the numbers at a level that makes most sense—in some cases, this will be at a level that will cause the most pain if not completed as planned.  Use your WBS and/or OBS (if you have one) to summarize or slice and dice the data for better visibility.
2. Highlight the significant variances and provide explanations for each one.  This will give you, your project team, management, and your customer a feel for the current status of the project.  You’re identifying potential problems and the reasons they exist.  But take note: the prerequisite for this action is to explicitly define your thresholds (keep them relatively simple) and make sure everyone knows what “significant” is, by communicating the thresholds.
3. Develop and implement corrective actions.  This is your chance to course correct the project.  Why review the variances if you’re not going to do anything about them, right? Also, corrective actions should be agreed upon by the management team.  This is one reason it is so important that they have the same reports you’re giving to the customer, and it’s also why they should be getting your EV reporting data on a periodic basis.  Remember that large course corrections must be performed before the project is 30% complete to affect the end result, which means reviewing performance and taking action early on.
4. Review and revise your EAC (Estimate At Completion) as necessary to reflect reality.  Things happen.  People and circumstances change.  The more reality you pour into your EAC, the better to see potential future problems.  You can use your performance to date to enhance your predictability, and as the project marches on, the more accurately you can adjust your EAC based on risks and opportunities.  It’s really best if you perform this exercise at least monthly—otherwise the effort can get overwhelming and feel like a rebaseline.
5. Put all of the above information into a report.  This formalizes your EVMS process and your data, and allows you to distribute it to the right people for more effective communication.

You may have noticed I left out the analysis and reporting of indirect costs.  In a non-certified EVMS, the indirect costs tend to be a bit of an afterthought.  It’s still important, but the department or program manager can work with accounting to look into any variances easily enough, so I personally wouldn’t put too much energy into it.

A bit of caution: it is common for the untrained manager to want to jump straight to analysis and reporting without properly setting up the framework for an EVMS.  Then they scratch their heads when the analysis doesn’t make any sense, and decide that Earned Value has no value.  That’s a shame.  He or she needs to be educated, because—as with many valuable tools, you get what you put into it.  This is also a fancy way of saying (GIGO) Garbage In Garbage Out. 

All of the items I mentioned can be done “offline”, in MS Excel or Word, but that’s a bit cumbersome and creates room for additional errors as well as making only a select few responsible for maintenance (i.e. no vacation for them…).   When considering an EV software solution, look for how it helps you track the project and what it does to make your life easier.  Allow the EV software do the work for you, such as creating graphs, project status reports, and variance analysis reports. That will allow you to focus on the more important things, like managing the project.

How do you perform analysis and reporting on your project?  Do you have any favorite or dearly hated reports?  Please share in the comments.  And check out my next blog, where I’ll take a peek at the most beneficial ANSI criteria for Revisions and Data Maintenance.

- Melissa Duncan (About Melissa)

Read the previous posting - Right Sizing: Finding the balance between Accounting’s "numbers" and 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
EAC=Estimate At Completion  

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

Right Sizing: Finding the balance between Accounting’s "numbers" and Your EVMS

This week we tackle the third of five in our five essential frameworks discussion, we will review the Accounting Considerations from the ANSI/EIA-748 guidance.

If you’re actively using Earned Value as a management tool, then it’s very likely you have a love/hate relationship with the accounting folks.  You love them when they provide details and data you need to answer variances, and they serve as a bit of a watchdog for your project costs.  However, you hate them when their systems or processes are not set up correctly to effectively manage projects.  That wouldn’t be so bad, except in many cases they are reluctant to change the setup, or complain it’s too difficult.  Remember that people are a bit more willing to change if you offer to do most of the work for them, and in this case, it behooves you to do it because it will make for more effective and less painful project management.  While integrating the accounting software with your Earned Value Software can be challenging, it is well worth your time.

So, what can you do right now, to guide or change the direction of the accounting system setup so it is Earned Value friendly?  Take a look at the requirements for a certified EVMS in the ANSI/EIA-748 and implement the basic framework so your organization can grow into a certified system when, or if, the time comes.  It’s a solid framework that will only help you manage your projects, whether you need to be certified or not.  If you’re working with an existing setup, map out a crosswalk showing how to go from the old setup to the new setup.  This may include using different software, but most likely it will just be changes to codes and processes, since most accounting systems are robust enough to handle an EV friendly design.  

What are the accounting considerations from ANSI/EIA-748 we should consider?

1. Record direct costs in a manner consistent with the budgets in your accounting system.  This sounds relatively simple, right?  Here’s the part that most people miss: they fail to collect their actual cost in the same manner as the budget.  If you budgeted for 5 tons of gravel to be “earned” upon delivery under control account XYZ, then record the actual costs upon delivery as well (in the same control account), instead of when it is ordered or under control account ABC.  This sounds like common sense, but it is all too common to record actual cost in a way that’s different than how it was budgeted, or under a different control account.  Make sure you formalize the process to aid in consistency each month.
2. At a minimum, your project costs must be reconcilable with the accounting system.  Costs associated with your project should have a charge code pointing them to the correct control account, or at least to the correct project.  If you are using control accounts and charge codes, it’s extremely important that they are only pointed to one corresponding WBS element.  Double counting the costs or having to determine how to split the costs between the applicable WBS elements is just a headache waiting to happen!  This also means that the WBS you’re using to account for the costs will roll up to the parent WBS successfully.  I have seen people attempt to point costs to a level 5 WBS element, and then also at level 2 or 3.  If you’re WBS is set up correctly, and you’re only allocating costs to one element, this won’t be a problem.
3. Everything described in item 2 above, is also applicable to the OBS; that is, control accounts and charge codes must correspond to only one OBS element for accurate performance reporting.  This also helps you hold the correct departments/groups responsible for their work on the project.
4. If material or unit costs are applicable, make sure your processes are consistent in how you budget and account for them between the accounting system and the project.  This will help you measure performance for these items on the project.
5. The standard also discusses allocated indirect costs to the project.  However, for organizations that aren’t required to have a certified EVMS, I think this one can be less rigid, or even skipped altogether.  You can still manage the project well enough without spending a lot of time on the indirect costs—let the department responsible for the project handle it. 

For this section of the ANSI/EIA-748, you can easily see that consistency in planning and costing (including taking credit for performance) is key.  The right earned value software can make it easier to be consistent in planning and costing, as well as making it easier to be consistent between the accounting system and the project.  Let these rules be your guiding principles with the accounting considerations for an EVMS, and you’ll be well on your way to a headache free framework that yields the highest results for the least amount of effort!

Have you experienced any headaches with aligning your project or accounting system with EVMS principles?  Please share your story in the comments.  Stay tuned for the next blog; we’ll discuss the most crucial Analysis and Reports criteria of an EVMS.

- Melissa Duncan (About Melissa)

Read the previous posting Right Sizing: Shrink to Fit - One Size Does Not Fit All

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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

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

Right Sizing Your Earned Value Management System

The concept of obtaining the biggest bang for your buck is not new, certainly there are thousands of managers attempting to maximize their Return On Investment (ROI) every day.  Truly, a smart business will squeeze every ounce of worth out of any good or service purchased; this is just common sense.  The trick is to find the right balance of squeezing those ounces without sacrificing something along the way, such as burning out your resources.  The same is true for your Earned Value Management System.  Implementing your EVMS is similar to a game of limbo; the lower you go, the harder it is to maintain balance.  More details and granularity means more complexity, time, and money.  It costs significantly more to control and maintain very low levels of detail.  Yet if the data exists at higher, summary levels, it won’t yield the details you need to effectively manage and you’ll lose control and visibility of the status of the project.

So how do you find your balance when implementing an EVMS?  The key is in the planning and design of the system.  The level of detail of the EVMS should be commensurate with the organization’s control and reporting goals, as well as the customer’s requirements.  This is one of those instances where you MUST define the rules before you play the game.  A certified EVMS, adhering to the ANSI/EIA-748 32 criteria, will have set requirements and therefore some of the planning and design is fixed.  Variables will include structure, procedures/processes, and the EVMS software tools.  The key in this scenario is to keep it as simple as possible and be careful in your design and software choices.  You can easily add complexity with systems that don’t speak the same language and intricate interfaces will make your head hurt.  Do your research and planning; map out the processes and software—you won’t regret it.

But what about organizations and projects that don’t require a certified EVMS?  Should they toss the whole concept out the window?  I’ve worked in organizations that attempted to implement various aspects of the 32 criteria—or some rudimentary Frankenstein cousin of them in any case.  Sometimes it works, other times it’s so painful you begin to think that implementing all 32 criteria would be easier!

When scaling your EVMS to align with your organization’s goals, remember to make it flexible enough that your company can grow without it blowing up.  By putting a few key elements into place, you can make your implementation easier, and crossing over into a certified system won’t require a painful redesign.  This means setting up the framework for a certified EVMS, but only implementing the pieces you really need right now.  Using the ANSI/EIA-748 Intent Guide, your framework should cover the five areas containing the 32 criteria.  These areas are:

1.     Organization

2.     Planning, Scheduling, and Budgeting

3.     Accounting Considerations

4.     Analysis and Management Reporting

5.     Revisions and Data Maintenance

Implementing only a few elements of each area can give you the ROI you need in order to convince management an EVMS is a good investment.  It will also set you in the right direction if you ever do need to get your EVMS certified.  

In our next Blog, we’ll break down these five areas and discuss which elements are most needed as you begin marching to the EVM drum.  However, you can start looking at the 32 criteria now, and determine which elements seem most useful to your organization.  Your gut feeling may be right on the money.

- Melissa Duncan (About Melissa)

Read the previous posting Weathering the Storm of Cost Variance Analysis

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

PM=Project Manager

PC=Project Controls

CAM=Control Account Manager
CPI=Cost Performance Index

EVM=Earned Value Management

EVMS=Earned Value Management System

EAC=Estimate At Completion 
WBS=Work Breakdown Structure

OBS=Organizational Breakdown Structure
SPI=Schedule Performance Index
IPMR=Integrated Program Management Report

How to avoid being sucked into the vortex of Schedule Variance Analysis: Part One

Welcome to the Bermuda Triangle of project management, where even the best PM’s can get lost and fired along the way.  Writing a schedule variance analysis for a certified EVMS can be painful, much like a love triangle.  You must please the client, your management, and the project—all while trying to keep the political fire under control.  The project is in hot water and you have to ease the minds of your management and the client, but give it enough teeth in order to get the assistance you may need to get the project back on track, such as additional resources.  The client wants ALL the details, while management does not want you to share any of the dirty laundry, and the poor project just needs some tender loving care to get back on track.  So how do you navigate these turbulent waters?

Simple.  Be specific when writing the reasons, impacts, and corrective actions.  Do not add unnecessary information or lay blame—just stick to the facts.  Identify the tasks behind schedule, provide a brief reason, and then focus on the impact to the project and the corrective actions being taken.  And the number one mistake I see in schedule variance analysis is confusing cost with schedule.  For example, if any part of the explanation for the variance has the word “cost” in it, you’re headed in the wrong direction.  An overrun in cost is not even part of the schedule variance equation!  You’re only looking at how much work was scheduled compared to what was done.  Also, remember that you cannot take earned value performance for work that is not in the baseline. 

Sometimes poor variance write-ups are due to missing the real cause of the variance.  Finding the correct cause can often lead to the appropriate impact and corrective action.  So, if you’re really struggling with identifying the cause of the variance, remember, possible schedule variance (SV) causes include:

• Poor baseline schedule (does it reflect reality?)
• Subcontractor/vendor cannot deliver when needed
• More/less effort than planned (be specific)
• Insufficient resources (staffing)
• Labor disputes/work stoppage,
• Resource availability (is it there when I need it?)
• Requirement changes 

All of the above examples are issues that can directly affect the earned value realized by the project.  If you have gone to the trouble to implement the elements of EVMS, at least be sure to maintain its integrity with strong schedule variance analysis.

This is part one of a two part series on variance analysis.   Part Two takes a look at some real world examples and examine why they are good or bad variance write-ups.   

Click here to view : Part Two of “How to avoid being sucked into the vortex of Schedule Variance Analysis”

Next week we’ll tackle the CPI report and look at how to write a solid cost variance analysis. 

- Melissa Duncan (About Melissa)

Read the previous posting Earned Value Exposed: What has Your Earned Value Software Done for You Lately?

Subscribe to Blog 

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

PM=Project Manager

PC=Project Controls

CAM=Control Account Manager
CPI=Cost Performance Index

EVM=Earned Value Management

EVMS=Earned Value Management System
WBS=Work Breakdown Structure

OBS=Organizational Breakdown Structure
SPI=Schedule Performance Index
IPMR=Integrated Program Management Report

How to avoid being sucked into the vortex of Schedule Variance Analysis: Part Two

The discussion in Part One reminded us to stay focused on the facts as an essential aspect of completing schedule variance analysis in support of earned value management, with a few tips on what not to do.  Let’s take a look at some examples and examine why they are good or bad variance write-ups.  These are real examples from real projects that were behind schedule from an earned value perspective (earned value was less than scheduled/planned value).

Good Schedule Variance Report – Example #1 
Reason: Progress slowed due to difficulty of removing control rod drive mechanisms.  Shipping of CRDM’s to laboratory was behind schedule due to laboratory documentation and procedural issues.  Non-Destructive Assay (NDA) is slow due to resources working on higher priority lab projects.
Impact: No long-term impact to the project with additional labor support for NDA coming in February.  With proper support the project will be back on schedule in March.
Corrective Action: Continue to use selective overtime and make adjustments in the sequencing of work.  Working with the laboratory to resolve documentation issues and NDA labor availability.
Comments:

• The reason statement is clear on what work has been delayed and why, yet it is very brief.
• The impact statement tells the possible results/severity of the delay and addresses when recovery will be expected (including the “with proper support” caveat condition).
• Action statements tell what is being done to recover the slip in schedule.

Good Schedule Variance Report – Example #2 
Reason: Behind schedule on removal of TR-N1 due to equipment breakdowns and poor-weather delays (excessive winds).
Impact: TR-N1 removal is three weeks behind schedule; which, if not recovered, will impact replacement schedule of new transformer and the testing/turnover milestone.
Corrective Action: A recovery schedule has been prepared and implemented that will recover the schedule in time to meet the testing/turnover milestone.  Equipment repairs have been made but schedule recovery is based on continuous equipment operation.  Routine maintenance frequency has been increased to minimize the extended downtime.  Additional spare parts have also been purchased.  With the seasonal change, there should not be weather delays during the recovery period.
Comments:

• The reason/issue is brief but it is clear what caused the delay and why there is a schedule variance.
• The impact addresses that a milestone will be affected if action isn’t taken.  This provides an early warning, documents the current situation, and will get management support for recovery actions.  The specific milestone impacted is also stated.
• The corrective action statements tell what is being done to recover the slip in schedule and the expected result (when).  Additional information is added to help clarify the expected results.

Good Schedule Variance Report – Example #3
Reason: Extended discussions by the utility administration and the board of directors led to delays in starting the following work: Task #1 (name the task)
-     Task #2 (name the task)
       -     Task #3 (name the task)
Impact: The delay will not allow completion of task #2 this fiscal year, as planned.  Tasks #1 and #3 can be completed this FY but with revised completion dates.  The milestone deliverable dates cannot be met.
Corrective Action: A revised schedule is being prepared to incorporate the later start dates.  Since the delay is beyond company control, a baseline change will be prepared to incorporate the budget and resource changes into the Baseline.  This change will not have a significant impact to overall plant operations.
Comments:

• The reason statement specifies the tasks that are impacted by the delay and why.
• The impact statement sates the expected impact to the tasks specified (unrecoverable) and that a key milestone is also impacted.
• Corrective actions relate to what will be done relative to the impact.

Poor Schedule Variance Report - Example #4
Reason: Work was behind schedule at the end of the month.
Impact: Negative schedule variance.
Corrective Action: Full recovery will be achieved.
Comments:

• Reason needs to tell the reader what caused the delay and why.
• The impact statement needs to assess the impact on other work, key milestones, and the activity completion date. 
• The corrective action needs to identify what the project is doing to correct the situation.

Poor Schedule Variance Report – Example #5 
Reason: Behind schedule due to lack of resource availability
Impact: Expect to recover schedule.
Corrective Action: Offers have been extended.
Comments:

• The reason needs to be more specific; it should address the work that is being delayed.  Why adequate resources were not provided should also be addressed. 
• The impact statement does identify the expected result but it also needs to state the impact on other work or key milestones.  It’s appropriate to state that the work is not on the critical path and there is no impact to milestones.
• The corrective action should be more specific in identifying what the project is doing to correct the situation; i.e., how many and what personnel are being added and when is recovery expected?  Usually, overtime is used rather than a new hire; if so, consider the cost variance impact as well.

Writing a proper schedule variance analysis does not have to be difficult, but you will need to spend enough time to think carefully and ensure you have addressed the specific issues adequately.  Do not try to rush through the write-ups or you risk undermining the benefits of earned value management.  Good luck!

Do you have any great examples of what to write or not write?  I know some of you must have some interesting stories, so consider sharing them with us.  Please share in the comments below. 

Next week we’ll tackle the CPI report and look at how to write a solid cost variance analysis.

- Melissa Duncan (About Melissa)

Read the previous posting Earned Value Exposed: What has Your Earned Value Software Done for You Lately?

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

PM=Project Manager

PC=Project Controls

CAM=Control Account Manager
CPI=Cost Performance Index

EVM=Earned Value Management

EVMS=Earned Value Management System
WBS=Work Breakdown Structure

OBS=Organizational Breakdown Structure
SPI=Schedule Performance Index
IPMR=Integrated Program Management Report

What Has Your Earned Value Software Done For You Lately?

Have you ever cursed your Earned Value management software for not easily giving you the data you want? Perhaps it does not provide certain reports, thus necessitating the use of additional software just to get the data out in a palatable format.  Or maybe you are always pushing the data into another software just so you can analyze the problems with this month’s performance. As sad as it sounds, it is rather common to use one software to generate data, and yet another to report or analyze it.  For example, raise your hand if your Earned Value software can generate ready-to-publish CPRs or IPMRs without using another software program or add-on.  It’s unlikely you raised your hand.  Now I want you to ask your EVM software, “What have you done for me lately?”  Perhaps when Eddie Murphy and Janet Jackson made those words famous, they weren't referring to EVM software.  However, it doesn't mean you can’t apply the concept to it!  

Why are we doing this to ourselves? Well, in simple terms, it’s because we haven’t had much choice.  EVM software typically comes with a few canned reports, and most are clunky when it comes to drilling down into your 
data or slicing and dicing it.  Sometimes a user must look at more than one screen in the software to put all the pieces together to find a problem.  Let’s be honest; drilling down and finding exactly the activity/resource that caused the funky variance should not require three monitors so you can find the problem.  It’s time consuming and costly—especially if you’re forced to trace the issue through multiple software programs.  Don’t forget to add in the headaches associated with buying added software, creating the interfaces, “massaging” the data to load it into the next software, oh, and the added manual steps that are just begging for a mistake!  This isn't exactly the automation dream you were looking for, is it?  

EV software is supposed to make your life easier, by highlighting areas of concern early enough to make positive changes for the project.  The valuable EV data within the system absolutely must be easy to access, otherwise one of two things can occur: you risk having a “surface level” EV solution that won’t be used for real analysis and control of the project.  Or, you may be spending too much time getting the data out of your EVM software for reporting and analyzing—which, let’s face it, is wasteful.  Your time would be better spent actually trying to correct the problems on the project, not fight with your EVM software.

Setting up your structure or data inputs with the end goal in mind can help make the canned reports more meaningful and useful.  But if you’re already underway and changing the inputs would be too difficult, then what recourse do you have?  You’re forced to change the outputs.  That usually means added software, whether it be wInsight, Empower, MS Excel, MS Access, or sometimes a combination of several software programs.  And don’t forget what happens when a new manager comes in and they want to see the data sliced in a different way.  Might as well attempt to pull a rabbit out of your hat.  So do your research and choose an EVM software that really can save you time and money while giving you the data you need.  Software that integrates cost and schedule can be pricey, so of course, being prudent that you’re getting the biggest bang for your buck only makes sense. A good EVM application will have ready-to-publish reporting capabilities with solid drill-down functions as standard features.   Limitations in any software is a given, but if you do your research, you CAN find an EV software that will generate the data in a format you can actually use, without forcing you to buy additional software.  

To aid you in your quest for better earned value management software, below are some things a serious earned value management system ought to be able to easily perform or address:

• Generating pre-formatted and ready to publish CPR/IPMRs, SPA and CPI/SPI graphs, cost element pie charts, Control Account Plans, dashboards, etc., at various levels in the WBS and filter to exclude overheads, G&A, etc.  You shouldn’t need another software program to generate the necessary reports.
• Drill-down capabilities, such as clicking on a control account and automatically drill-down into the work packages, control account plans, variances, or cost elements.
• Definable variance thresholds at any level of the WBS and automatic flagging when a threshold is exceeded, along with a screen to enter the variance analysis and corrective actions to produce your variance reports (CPR/IPMR Format 5).
• Generating pivot tables within the software, instead of having to export it to MS Excel or MS Access.
• Speaking of exporting, your EV software should be able to export data, easily.  Only one or two clicks should be needed to get the data out of the software.
• If you do need to push the data into another program, your EV software should at least have open integration with other software.  It should be capable of utilizing simple interfaces.

Is there anything else you would add to this list?  How do you feel about your EVM software? What do you WISH it could do?  Please share your input in the comments.

Our next post looks at avoiding the political storm caused by weak schedule variance analysis. 

- Melissa Duncan (About Melissa)

Read the previous posting Earned Value Exposed: Obtaining EVMS Compliance When Management Can't Even Spell EVM.  

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