JTP - EV Presentation

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  • Introduction to Earned Value Management

    EVM Introduced by

    Stan Taylor

    to

    Democratic Alliance North West Province

    Gerda Tullues & Team

    11 November 2016

  • What is Earned Value Management?

    Earned Value Management (EVM) is a project management technique for measuring project or contract performance and progress;

    EVM has the ability to combine measurements of the project management triangle:

    Scope

    Time

    Costs

    In a single integrated system, EVM is able to provide accurate forecasts of project and contract performance problems, which is an important contribution for good project performance;

    Traditional methods for evaluating a projects or contracts health can cause misleading results. The EV process is a proven method for identifying the specific areas of a project that need early management intervention while they are still correctable;

    It is therefore considered a Performance Management approach

  • Why Use Earned Value Management ?

    Early Warning System: You will find one of the most important functions of EV is to provide an early warning system. This means a projects performance and productivity issues can be identified very early in a projects life. Significant cost and schedule variances are detectable when the planned work has reached as little as 10% completion on any portion of the project.

    Course Corrections: Part of the EV process is to determine the cause of performance issues in order to develop a corrective action plan. Course corrections are made much easier when performance issues are identified early. This is because the problem is still relatively small and there is plenty of time left in the project to allow a recovery plan to work.

    Management by Exception: A project managed at a control account or work package level allows management to easily identify the accounts with performance problems. Management can then focus its efforts on correcting those areas. Alternatively, management can recognize the areas of the project showing good performance.

    Communication Tool: Communication is stifled when problems are hidden. It usually backfires when there is an expectation that problems will fix themselves. EV is a communication tool helping everyone associated with a project to understand the answers to important questions like;

    What is the scope?;

    When is the work planned to be accomplished?;

    What is the estimated cost of the planned work?;

    What is the progress of the work?

  • PV (Planned Value) or BCWS (Budgeted Cost of Work Scheduled)

    AC (Actual Cost) or ACWP (Actual Cost of Work Performed)

    EV (Earned Value) or BCWP (Budgeted Cost of Work Performed)

    SV (Schedule Variance)

    CV (Cost Variance)

    SPI (Schedule Performance Index)

    CPI (Cost Performance Index)

    EAC (Estimate at Completion)

    Earned Value Terminology

  • Defined Scope of Work;

    Work Breakdown Structure (WBS);

    Approved Schedule;

    Approved Estimate / Contract;

    Monthly actual expenditure / claims;

    Monthly Schedule updates

    Requirement to implement Earned Value

  • Project Sponsors & Project Managers

    Only focus on SPI & CPI (> 1 is ahead of Schedule & Under Budget);

    No need to go into too much detail to understand health of project;

    Dashboard can be created to make reporting more understandable for Stakeholders

    Project Teams

    Cost Controllers can Pro-actively manage the cost vs performance;

    Cost Controllers can detect if material is wasted;

    Costs can be easier forecasted and analysed;

    Early warning on Scope, Cost & Schedule variances;

    Clear indication if costs is wasted or payments is made without actual achievements

    Government, Investors, Tax payers and Stakeholders

    Funds will be spend according to actual achievements;

    Projects will be delivered as per Scope & Schedule

    Who will benefit by using Earned Value

  • Example of work done

    WAFI-GOLPU Study

    Qty Unit Total Qty % Plan PV Qty % Actual Cost Qty % Comp. EV SPR CPR SV CV

    Study Management 665 Hour 1 000 246 565 85,1 850 995 590 79,8 798 216 566 85,1 851 210 1,00 1,07 215 52 993

    Mining 2 230 Hour 2 654 747 2 073 91,9 2 440 628 3 200 120,1 3 188 884 1 896 85,0 2 256 535 0,92 0,71 -184 093 -932 350

    Engineering & Infrastructure 3 951 Hour 4 282 625 3 672 91,6 3 920 816 4 577 103,0 4 411 315 2 963 75,0 3 211 969 0,82 0,73 -708 847 -1 199 346

    Process Engineering 1 750 Hour 1 939 059 1 660 93,9 1 820 130 1 987 93,8 1 818 471 1 488 85,0 1 648 200 0,91 0,91 -171 930 -170 271

    Drawing Office 3 270 Hour 2 557 186 3 090 92,9 2 376 048 4 864 134,1 3 430 321 2 616 80,0 2 045 749 0,86 0,60 -330 300 -1 384 572

    Project Services 4 640 Hour 2 899 380 4 310 92,4 2 679 093 5 316 114,3 3 313 846 3 016 65,0 1 884 597 0,70 0,57 -794 496 -1 429 249

    Sub Consultants 4 Months 3 772 410 3,5 89,0 3 357 010 3,5 35,5 1 339 977 3 80,0 3 017 928 0,90 2,25 -339 082 1 677 951

    Disbursements 4 Months 190 000 3,5 93,4 177 500 3,5 21,6 40 947 4 93,4 177 460 1,00 4,33 -40 136 513

    Escalation 3 Months 888 589 2,5 88,7 788 183 2,5 0,0 0 3 88,7 788 178 1,00 1,00 -5 788 178

    Total Contract Budget 20 184 242 Planned Value 18 410 403 Actual Cost 18 341 978 Earned Value 15 881 825 0,86 0,87 -2 528 578 -2 460 153

    Planned Value (BCWS) Actual Cost (ACWP) Earned value (BCWP)

    Contract Value Progressive Plan Progressive Actual Progressive Progress

    As at Sept. 2015

  • Example of work done

    Nominal Cost Cont. Total Actual Cost SPR CPR SV CV

    1.1 Mining Services 1.1.1 Occupational Environment 88 996 7 912 96 908 26 441 29,7% 13 905 15,6% 25 903 29,1% 0,53 0,54 -12 536 -11 997

    1.1.2 Geology and Geo technical 117 342 13 250 130 592 63 265 53,9% 39 466 33,6% 57 045 48,6% 0,62 0,69 -23 800 -17 579

    1.1 Total 206 338 21 161 227 500 89 706 43,5% 53 371 25,9% 82 947 40,2% 0,59 0,64 -36 335 -29 576

    1.2 Mining Development 1.2.1 Eastern Access Dev. 101 Level 266 330 11 068 277 399 141 643 53,2% 10 319 3,9% 161 209 60,5% 0,07 0,06 -131 323 -150 890

    1.2.2 Diagonal Acc. Haulage & Ramps 749 672 29 277 778 949 170 854 22,8% 6 614 0,9% 84 0,0% 0,04 79,13 -164 240 6 530

    1.2.3 In circle Dev. 100 Level - Infr. 42 287 1 852 44 139 9 494 22,5% 2 885 6,8% 23 209 54,9% 0,30 0,12 -6 609 -20 324

    1.2.4 Main Decline Dev. 100-101 Level 117 536 4 516 122 052 15 155 12,9% 0 0,0% 0 0,0% 0,00 #DIV/0! -15 155 0

    1.2.5 Incircle Dev. 101 Level Infr. 79 861 3 333 83 194 9 036 11,3% 662 0,8% 3 275 4,1% 0,07 0,20 -8 374 -2 613

    1.2.6 Development Incentives 184 361 502 184 863 47 850 26,0% 0 0,0% 0 0,0% 0,00 #DIV/0! -47 850 0

    1.2 Total 1 440 047 50 548 1 490 595 394 032 27,4% 20 480 1,4% 187 778 13,0% 0,05 0,11 -373 552 -167 297

    1.3 Development Equipm. 1.3.1 Access Dev. Equipment 374 068 12 966 387 034 128 997 34,5% 33 018 8,8% 33 060 8,8% 0,26 1,00 -95 978 -41

    1.3.2 Incircle Dev. Equipment 39 283 1 379 40 661 14 026 35,7% 118 0,3% 116 0,3% 0,01 1,02 -13 908 2

    1.3.3 Rolling Stock 17 731 1 479 19 209 0 0,0% 2 660 15,0% 2 652 15,0% #DIV/0! 1,00 2 660 8

    1.3 Total 431 081 15 823 446 905 143 023 33,2% 35 796 8,3% 35 828 8,3% 0,25 1,00 -107 227 -32

    1.4 Raise Boring 1.4.1 Incircle Raise Boring 2 265 118 2 383 0 0,0% 0 0,0% 0 0,0% #DIV/0! #DIV/0! 0 0

    1.4.2 Access Raise Boring 19 049 999 20 049 0 0,0% 95 0,5% 102 0,5% #DIV/0! 0,93 95 -7

    1.4 Total 21 315 1 117 22 432 0 0,0% 95 0,4% 102 0,5% #DIV/0! 0,93 95 -7

    1.5 Engineering Infr. 1.5.1 Refrigeration 79 428 5 553 84 980 39 932 50,3% 21 602 27,2% 20 486 25,8% 0,54 1,05 -18 330 1 116

    1.5.2 Services 193 370 11 919 205 290 48 267 25,0% 30 271 15,7% 43 486 22,5% 0,63 0,70 -17 996 -13 215

    1.5.3 Water Reticulation 14 344 1 046 15 390 765 5,3% 0 0,0% 0 0,0% 0,00 #DIV/0! -765 0

    1.5.4 Rock handling system 56 666 3 363 60 029 12 450 22,0% 2 793 4,9% 3 868 6,8% 0,22 0,72 -9 658 -1 076

    1.5.5 Electrical Reticulation 73 568 5 065 78 633 37 272 50,7% 20 045 27,2% 30 582 41,6% 0,54 0,66 -17 227 -10 537

    1.5.6 Other Equipment 84 010 10 947 94 957 32 687 38,9% 30 020 35,7% 27 041 32,2% 0,92 1,11 -2 667 2 979

    1.5 Total 501 387 37 893 539 280 171 375 34,2% 104 732 20,9% 125 464 25,0% 0,61 0,83 -66 643 -20 733

    1.6 Project Management 1.6.1 Project Team 131 542 6 109 137 652 41 367 31,4% 25 256 19,2% 35 723 27,2% 0,61 0,71 -16 111 -10 466

    1.6 Total 131 542 6 109 137 652 41 367 31,4% 25 256 19,2% 35 723 27,2% 0,61 0,71 -16 111 -10 466

    1.7 Shaft Allocated Costs 1.7.1 Financial Costs 400 476 232 400 708 220 407 55,0% 221 535 55,3% 237 177 59,2% 1,01 0,93 1 128 -15 642

    1.7 Total 400 476 232 400 708 220 407 55,0% 221 535 55,3% 237 177 59,2% 1,01 0,93 1 128 -15 642

    Total Project 3 132 187 132 884 3 265 071 1 059 910 33,8% 461 265 14,7% 705 019 22,5% 0,44 0,65 -598 645 -243 754

    Planned Value Earned Value

  • Example of work done

    Nom. Cost Cont. Total PV % Plan EV % Comp. AC % Actual SPR CPR SV CV

    1.5 1.5.1 1.5.1.1 15 813 386 1 385 286 17 198 672 13 407 986 84,8% 9 329 898 59,0% 13 165 547 83,3% 0,70 0,71 -4 078 088 -3 835 650

    1.5.1.2 9 135 000 609 000 9 744 000 9 135 000 100,0% 9 043 650 99,0% 3 269 862 35,8% 0,99 2,77 -91 350 5 773 788

    1.5.1.3 43 717 306 2 925 544 46 642 851 13 954 285 31,9% 0 0,0% 0 0,0% 0,00 -13 954 285 0

    1.5.1.4 10 762 120 632 800 11 394 920 3 435 200 31,9% 3 228 636 30,0% 4 051 060 37,6% 0,94 0,80 -206 564 -822 424

    79 427 812 5 552 630 84 980 442 39 932 471 50,3% 21 602 184 27,2% 20 486 470 25,8% 0,54 1,05 -18 330 287 1 115 714

    1.5.2 1.5.2.1 1 856 449 122 191 1 978 640 0 0,0% 0 0,0% 0 0,0% 0 0

    1.5.2.2 33 787 565 2 241 749 36 029 314 17 761 589 52,6% 9 224 005 27,3% 13 219 747 39,1% 0,52 0,70 -8 537 584 -3 995 742

    1.5.2.3 34 228 665 2 090 415 36 319 081 10 365 027 30,3% 8 146 422 23,8% 11 719 633 34,2% 0,79 0,70 -2 218 605 -3 573 211

    1.5.2.4 73 986 329 4 725 117 78 711 446 20 140 583 27,2% 8 286 469 11,2% 11 909 070 16,1% 0,41 0,70 -11 854 114 -3 622 601

    1.5.2.5 10 962 845 619 529 11 582 374 0 0,0% 2 455 677 22,4% 3 497 926 31,9% 0,70 2 455 677 -1 042 249

    1.5.2.6 38 548 359 2 120 464 40 668 823 0 0,0% 2 158 708 5,6% 3 139 908 8,1% 0,69 2 158 708 -981 200

    193 370 212 11 919 466 205 289 677 48 267 199 25,0% 30 271 282 15,7% 43 486 284 22,5% 0,63 0,70 -17 995 917 -13 215 002

    1.5.3 1.5.3.1 14 344 349 1 045 547 15 389 895 764 987 5,3% 0 0,0% 0 0,0% 0,00 -764 987 0

    14 344 349 1 045 547 15 389 895 764 987 5,3% 0 0,0% 0 0,0% 0,00 0,00 -764 987 0

    1.5.4 1.5.4.1 39 895 341 2 379 281 42 274 622 12 450 466 31,2% 2 792 674 7,0% 3 868 281 9,7% 0,22 0,72 -9 657 792 -1 075 608

    1.5.4.2 10 505 112 612 909 11 118 021 0 0,0% 0 0,0% 0 0,0% 0 0

    1.5.4.3 6 266 013 370 377 6 636 390 0 0,0% 0 0,0% 0 0,0% 0 0

    56 666 466 3 362 567 60 029 033 12 450 466 22,0% 2 792 674 4,9% 3 868 281 6,8% 0,22 0,72 -9 657 792 -1 075 608

    1.5.5 1.5.5.1 39 185 475 2 659 735 41 845 210 17 404 457 44,4% 8 228 950 21,0% 11 760 678 30,0% 0,47 0,70 -9 175 507 -3 531 728

    1.5.5.2 3 542 026 220 419 3 762 445 1 127 388 31,8% 2 479 418 70,0% 3 675 990 103,8% 2,20 0,67 1 352 031 -1 196 571

    1.5.5.3 8 654 165 594 541 9 248 706 8 654 165 100,0% 6 230 999 72,0% 10 387 875 120,0% 0,72 0,60 -2 423 166 -4 156 876

    1.5.5.4 22 186 526 1 590 478 23 777 004 10 086 410 45,5% 3 106 114 14,0% 4 757 520 21,4% 0,31 0,65 -6 980 296 -1 651 406

    73 568 193 5 065 172 78 633 365 37 272 419 50,7% 20 045 481 27,2% 30 582 063 41,6% 0,54 0,66 -17 226 939 -10 536 582

    1.5.6 1.5.6.1 4 494 620 158 197 4 652 817 1 665 371 37,1% 3 051 847 67,9% 4 382 521 97,5% 1,83 0,70 1 386 475 -1 330 674

    1.5.6.2 31 174 102 1 623 651 32 797 753 0 0,0% 0 0,0% 0 0,0% 0 0

    1.5.6.3 11 730 492 823 475 12 553 967 8 600 762 73,3% 6 099 856 52,0% 10 032 863 85,5% 0,71 0,61 -2 500 906 -3 933 008

    1.5.6.4 36 610 848 8 342 013 44 952 861 22 421 090 61,2% 20 868 183 57,0% 12 625 846 34,5% 0,93 1,65 -1 552 907 8 242 337

    84 010 062 10 947 337 94 957 399 32 687 224 38,9% 30 019 886 35,7% 27 041 230 32,2% 0,92 1,11 -2 667 338 2 978 656

    501 387 093 37 892 718 539 279 811 171 374 766 34,2% 104 731 506 20,9% 125 464 328 25,0% 0,61 0,83 -66 643 260 -20 732 822

    1.6 1.6.1 1.6.1.1 131 542 316 6 109 327 137 651 643 41 367 182 31,4% 25 256 125 19,2% 35 722 517 27,2% 0,61 0,71 -16 111 058 -10 466 392

    131 542 316 6 109 327 137 651 643 41 367 182 31,4% 25 256 125 19,2% 35 722 517 27,2% 0,61 0,71 -16 111 058 -10 466 392

    131 542 316 6 109 327 137 651 643 41 367 182 31,4% 25 256 125 19,2% 35 722 517 27,2% 0,61 0,71 -16 111 058 -10 466 392

    3 132 186 899 132 884 303 3 265 071 202 1 059 910 134 33,8% 461 265 011 14,7% 705 018 816 22,5% 0,44 0,65 -598 645 123 -243 753 804

    Total Project Value

    Planned Value Actual Cost Earned value

    Progressive Plan Progressive ActualProgressive Progress

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    Earned Value AnalysisPV vs AC vs EV

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    Earned Value AnalysisCPR & SPR

    CPR SPR

  • Can Project Teams afford not to do Earned value on

    Projects or Contracts?

    NO !!The ultimate goal of any project is that it meets its deadlines, accomplishes its objectives and comes in at or under budget.

    In September 2009, a study released by ObjectWatch, a market research and consulting firm, showed that failed information technology projects alone cost worldwide businesses and agencies $6.2 trillion per year.

    While there is no system that can guarantee that your project will succeed, Earned Value Management (EVM) will give your project a better chance for success.

  • Questions ?