Today’s post provides a short summary of how to build a schedule that will facilitate Earned Value Management (EVM) reporting. When coming from a private sector construction environment were an EVMS isn't typically required, the idea of creating a schedule in a different way than you are used to might be a little daunting.
The subject " Earned Value Management" could span many, many blog posts, but I hope this post at least helps summarize and demystify the process of creating a schedule that supports earned value management.
In case you've never heard the term before an Earned Value Management System (EVM) is essentially a comprehensive set of management methods and tools that integrate project scope, schedule, and cost so a person can objectively measure project performance and forecast future outcomes.
Just a note: There are 32 guidelines that a valid EVM System (EVMS) needs to adhere to and they are generally referenced as ANSI/EIA-748. There are numerous online resources that can help you learn more about EVMS and the 32 guidelines so I won't be covering that right now but if you are curious you can find the definition and intent of the 32 guidelines in the NDIA resource located here.
The intent of today's post is just to outline the process of creating an EVM schedule by providing some basic steps:
1. Identify Key Milestones that summarize major phases or deliverables within the work scope.
2. Develop the Work Breakdown Structure (WBS): Start by breaking down your project into smaller, manageable components. Each component should be well-defined and have a clear deliverable or outcome. This breakdown will serve as the framework for everything that follows. Think of it as an outline.
3. Define the Work Packages: Provide more detail under the WBS structure by creating work packages. A work package is a collection of related activities that are necessary to complete a specific deliverable. The work packages will contain the tasks, the resources required, the duration and the budget. You should keep your work packages shorter than 6 months and the activities within it shorter than 44 days if possible.
4. Determine task dependencies: Identify the dependencies between the tasking that makes up each work package. Just like in any schedule, some tasks may need to be completed before others can start, while some can be worked on concurrently. Use Finish to Start (FS) relationships for 90% of the relationships. If FS relationships don't work for the scope, then break down the activities into smaller chunks so you can avoid Start to Start (SS) plus lag.
5. Estimate task durations: Just like in any schedule you'll need to estimate the time required to complete each task. Consider factors like available resources & skills required. The estimates should be realistic and based on historical data or the experienced judgment of the project manager, estimator, or control account manager. Again try to keep the duration of each task shorter than 44 days whenever possible. You may need to add more detail if you find that more than 5% of your activities are longer than 44 days. Long duration activities make it more difficult to see and understand the progress being made. Shorter activities are more easily tracked as they can start and finish and earn their full value within 2 months.
6. Identify resources: Determine the resources (such as people, equipment, subcontractors or materials) needed to carry out each task.
7. Build the schedule: Use a scheduling tool such as P6 or MS Project to create the WBS and all of the work packages/activities you've defined. You can find info on how to create the WBS in P6 in a previous post. If you need help learning how to create activities in P6, this blog has a post on that too!
8. Ensure all activities other than the project start milestone and project finish milestone have a predecessor and successor.
8. Review the longest path & near critical activities: Use the scheduling tool to identify and review the longest path. Make sure it is clear and true. Does it make sense in terms of what you know? Regarding reviewing near critical activities, you might want to establish a float threshold with the PM such as identifying any activity with less than 10 days of float. You could also come up with a threshold for near critical activities such as having float less than 10% of it's remaining duration. If your organization uses a schedule risk assessment method you may want to add some activity coding so you can keep an eye on high risk activities rather than just relying on it's float calculation. These are just some general methods of identifying the activities that need to be carefully monitored as the job progresses. Always review what the tool is telling you & ask yourself does it pass the "sniff test"? If not, you might have invalid logic or some errant lag hidden somewhere in the chain.
9. Input the budgeted value for each task or work package: This is also known as budgeted cost of work scheduled, BCWS or planned value. The planned value represents the budgeted amount for each task. This value is different at different points in time so you may need to adjust the cost spread to ensure that the budget is aligned with the amount of work being performed.
10. Review the schedule with all stakeholders. Make adjustments based on their input as needed.
11. Establish the baseline: Once you’ve developed the schedule and reviewed with all stakeholders you'll want to establish it as the project baseline. This baseline serves as a reference point against which you'll measure actual progress and performance.
12. Track actual progress: As the project progresses, track the actual progress of each task. Record the actual start and end dates, as well as the actual cost incurred for each task.
13. Calculate earned value (EV): Determine the earned value (also known as budgeted cost of work performed, BCWP) for each task. The earned value represents the value of work completed at a given point in time, based on the schedule. It is typically calculated by multiplying the percent complete of a task by its planned value (PV or BCWS).
14. Calculate performance metrics: Use the data gathered to calculate key performance indicators in EVM, such as schedule variance (SV), cost variance (CV), schedule performance index (SPI), and cost performance index (CPI). These metrics help assess the project's progress, efficiency, and overall performance. Stay tuned for a future blog post further explaining these metrics!
15. Analyze and take corrective actions: Regularly review the performance metrics and analyze any significant deviations from the planned values. Identify the causes of the variances and take corrective actions or make a plan to bring the project back on track. This may involve adjusting the schedule, reallocating resources, or revising estimates for the work left to be completed.
17. Update the schedule: Update the schedule at least monthly to reflect any changes in task durations, dependencies, or resource allocations. The idea is to ensure the schedule remains accurate and aligned with the project's current status.
Seventeen steps is a lot I know! There is plenty more that can be said but I hope this post has at least helped provide a basic understanding of how to create a schedule that supports earned value management and enables effective monitoring and control of your project's progress and performance.
If you have any questions or need assistance, feel free to reach out!
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