29/06/2009

http://www.gantthead.com/articles

Print Close

Easy as Pie
Andrew Makar, PMP
October 24, 2005
For the past three articles, I've discussed earned value theory and its application using MS-Project. If you've adopted earned value and incorporated it into your status reviews, a tendency to track each week's earned value metrics emerges. Once earned value is institutionalized in your status review process, your customers, sponsors and senior management will want to know how the project has progressed each week. Whenever management requests metrics on a process or asks project managers to track anything, a spreadsheet emerges as the defacto standard for management metrics. Before you go off and develop your own spreadsheet to track earned value, review the attached template that provides an easy-touse format that calculates all the metrics I discussed in my previous articles and a few new metrics. All you need to do is provide three simple numbers: planned value (PV), earned value (EV) and actual cost (AC). The ezEVA template is separated into four tabs: Instructions, Definitions, ezEVA Worksheet and the EVA Chart. The Instructions and Definitions are self explanatory and summarize the definitions discussed in the previous articles. The ezEVA Worksheet is the historical log used to track earned value metrics over the length of the project. The ezEVA Worksheet tab contains three key sections: Project Information, EVA Status Options and EVA Data Table. Figure 1 provides a tool snapshot:

gantthead.com//articlesPrint.cfm

1/4

29/06/2009

http://www.gantthead.com/articles

Fi g u re 1 e z E V A Te m p l a t e

P r o j e ct Info r ma ti o n S e cti o n The project information section lists several key fields that drive the additional earned value calculations. The data for these fields come from funding documents or the project plan. Fie ld Project Name Project Start Date Project End Date Number of Calendar Days Project Budget (BAC) Hours Project Budget (BAC) Dollars Descr i p ti on Name of the program or project Baseline project start date Baseline project end date This value is calculated from the project dates. The budgeted number of resource hours required to complete the project The budgeted amount of dollars allocated to complete the project

E VA S ta tu s O p ti o ns The EVA Status Options section determines the traffic light color for the SPI and CPI calculations. Organizations implementing traffic light status reporting and earned value metrics need to establish objective ranges for the Schedule Performance Index (SPI) and Cost Performance Index (CPI). The tolerance ranges determine the color of the SPI or CPI index based on the minimum and maximum values. The template is configured with the following ranges for green, yellow and red status colors. S ta tu s Co l o r To le r a nce Ra ng e Green Yellow Min 0.95 0.85 Ma x 1 0.94

gantthead.com//articlesPrint.cfm

2/4

29/06/2009
Red

http://www.gantthead.com/articles
0 0.84

These ranges should be used as a guideline. In the example, a project that is 5 percent off schedule or budget can still be considered a Green project. Yellow projects could be 15 percent off schedule or budget and should be examined for root causes. Red projects exceeding the 15 percent variance should be inspected for performance problems and corrective action. Professional judgment should still be applied to each project since the impact of a 15 percent variance on a small 100 hour project can be vastly different than a 15 percent variance on a 100,000 hour project. The objective indicator provides another dimension of project health. Outstanding issues and open risks also need to be considered to determine project health. E VA Da ta Ta b l e The E VA Da ta tab l e is the historical record of earned value metrics during the length of the project. The template is configured for 52 weeks and can be expanded by copying rows for subsequent weeks. The entire template contains multiple formulas using the data from the Project Information section and the EVA Data Input columns. The We e k co lu mn represents the numerical week in the year and the Da te col u mn represents the week ending date. The Da Date te va l u e is calculated from the P r o je ct S ta r t Date fi e ld and is used to report status at the end of the week. If your status reporting occurs midweek, modify the date values as appropriate in the Date column. The E VA Da ta Inp u t co l umns are highlighted in a blue font in EVA Data Table section. On a weekly basis, the project manager should enter the PV, EV and AC calculations from the MS-Project plan. Remember MS-Project refers to Planned Value (PV) as BCWS, Earned Value (EV) as BCWP and Actual Cost (AC) as ACWP. The project manager shouldn't need to modify or enter any other data values in the spreadsheet. All other fields in the EVA Data Table are calculated using these values. The Ind e x co l u mn provides the SPI and CPI values based on the earned value information entered in the previous three columns. Each index will be automatically color coded based on the interval range specified in the E VA S ta tu s O p tio ns section. The Va r ia nce co lu mns express the schedule and cost variances in terms of dollars. For all the calculated sections, the units of measure are dollars unless otherwise specified. Positive variances should also be examined since under spending the project budget can indicate a deferral of project deliverables. The deferred deliverables may not be containable in the current time frame despite the under spend. The E stima tio n co lu mns provide forecasts for the dollar estimate at completion, estimate to complete and variance at completion. All of these calculations help quantify the true cost required to deliver the project and any budget variances. The To Co mp le te P e r fo r ma nce Ind e x (TCPI) also determines if the team needs to increase or decrease performance based on the remaining project budget. The Ti me E sti ma te A t Comp le te (TEAC) column provides the estimated duration at the completion of the project. If a project was estimated to take 150 days and the TEAC is currently 180 days, the project manager can quickly conclude the project delay is 30 days or 1 month. The Time Variance At Complete (TVAC) column determines the actual time variance expressed in days. Finally, the E nd Da te co lu mn determines the forecasted project end date based on the TVAC calculation. These calculations are useful to make some broad assumptions about the forecasted project end date. The forecasts are all based on the project's schedule and cost performance. Reviewing the project plan in detail will provide a more accurate forecast since the project plan includes additional task dependencies and resource allocations that determine the project end date. The last section of the EVA data table provides the project completion percentages. Customers and IT management naturally talk about projects in terms of percent complete. The actual percent complete is often communicated, but the planned percent complete is rarely included. Earned value metrics provide both planned and actual metrics and improve the project status discussion. The Planned, Actual and Spent columns determine the various completion metrics based on the weekly EVA data.

gantthead.com//articlesPrint.cfm

3/4

29/06/2009

http://www.gantthead.com/articles

E VA Ch a r t The EVA Chart tab contains a simple linear graph that displays the historical planned value, earned value and actual cost curves. The chart's Y axis displays the project budget and the X axis displays each week. The source data is obtained from the EVA Data table data input columns. Please note the data range in the template only extends to June. When you customize the template to your project, you'll need to modify the chart's source data to span your entire project. The EVA Chart is an effective communication tool to share with your internal IT management and your customers. The graph may appear confusing to EVA newbies. However, explaining to the stakeholders that each week the pink curve (earned value) should match the blue curve (planned value) will help clarify the chart. If the two curves to not align, it is the project manager's job to explain the gaps and communicate next steps to align the project with the original plan. The gaps are caused by the incomplete tasks that were due by the reporting date. The yellow line graphs the project's actual cost over time. In the template example, the earned value curve is below the planned value curve however the actual cost curve exceeds the planned value. The graph depicts a project exceeding the project budget and failing to deliver according to schedule. By reviewing these graphs or examining the SPI and CPI metrics, troubled projects can be quickly identified and communicated. The EVA chart is a useful supplement to the weekly status report. S u mma r y The ezEVA template is an effective tool to track and manage project health throughout a project. The historical tracking allows project managers to determine past and future performance trends. The metrics provide additional performance and cost indicators that provide a better assessment of project health. The project manager only needs to enter the basic earned value metrics of PV, EV and AC and the rest of the metrics are automatically calculated. Applying earned value to your projects isn't difficult if you follow a few steps and have some useful tools at your disposal.
Andrew Makar is a senior IT project/program manager who is f ocused on ef f ectiv ely translating project management theory into actual practice. He can be reached at andy @amakar.com.

Copyright 2009 gantthead.com All rights reserved. The URL for this article is: http://www.gantthead.com/article.cfm?ID=227826

gantthead.com//articlesPrint.cfm

4/4