Earned Schedule Leads

to Improved Forecasting

Walt Lipke
waltlipke@cox.net
(405) 364-1594

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 Purpose

To discuss the application of Earned

Schedule to schedule and cost prediction

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 Overview
• Earned Schedule Review
• Network Schedule Analysis
• Earned Value Research
• Schedule Performance
• Concept of Effective Earned Value
• Forecasting with Effective EV
• Summary

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 Earned Schedule

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 Why Earned Schedule?
• Traditional schedule EVM metrics are good at
beginning of project
− Show schedule performance trends
• But the metrics don’t reflect real schedule performance
at end
− Eventually, all “budget” will be earned as the work is
completed, no matter how late you finish
• SPI improves and equals 1.00 at end of project
• SV improves and concludes at $0 variance

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 Why Earned Schedule?
• Traditional EVM schedule metrics lose predictive
ability over the last third of the project
− Impacts both schedule & cost predictions
• Project managers and customers don’t comprehend
schedule performance in terms of budget

…Like most of us!

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 Earned Schedule Concept
EV
SPI($) = SV($) = EV − PV
PV
PV

ES
SPI(t) = SV(t) = ES − AT
AT
Projection of EV
onto PMB

EV
ES = All of May + Portion of June
EV($) - PV(May)
ES = 5 +
PV(June) - PV(May)
AT = 7

J F M A M J J A S O N
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 Earned Schedule Formulae
• EScum is the:
Number of completed PV time increments EV exceeds + the
fraction of the incomplete PV increment

• EScum = C + I
C = number of time increments for EV ≥ PV
I = (EV – PVC) / (PVC+1 – PVC)
• ESperiod(n) = EScum(n) – EScum(n-1)
= ∆EScum

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 Key Points
• ES indicators are constructed to behave in an
analogous manner to the EVM Cost Indicators, CV
and CPI
• SV(t) and SPI(t) are not constrained by PV
calculation reference (BAC)
• SV(t) and SPI(t) provide duration based measures of
schedule performance

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 Table of Formulas
ES = C + I number of complete
Earned Schedule EScum periods (C) plus an incomplete
Metrics portion (I)

Actual Time ATcum AT = number of periods executed

Schedule Variance SV(t) SV(t) = ES - AT

Schedule Performance
Indicators Index
SPI(t) SPI(t) = ES / AT

To Complete Schedule TSPI(t) TSPI(t) = (PD – ES) / (PD – AT)

Performance Index
TSPI(t) = (PD – ES) / (ED – AT)

Predictors Independent Estimate IEAC(t) IEAC(t) = PD / SPI(t)

at Completion (time)
IEAC(t) = AT + (PD – ES) / PF

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 Application Results

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 ES Applied to Real Project Data
Late Finish Project: SV($) and SV(t)
Commercial IT Infrastructure Expansion Project Phase 1
Cost and Schedule Variances
at Project Projection: Week Starting 15th July xx

CV cum SV cum Target SV & CV SV (t) cum

20 2

0 0

-20 Stop wk 19 -2
Dollars (,000)

-40 -4
Sched wk 20 Re-start wk 26

Weeks
-60 -6

-80 -8

-100 -10

-120 -12

-140 -14

-160 -16
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34

Elapsed Weeks

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 Duration Prediction

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 IEAC(t) Prediction Comparison
Early and Late Finish Project Examples
IEAC(t) Metrics at Project Completion
Early Finish Project
Planned Duration (weeks) 25
Actual Time (weeks) 22
Percentage Complete cum 100%
CPI cum 2.08
SPI(t) cum 1.14
SPI($) cum 1.17
Critical Ratio cum 2.43
IEAC(t) PD/SPI(t) cum 22.0
IEAC(t) PD/SPI($) cum 21.4
IEAC(t) PD/CR cum 10.3
IEAC(t) Metrics at Project Completion
Late Finish Project - pre ES
Planned Duration (weeks) 20
Actual Time (weeks) 34
Percentage Complete cum 100%
CPI cum 0.52
SPI(t) cum 0.59
SPI($) cum 1.00
Critical Ratio cum 0.52
IEAC(t) PD/SPI(t) cum 34.0
IEAC(t) PD/SPI($) cum 20.0
IEAC(t) PD/CR cum 38.7

• In both examples, the pre ES predictors (in red) fail to correctly

calculate the Actual Duration at Completion!
• The ES predictor, SPI(t) alone correctly calculates the Actual
Duration at Completion in both cases
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 Schedule Analysis

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 Schedule Analysis with EVM?
• The general belief is EVM cannot be used to predict schedule
duration
• Most practitioners analyze schedule from the bottom up using
the networked schedule ….“It is the only way possible.”
– Analysis of the Schedule is overwhelming
– Critical Path is used to shorten analysis
(CP is longest path of the schedule)
• Duration prediction using Earned Schedule provides a macro-
method similar to the method for estimating Cost
– a significant advance in practice
• But, there’s more that ES facilitates ….
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 Earned Schedule
Bridges EVM to Network Schedule

BAC
$$
PV

EV

SV(t)

ES AT PD
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 How Can This Be Used?
• Tasks behind – possibility of impediments or constraints can
be identified
• Tasks ahead – a likelihood of future rework can be identified
• The identification is independent from schedule efficiency
• The identification can be automated

• PMs can now have a schedule analysis tool

connected to the EVM Data!!

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 Earned Value Research

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 Earned Value Research
• Most research conducted since 1990
– Result of cancellation of Navy A-12 Avenger
– Primary researcher, Dr. David Christensen, Southern Utah
University
– Cost studies using very large DOD projects
• EVM Literature on Dr. Christensen’s website
http://www.suu.edu/faculty/christensend/ev-bib.html

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 Results from EV Research
• Dr. Christensen’s & associates’ findings
– CPI stabilizes @ 20% complete
– CPI tends to worsen as EV ⇒ BAC
– |CPI(final) – CPI(20%)| ≤ 0.10
– IEAC = BAC / CPI ≤ Final Cost
when Percent Complete is 20% ⇔ 70%

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 Research Discussion
• CPI tends to worsen as EV ⇒ BAC
• IEAC = BAC / CPI ≤ Final Cost
when Percent Complete is 20% ⇔ 70%
• IEAC condition must be true if CPI tendency is true
• Rationale supporting CPI tendency
– Rework increasing as EV approaches BAC
– Late occurring impacts from constraints/impediments
– Lack of available EV toward end of project
• My conjecture: SPI(t) & IEAC(t) = PD / SPI(t)
behave similarly to CPI & IEAC = BAC / CPI
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 CPI & IEAC Behavior
CPIcum versus IEAC Behavior
Percent Complete
0.00

(IEAC - Final Cost) / Final Cost

0.2 0.4 0.6 0.8 1.0

Percent Difference
1.06 -0.02
1.04
CPIcum

-0.04
1.02
1.00 -0.06
0.98
-0.08
0.96
0.2 0.4 0.6 0.8 1.0 -0.10

Percent Complete Percent Complete

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 Schedule Performance

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 Earned Schedule
Bridges EVM to Network Schedule

BAC
$$
PV

EV

SV(t)

ES AT PD
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 Schedule Performance
• EV isn’t connected to task sequence
– Hypothesis: Completion sequence of tasks
affects performance efficiency
• Incorrect task sequencing occurs when there is …
– Impediment or constraint
– Poor process discipline
• Improper performance sequence may cause …
– Overloading of constraint
– Performance of tasks w/o complete inputs

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 Schedule Performance
• Result from improper performance sequence …
– Constraint limited output
• Schedule lengthens
• Cost increases while waiting (when other EV available
is severely limited)
– Rework occurs (~ 50%)
• Schedule lengthens
• Cost escalates
• Constraint problem & Rework appear late causing …
– CPI & SPI(t) to decrease as EV ⇒ BAC
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 Schedule Adherence Measure
• Schedule Adherence measure is proposed to enhance
the EVM measures
– Early warning for later cost and schedule problems
– Proposed Measure: In accordance with the project plan, determine
the tasks which should be completed or started for the duration
associated with ES. Compare the associated PV with the EV of the
tasks which directly correspond. Calculate the ratio:

P = Tasks (correspond) / Tasks (plan)

= Σ EVj (correspond) / Σ PVj (plan)
where Σ EVj ≤ Σ PVj & Σ PVj = EV
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 Schedule Adherence Measure
• Characteristics of the P measure
– P measure cannot exceed 1.0
0 ≤ P ≤ 1.0
– At project completion P = 1.0
– P is likely unstable until project has accumulated a
sufficient amount of data {similar to the behavior
of CPI}
• P used to compute effective earned value {EV(e)}

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 Effective Earned Value

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 Effective Earned Value
Effective EV

ΣEVj ⇐ PV @ ES

Total EV

EV(r)
EV(r) is performed at risk of creating rework
Portion colored is usable
Portion colored is unusable
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 Effective Earned Value
• Effective earned value is a function of EV, P, and
Rework
EV(e) = f (EV, P, Rework)
• EV(e) = [ (1 + P ∗ R%) / (1 + R%) ] ∗ EV
R% = Rework Percent
R% = fraction of EV(r) unusable ÷ by fraction of EV(r) usable
{ EV(r) = Σ PVj - Σ EVj }
• EV(e) = [ (P + 2) / 3 ] ∗ EV
when R% = 50%

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 Effective Earned Value
• Effective ES is computed using EV(e) {i.e., ES(e)}
• Effective EV indicators are …
– CV(e) = EV(e) – AC
– CPI(e) = EV(e) / AC
– SV(te) = ES(e) – AT
– SPI(te) = ES(e) / AT
• The behavior of P may explain Dr. Christensen’s
findings for CPI & IEAC
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 Graphs of CPI, CPI(e)
& P - Factor (notional data)
1.2

CPI
1.1
CPI(e)
Index Value

1.0

0.9
P – Factor
0.8

0.7
0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Percent Complete
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 Graphs of CPI, CPI(e)
& P - Factor (real data)
1.2

1.1
CPI
Index Value

1.0 CPI(e)
SPI(t)
0.9 SPI(te)
P- Factor
0.8

0.7
0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0
Percent Complete

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 Recap - Effective Earned Value
• Lack of adherence to the schedule causes EV to
misrepresent project progress
• P indicator introduced to measure schedule adherence
• Effective EV calculable from P, R% and EV reported
• Prediction for both final cost and project
duration hypothesized to be improved with
Effective Earned Value

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 Forecasting with
Effective Earned Value

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 Forecasting using
Effective Earned Value

Schedule Prediction IEAC(te) = PD / SPI(te)

Cost Prediction IEAC(e) = BAC / CPI(e)

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 Schedule & Cost Prediction
(notional data)

Cost Forecast Comparison Schedule Forecast Comparison

$1,250 45
IEAC(e) IEAC(te)
43
$1,150
(x 1000)

Months
IEAC
41
IEAC(t)
39
$1,050
37
BAC = $1,000,000 PD = 36 months
$950 35
0.2 0.4 0.6 0.8 1.0 0.2 0.4 0.6 0.8 1.0
Percent Complete Percent Complete

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 Summary

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 Summary
• ES derived from EVM data … only
• Indicators do not fail for late finish projects
• Schedule prediction is better than any other EVM
method presently used
• Application is scalable up/down, just as is EVM
• Facilitates bridging EVM to the schedule
• Leads to Schedule Adherence & Effective Earned
Value, and …
• Improved Cost & Schedule Forecasting
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 References
• “Schedule is Different,” The Measurable News, March & Summer 2003
[Walt Lipke]
• “Earned Schedule: A Breakthrough Extension to Earned Value Theory? A
Retrospective Analysis of Real Project Data,” The Measurable News,
Summer 2003 [Kym Henderson]
• “Further Developments in Earned Schedule,” The Measurable News,
Spring 2004 [Kym Henderson]
• “Connecting Earned Value to the Schedule,” The Measurable News, Winter
2004 [Walt Lipke]

Earned Schedule Website: www.earnedschedule.com

PMI-Sydney Website: http://sydney.pmichapters-australia.org.au/
Click “Education,” then “Presentations and Papers”

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