Michael Gowlett presented on implementing Earned Value Management (EVM). He began with an overview of EVM, explaining that it allows organizations to more effectively measure project time, cost, and quality by combining measurements of scope, schedule, and cost. He then discussed why organizations should use EVM to detect cost overruns and schedule slippages early. Gowlett also covered available EVM tools, how to implement EVM through a case study at a bank, and the advantages and benefits of EVM like early warning of deviations and improved project visibility.

1. ux
Michael Earned Value
Project
Gowlett Management
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Presented By Michael Gowlett 1

2. Introduction
Name Presentation By Michael Gowlett
Position PMO Manager at Kredietbank Luxembourg
18 Years of Financial Experience
Experience
Expertise PMO Implementations & Operational Management
Virtualizing PMO’s
Programme Office Automation
Earned Value Management (EVM)
Certifications PMP & Prince 2 Practitioner
Based In Luxembourg for 2.5 years
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3. WWW.BANKING-ALLIANCE.COM
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4. Agenda
Insight to Earned Value Management (EVM)?
Explain why you should use EVM?
I’ll describe some EVM tools that are available to us
How EVM can be implemented?
I’ll walk you through a Luxembourg case study
We’ll talk about a Plan Maturity Model & how its used
I’ll describe some of the core EV KPI’s
Highlight some of the PMO EV implementation challenges
I’ll walk you through the creation of an EVM architecture through
multiple PPM tool integration and collaboration.
Advantages & Benefits
Finally, some good sources for understanding EVM & a Q&A
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5. What Is Earned Value Management?
EVM is a project management technique for measuring project
performance and progress in an objective manner.
EVM has the ability to combine measurements of scope,
schedule, and cost in a single integrated system.
EVM allows an organization to measure project time, cost &
quality more effectively.
First developed by the US Government in 1960s
EVM is fast becoming the preferred technique for advanced
cost & schedule tracking within organizations.
Recognized by the PMI as an industry standard tool since the
first PMBOK edition in 1987
EVM is a mathematical analytical technique used to derive
critical delivery KPI’s to the reviewer at a glance.
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6. Why should you use EVM?
Most projects have no mechanism to measure the value of
the actual “work” being performed against plan & budget.
Tracking the progress against the planned spend and
actuals are separate processes but a relationship needs
to exist between them, and EVM accomplishes this.
Cost overruns or work schedule slippages are often not
visible until a month end report is revealed
EVM can eliminate the “Good News” reporting culture we
often see in projects and allows for early detection and
intervention of schedule and cost problems.
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7. EVM TOOL OPTIONS
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8. EVM Tool Options
Tools Advantages Disadvantages
Excel • Low cost • Time consuming
• Suitable for small projects
MS Project • Familiar business • Detailed plans above 200 lines
product. can be complex to manage.
• Built-in EVM • Can be unreliable & time
system. consuming
• No collaboration & automation
MS Project & • Familiarity + EVM • Requires an integrator to set-up
MS Sharepoint • Collaboration a MOSS site to the right level
• Low up front cost • Partial Integration
• Automation Avail:
PPM Tools • Rich feature set • High purchase price €1.5m+
• Clarity • Fully automated excluding year on year running
• Planview costs.
• ROI can be hard to justify
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9. EVM Graph Standard
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10. HOW TO IMPLEMENT EVM
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11. How to Implement EVM
Establish the objectives
Identify a suitable project (Typically start with a small project)
Identify a suitable partner to mentor on your PMO team
Arrange a planning workshop
Select the relevant PPM tools to fit your budget
Training
Knowledge Transfer
Support & Mentoring
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13. Case Study – Key Drivers
Adopt EVM without investing in a (€) 7 figure project &
portfolio management system (PPM)
To develop a solution, using off the shelf current PPM tools
that minimized additional training & the learning curve.
They wanted to automate 90% of the reporting process
To integrate desperate data sources, to derive meaningful
management information and metrics
To provide early warning of project issues
To provide the management team with an exception based
reporting tool
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14. Case Study –Before EVM - Typical Tools
What PPM products do we typically see on a given project?
WBS (Work Breakdown Structure)
High Level Plan (Steering level)
No
Integration
MS Project Plan (Gantt Charts)
Milestone List No
Resource Plans Automation
Budget Reports
Labour
Timesheet Management Actuals
Intensive
Financial Reports
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15. Case Study - Before Earned Value
Costs were captured in plans but spend to date was unclear
Resource actuals were tracked monthly by timesheets only
Performance of the actual work couldn’t be measured
Each department used its own processes & forms
No consistent measurements or KPI’s existed across multiple
projects
No process of identifying early warning signs of cost over runs
Issues went un-noticed due to the frequency of reporting
No formal project methodology existed
No consistency to the project lifecycle
99% of the processes were manual.
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16. EVM Implementation Challenges
Knowledge of how to intepret an EV graph
At initiation choosing the right tools to consolidate the data
Set the appropriate tolerances to determine deviation
Standardize the reporting expectations
Know what measurements to monitor to indicate deviation or
improvement in performance.
An EVM architecture is a key element to obtaining the most
out of the EVM technique (Explained later)
For larger projects it can up to take 3 months to fully adopt
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17. Understanding Core EV KPI’s
Acronym Algebraic Equation Explanation of Equation Explanation
Plan % Comp x PV of work at a status Authorized budget assigned to the
PV BAC date in time project or scheduled task
Actual % EV<AC = Cost or effort Represents the cost of work value
EV Complete * overrun; EV>AC = Under performed at a given point in time i.e.
Project budget budget/effort when a status date is selected in MPP
Total costs actually incurred to date in
AC>EV=Cost overrun;
AC No Derivation
AC<EV= Cost under budget
accomplished work performed for a
schedule or activity
If CPI is = to 1 = Within Measures cost efficiency. A value >1
budget; If CPI <1 = Over indicates a favorable position. A value
CPI EV/AC
budget; If CPI >1 = Project <1 and a negative value equals an
costs are under budget unfavorable position
If SPI is = to 1, On Schedule
Efficiency of the time utilized on the
SPI EV/PV ; SPI=<1 Schedule Delay; If
project
SPI >1 Ahead Of Schedule
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18. PMO Challenges Of EVM
EVM data can be time consuming to maintain if you don’t utilise
collaborative content management databases to reduce the cost of data
collection
A lot of organizations don’t have the knowledge to exploit the functionality
benefits in our everyday PPM tools.
EVM is beyond the reach of most PMO teams, who have not been trained
to implement this relatively complex technique.
It requires BI reporting skills to generate trend analysis, dashboards and
ad-hoc reporting
Few training courses exist to acquire the skills to implement EVM
While EVM increases the likelihood of success, it can add to the cost
Requires an understanding of the EV equations to calculate EV
EVM can place a high demand on the PMO because the actual project plan
needs to be at the advanced standard level of maturity
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19. Plan Maturity Level
Adopting Earned Value, you need to know that it requires
an good level of planning.
A pre-requisite is that your project plans are mature
enough.
Organisations with immature plans need to increase their
planning capabilities before implementing EVM
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20. Case Study - Plan Maturity Level
Low High
Level Level 2 Level 3 Level 4 Level 5 Level
Level 1 Level 6
Level Plan Maturity Level Planning Requirements
EV technique is used & the EVA can be retrieved from the MPP to track, cost, time & quality and the reports are
6 MPP is being updated periodically? providing valuable information to senior management.
Have the resources been Resource are fully allocated (not generic and the plans have been leveled to achieve an
leveled across the plan? agreed resource utilization
Is Work (effort) Vs Elapsed available? The plan will differentiate elapsed time (duration) from effort (work) to understand the
5 resource utilization between each of its deliverables
Are the resource costs shown Billable resource costs are captured for each resource
& are they being monitored?
Has a contingency been included? The plans contain sufficient contingency for the phase and complexity of the project
4 Are holidays & sickness being tracked? The plans contain forecasted holidays and have contingency for sickness
Has the MPP been base-lined? Has the plan been base-lined to measure efficiency & progress
3 Has a critical path been established? Has the critical path been established to understand the deliverables that closer
monitoring
Is the % Complete being maintained? Have the tasks % complete been updated & periodically are the they been tracked
daily/weekly/monthly
2 Does the MPP contain dependencies?
Have valid milestone been
Does the plan have predecessors & successors (dependencies) captured?
Does the plan contain an adequate number of achievable milestones?
agreed & are they shown?
Have tasks & elapsed times been At minimum are all the tasks and activities captured with resource assignment?
captured?
1 Has the project plan been derived from How, or what has been used to derive the estimates? Have you used a specific
an estimating model/tool or a WBS tool/technique?
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21. Michael.Gowlett@Banking-Alliance.com
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22. Tools Adopted by KBL
MS Project
MS Sharepoint
Reporting Tool (SQL Reporting Services)
Mindjet Mind Manager (WBS Development)
MS Visio
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23. PPM Tool Usage Through The Planning Phase To Create An EVM Architecture
Now We Have Steering Level Plan Dashboard
Integration &
Collaboration
Between All H
PPM Tools
WBS Project Plan EVM Reporting
Export Our
Assign Our
Project Plan Into
Baseline Our
Resources To
A Sharepoint
Project Plan M
Tasks In MPP
List
Define Our Plan Our
Task Assignment Level
Resources Resources
Synchronize Our
Triggering Work
Actuals From
Assignments To
Sharepoint back
L
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Into Project
Presented By Michael Gowlett

24. Sharepoint Portfolio Dashboard
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25. Example Of An EVM Report
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26. ADVANTAGES & BENEFITS
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27. Case Study – Overall EV Advantages
Tracking Perspective:
PMO has the ability to identify a slipping project schedule or
cost deviation as periodically as when the actuals are
synchronized.
Reporting Perspective:
We can track near real-time delivery against the plan
(Schedule)
Senior management can view a performance of a live
dashboard that shows all EVM KPI’s allowing the viewer to
drill down from Portfolio > Programme > Project & Task level.
Historical databases of performance can be retrieved to tune
future project estimates & assumptions.
Trends Perspective:
We can have more control over early detection of schedule &
cost deviation because you can accurately see when & where
deviation is trending against your baseline.
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28. Case Study – After – EV PMO Benefits
MS Access for automated reporting:
When used with SharePoint
It can replace large & unmanageable Excel spreadsheet DB’s
The integration of SharePoint, Project & Access together can
minimize financial reconciliation errors
We also have further automation with
Task & activity synchronization when using SharePoint & Project
The PMO has less manual intervention for retrieving actuals
because work assignments are delegated to owners via email, so
trigger alerts can be setup, for task timing reminders
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29. Overall EVM Benefits
Provides advanced warning of cost and schedule overruns
Enables preventative measures and/or corrective actions to be undertaken at
the earliest signs of project deviation.
Provides a mechanism to monitor the performance of suppliers and their staff
in near real time.
Provides a direct link between budgets, plans, resources and delivery.
Provides statistics to stakeholders and steering groups showing past, current
and predicted performance
Enhances management visibility, allowing you to drill down into a portfolio of
projects & tasks to retrieve statistics, that can be measured against a
baseline
Provides a management reporting methodology that encourages delegation
and an exception based management style. Reduces Micro Management.
Removes the “good news” reporting culture
The PMO becomes more productive when it has the right PPM tools.
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30. Further Reading
http://en.wikipedia.org/wiki/Ea
Wikipedia
rned_value_management
http://www.amazon.co.uk/Earned
-Value-Management-Microsoft-
Project/dp/1932159983
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31. QUESTIONS
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32. WWW.BANKING-ALLIANCE.COM
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