PM World Journal Voluntary Usage of EVM on Projects in Sub-Saharan Africa Vol. VI, Issue VIll - August 2017 by Lucky Enajite Edjenekpo www.pmworldjournal.net Featured Paper as "a method for project progress measurement analysis and control that combines work scope, schedule, and resource evaluation to enable objective comparison of the planned schedule of the project to the work completed along with its actual costs' (AACEI, 2014, p. 2). Brief History In the 1900's EVM was used by the Department of Defense (DoD), National Aeronautics and Space Administration (NASA), Department of Energy (DoE), Department of Transportation (DoT), and others in the U.S., providing Cost and Schedule Variances (CV, SV) with which Cost and Schedule Performance Indices (CPI, SPIs) and Estimated Cost at Completion (EAC) were derived. During the 21" century, improvements to EVM became ubiquitous providing SV in time units and computing SPI, based on time units and deriving Estimated Date of Completion, all of which has come to be known as Earned Schedule (Stratton, 2006) EVM concept - What is it? Basic EVM concepts relate the money spent to the work done as it combines schedule status with cost information using common units of measure. The work has value equal to its budget. The three key elements of EVM are Planned Value (PV) - the schedule (plan) to build project equity from zero to the total project value (also called Budgeted Cost of Work Scheduled (BCWS), Actual Cost (AC) - total cost of completed work (also called Actual Cost of Work Performed (ACWP) and Earned Value (EV) - the gain in project equity as a result of completed work regardless of the cost to accomplish the work (also called Budgeted Cost of Work Performed (BCWP) (Stratton, 2006) (Figure 6). In other words, what is achieved for what is expended. The analysis of variances is used to track trend over time as a management tool. 75 Status Date $'s PV - planned work 50 AC _ what the work actually cost 25 EV = actual work accomplished 0 Time 6 12 18 24 Figure 6: Typical Graph Showing PV, EV, and AC [Source: Lukas, 2012] 2017 Lucky Enajite Edjenekpo www.pmworldlibrary.net Page 6 of 24Why difficult to apply? - What to do The most pervasive challenges facing EVM practitioners include lack of management buy-in, length of time spent reporting, lack of adequately qualified people, difficulty to integrating cost and schedule, and inconsistency across programs (Bell, 2009). Suggested remedies are presented in the table below: Challenge Aspect Suggested Remedies Lack of management Lack of executive Conduct executive training buy-in understanding (bring in peers) Challenge getting PMs to Demonstrate success (choose a accept EVM pilot project; measure current Inability to prove the value progress and report on it) of EVM to management Create best practices (create EV EVM is viewed as a council; focus on how to act on stepchild information, not just create it) Compensation tied to performance (pay, EVM status tied to successful use of EVM) Time spent reporting Takes too long to provide Standardize report (build reports consensus with management on Another custom report the key set of reports) required Exploit high value areas of More time spent producing program control reports than measuring Automate everything (leverage performance earned value analytics Too many reports solutions, let dashboard inform teams - not just other program controls professionals) Lack of qualified Retiring workforce Advertise (use trade magazines, people Unmotivated employees recruit at industry conferences Inability to find qualified etc.) @ 2017 Lucky Enajite Edjenekpo www.pmworldlibrary.net Page 10 of 24 PM World Journal Voluntary Usage of EVM on Projects in Sub-Saharan Africa Vol. VI, Issue VIll - August 2017 by Lucky Enajite Edjenekpo www.pmworldjournal.net Featured Paper people when needed Network with colleagues Lack of qualified people to (LinkedIn, Twitter, Facebook implement EVM etc.) Staff augmentation (staff augmentation firms) Groom internal candidates (train and retrain the one you have, give retention bonus - it costs less Difficulty integrating Lack of tool integration Converge the cost and schedule cost and schedule Hard to integrate cost people into one (cross train, estimates with EVM comingle personnel) Simple and reliable EVM Integrate the capture and tool delivery teams (EV focal points Compatible WBS structures must consult and advice during for estimates, schedules and the proposal phase, not after the EVM reporting fact) Make the cost and schedule tools one application (ask for dashboard solutions) Standardize structures and codes (prepare estimates that agree with project WBS, use a single program structure) Inconsistency across Hard time getting co- Standardize processes ( write it programs workers to follow process down, and share it; use SOPs; Friction between cost and create Center of Excellence) schedule communities Gain management support Different approach by (Find a VP/GM champion, different divisions create a single set of Conflicting contract standardized management requirements report Influence government to standardize (create regional advocacy groups, join forces with international agencies) Use standard tools (consolidate to make it easier, create data warehouses and dashboards to pull data and display consistently) Table 1: Challenges Facing EVM practitioners and Suggested RemediesPM World Journal Voluntary Usage of EVM on Projects in Sub-Saharan Africa Vol. VI, Issue VIll - August 2017 by Lucky Enajite Edjenekpo www.pmworldjoumal.net Featured Paper Critical Success Factors Lukas (2012), listed Ten (10) top items that must be done on projects to ensure a successful Earned Value Analysis (EVA). They are as follows: . Project requirements - completely captured and accurately reflect what is needed to meet the project's objectives. . Work Breakdown Structure - key project plan document; checked against project requirements to ensure none is missing. Change management process - Must exist and being used to capture both scope changes and deviations that occur. Integrated project plan - project schedule tasks and estimates must relate back to the WBS to create a project plan that gives the required cost and schedule integration. Correct schedule and budget - quality control process in place to ensure correct schedule logic and work package estimates; use contingency fund to handle cost and schedule deviations. . Schedule and budget Contingency - create both cost contingency (allowance for 'known unknowns') and schedule contingency (buffer for changes to the completion date). Contingency management - indicates how much cost and schedule contingency remains on the project. . Cost collection system - obtain accurate actual costs for the project; use 'adjusted actual cost' to minimize the effect of accruals; frequency and method of cost collection should be in the project plan. Accurate reported progress - minimize use of subjective progress techniques Management support - Resist management pressure to influence the reported results. Earned Schedule - Extending EVM Brief History Earned Schedule (ES), first introduced in 2003, is a schedule analysis method extending the benefits of EVM, using the same EVM data. The ES method has grown in popularity in recent times, being taught in universities; subject of graduate level research and included in PMI Practice standard for Earned Value Management (Lipke, 2012). ES Concept - What is it? The ES concept allows EVM metrics to be transformed to time or duration metrics to enhance the evaluation of project schedule performance and to forecast the duration needed to complete the project. When combined with appropriate schedule analysis, this approach can enhance the project manager's understanding of the time estimate at completion of the project, and provide further insights for making better decisions about project schedule and other related parameters. 2017 Lucky Enajite Edjenekpo www.pmworldlibrary.net Page 12 of 24Benefits of EVM (and its extension, ES) Benefits of EVM - Contractor and Customer Benefits Contractor benefits include "increased visibility and control to quickly and proactively respond to issues which makes it easier to meet project schedule, cost, and technical objectives. Customer benefits include confidence in the contractor's ability to manage the project, identify problems early, and provide objective, rather than subjective, contract cost and schedule status (Humphreys & Associates, 2012, p.1) (Figure 13). Additionally, an EVM 'improves the planning process, fosters a clear definition of the work scope, establishes clear responsibility for work effort, integrates technical, schedule, and cost performance, provides early warning of potential problems, identifies problem areas for immediate and proactive management attention, enables more accurate reporting of cost and schedule impacts of known problems, enhances the ability to assess and integrate technical schedule, cost, and risk factors, provides consistent and clear communication of progress at all management levels, and improves project visibility and accountability' (Subramani et al, 2014, p. 146). Earned value methods create room for the gathering of objective information. Project upheavals can be seen ahead of time and corrective actions can be taken to put them out. Realistic goals @2017 Lucky Enajite Edjenekpo www.pmworldlibrary.net Page 16 of 24 PM World Journal Voluntary Usage of EVM on Projects in Sub-Saharan Africa Vol. VI, Issue VIll - August 2017 by Lucky Enajite Edjenekpo www.pmworldjournal.net Featured Paper can be set, and the business owner would have the right information before him, so the facts are flawless and terse (Buntrock, 2003) Combined with an effort driven by schedule, the performance data derived from an earned value measurement system can quickly quantify the efforts necessary to mitigate schedule impacts. . Confidence in the contractor's ablity to manage the Customer project, identify problems early, and provide Benefits objective rather than subjective contract cost and schedule status (Humphreys & Associates, 2012) . Increased visibility and control to quickly and Contractor proactively respond to issues making it easier to Benefits meet project schedule, cost, and technical objectives(Humphreys & Associates, 2012) . Improves planning process . Fosters clear definition of the work scope . Establishes clear responsibility for work effort . Integrates technical, schedule, and cost performance . Provides early warning of potential problems Customer and . Identify problem areas for immediate and Contractor proactive management attention Benefits . Enables more accurate reporting of cost and schedule impacts of known problems . Enhances the ability to assess and integrate technical, schedule and risk factors . Provides consistent and clear communication of progress at all management levels . Improves visibility and accountability (Subramani et al, 2014) Figure 13: Benefits of EVM [Source: Author, 2015]clients and unsuccessful results. Also, traditional EVM is not intended for non-discrete (continuous) effort called "Level of Effort" (LOE) (Allen, 2010) (Figure 14). Each time payments are made in periods other than when expenses are incurred or budgeted, the cost variance (CV) is skewed (Nicholas & Steyn 2008, p 428). As a result, individual cost sources should be examined to identify the reasons for variances. While it is easier to estimate percentage complete when work can be measured in uniform unit rates, there is the challenge of accurately estimating percentage complete when uniform rates cannot be applied (Nicholas & Steyn, 2008, p. 429) The EV method does not take the critical path into account; the likelihood of indicating that a project is ahead of schedule exists if many non-critical activities are ahead of schedule and just one critical activity is late. As a result, most companies have to use additional scheduling techniques like Gantt charts and CPM (critical path method) since schedule variance is not related to the critical path (Kemps (1993) in Kim (2000, p. 69)). Does not measure project quality: Additional tool is required additional scheduling schaiques like Gan Traditionally, not charts and CPM are Intended for non- discrete (continuo required (Kemps, 1993] effort (LOE) ( Allen 2010) Limitations of EVM likely each time Does not take the critical path into acco (Kemps, 1993) merited of incur expense [Nicholas & Steyn, 2008) Greater challenge with accurately estimating percentage complete then non uniform rat are applied (Nicholas & Steyn, 2008) Figure 14: Limitations of EVM [Source: Author, 2015] @ 2017 Lucky Enajite Edjenekpo www.pmworldlibrary.net Page 18 of 24 PM World Journal Voluntary Usage of EVM on Projects in Sub-Saharan Africa Vol. VI, Issue VIll - August 2017 by Lucky Enajite Edjenekpo www.pmworldjournal.net Featured Paper Conclusion Earned value can be based on a variety of commodities, making it ideal for gathering data in a variety of methods, and converting it back to the plan. Earned value can be reported in terms of money, work hours, volume, weight, area and length. It is important to realize that progress is not percent money spent or percent work hours or percent time spent. Rather, it is the actual percent of work that has physically been completed based on original quantities. In other words, one must be able to physically see what work has actually been completed. This is the best part, and herein resides the panacea for reducing corruption that is endemic in project execution in industries in Africa. Bibliography