Figuring out where you are and does your contractor agree?
53
Roger D. H. Warburton, PhD, PMP Associate Professor, Metropolitan College, Boston Figuring Out: Where Are You? & Does your Contractor Agree?
-
Upload
public-technology-institute -
Category
Technology
-
view
508 -
download
0
description
Roger Warburton, Associate Professor in the Department of Administrative Sciences at Boston University’s Metropolitan College
Transcript of Figuring out where you are and does your contractor agree?
Roger D. H. Warburton, PhD, PMP
Associate Professor,Metropolitan College, Boston University
Figuring Out:Where Are You?
&
Does your Contractor Agree?
The “How ya doin?”
Problem
Contractor: We’re a little behind, but it’s not a problem. We’ll make it up.
What do you say?
Route 93 Re-Paving Problem
We Have a Plan
From 128/I93 to I90-I93 is 7.7 miles.
Plan: 0.77 miles each monthSchedule:10 months. Cost: $1,470,000.
What Actually Happened?
Month 1:
Contractor: We’re a little behind, but it’s not a problem. We’ll make it up.
What Actually Happened?
Month 2:
Contractor: We’re a little behind, but it’s not a problem. We’ll make it up.
What Actually Happened?
Month 3: We’re a little behind, but it’s not a problem. We’ll make it up.
Enough Already!
Here’s the bill!
Actual$1,869,000
Budget$1,470,000
Month 11
There is a better way!
How Do We Measure“Progress?”
Actual 0.66 miles
Planned 0.77 miles
You can always measure something!
Against the plan …..
What Was Accomplished? Miles of Roadway Lines of code designed, written,
tested Drawings completed Reports delivered Units delivered Square Meters of Paint Feet of Steel Erected Cubic Yards of Tunnel Dug Out
WBS:Deliverable
Oriented Hierarchy
You Already Have The Data
Monthly Reports:What was planned?What was accomplished?What did it cost?
You are the PM. The Mayor wants to know the status of the project.
End of Month 2
Planned 1.54 miles
2) Report Costs:
1) Measure Progress:
Actual 1.49 miles
Planned $294,000
Actual $329,000
The “Value” of a Mile
Planned Cost / Mile = $190,909
Plan: 7.7 milesCost: $1,470,000
Complete ½ mile:“Value” = $190,909 ÷ 2
= $95,455
The “Value” of a Mile
Planned Cost / Mile = $190,909
Plan: 7.7 milesCost: $1,470,000
Complete ½ mile:“Value” = $190,909 / 2
= $95,455EarnedValue
Glossary Planned Value, PV
The sum of the value of the work planned
Earned Value, EV The sum of the value of work performed
Actual Cost, AC The sum of the costs incurred
Budget At Completion,BAC Estimated At Completion, EAC Estimate To Complete, ETC
$
Time Now
Actual CostsTo Date
Budget, BAC EstimateTo Complete
ETC
EAC
Glossary
Glossary Cost Performance Index, CPI
Schedule Performance Index, SPI
CPI: Cost Efficiency Cost Performance Index
Cost Efficiency
𝑪𝑷𝑰=1.43𝑥 $190,909$342,000
=0.80
Planned 1.54 miles
Actual 1.43 milesCost / Mile = $190,909
SPI: Schedule Efficiency
Schedule Performance Index, SPI
𝑺𝑷𝑰=1.43 𝑥 $190,9091.54 𝑥 $190,909
=0.93
Planned 1.54 miles
Actual 1.43 miles
You are behind schedule
How Much Behind? Schedule Variance, SV
𝑺𝑽 (𝒕 )=$𝟐𝟕𝟑 ,𝟎𝟎𝟎−$𝟐𝟗𝟒 ,𝟎𝟎𝟎
Planned 1.54 miles
Actual 1.43 miles
You are $21,000 behind schedule!
𝑺𝑽=𝑬𝑽 (𝒕 )−𝑷𝑽 (𝒕)
𝑺𝑽 (𝒕 )=−$𝟐𝟏 ,𝟎𝟎𝟎
Route 93 Status: Month 4
(Miles Completed) Cost
Month Planned Completed Planned Actual
1 0.77 0.77 $147,000 $181,000
2 0.77 0.66 $147,000 $161,000
3 0.77 0.62 $147,000 $187,000
4 0.77 0.58 $147,000 $177,000
You are the PM. The Mayor wants to know the status of the project.
Plot Everything!
What actually happened?
Months
Add the Cost
Months
Cumulative Costs
Months
Efficiency
Months
Graphs vs. Tables
Months
CPI =
Month CPI1 0.81 2 0.80 3 0.74 4 0.71
Typical CPI & SPI
CPI falls & Levels off SPI falls & rises → 1.0
How Much Will It Cost?
BAC = $1,470,000
𝑬𝑨𝑪=𝑩𝑨𝑪
¿𝑪𝑷𝑰 >¿ ¿
CPI = 0.8 → EAC = $1,838,000
Estimate at Completion
Estimate at Completion #2
𝑬𝑨𝑪=𝑨𝑪 (𝒕 )+ 𝑩𝑨𝑪−𝑬𝑽 (𝒕 )𝑪𝑷𝑰 (𝒕 )
𝑬𝑨𝑪=𝑨𝑪 (𝒕 )+ 𝑹𝒆𝒎𝒂𝒊𝒏𝒈𝑾𝒐𝒓𝒌𝑬𝒇𝒇𝒊𝒄𝒊𝒆𝒏𝒄𝒚
𝑬𝑨𝑪=$𝟔𝟖𝟏 ,𝟎𝟎𝟎+$𝟏 ,𝟒𝟕𝟎 ,𝟎𝟎𝟎−$𝟓𝟒𝟔 ,𝟎𝟎𝟎
𝟎 .𝟖𝟎
𝑬𝑨𝑪=$𝟏 ,𝟖𝟑𝟔 ,𝟎𝟎𝟎#1: EAC = $1,838,000
Plot EAC (t)
𝑬𝑨𝑪=𝑨𝑪 (𝒕 )+ 𝑩𝑨𝑪−𝑬𝑽 (𝒕)𝑪𝑷𝑰 (𝒕)
𝑩𝑨𝑪
𝑨𝒄𝒕𝒖𝒂𝒍
Earned Value Management (EVM)
Christensen & Heise, 1992 DOD experience >400 programs since 1977 Without exception:
The cumulative CPI does not significantly improve during the period of 15% through 85% of the contract
Provides early warning of trouble EAC reliable ~ 20% into a project
In fact it tends to decline!
“I did not use EVM because …”
“Not needed on small projects” “Hard to apply” (Kim, 2000)
“The implementation requirements, terminology, and the countless rules and interpretations, are perceived as overly restrictive” (Fleming & Koppelman, 2005)
It is difficult to find a balance between the utility of the EV technique . . . versus the effort it takes to implement (Quentin & Koppelman, 2005)
ContractorExcuses
From Earned Value
toTCPI
The to-complete performance index (TCPI) is the calculated projection of cost performance that must be achieved on the remaining work to meet a specified management goal, such as the BAC or the EAC.
PMBOK 4th Edition
A simple formula to change the world!
“Once our customers start calculating TCPI, we will no
longer be able to fudge project cost!”
TCPI
What is TCPI?
TCPI: Month 4 Work Remaining:
BAC – EV(t) = $1,470,000 – $546,000 Funds Remaining:
BAC – AC(t) = $1,470,000 – $681,000
= 1.17
You:You need a 17% improvement.
Contractor:No problem!
Trust me, we’ll make it up.
Everything will be OK.
Really?!
Your current efficiency is 80%
Your TCPI is 117%
You need a 37% improvement!
It’s Getting Worse!
You need a 37% improvement!
37%
You Can’t Win!
TCPI → ∞!
You need to be here!
You are here!
Admit it,
You’re here
The “Modus” Project
Cumulative Doesn’t Help
Modus: CPI & SPI
We Know the Cost
Guidance EVM Works
2 Simple Formulae:
You already have the data! TCPI is a powerful addition to EVM
CPI is about the past TCPI is about the future
Graphs are powerful Weekly data is the key
SPI doesn’t really work
Conclusion
Earned Value is the Public Sector Manager’s
Friend
If it becomes obvious that the BAC is no longer viable, the EAC supersedes the BAC
PMBOK to the Rescue!
TCPI with EAC
Required efficiency is just the CPI!
Admit it,
You’re here
Schedule Prediction
𝑻 𝒂=𝑻 𝒑
√𝑺𝑷𝑰
