The effect of Level of Effort EVT

The effect of Level of Effort EVT

1

introduction

• LoE – This PMT is best used when it is impossible to determine progress for a task.

• This only works in circumstances where the forecast dates are the same as the Baseline dates, and if you will never need to do work from a previous month which was not done

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Earned Value Techniques

• The CAM must allocate an appropriate Earned Value technique to the work

being performed

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50 / 50

0/100

Physical % complete

Incremental Milestone

Equivalent Units

Level of Effort

50% is earned as soon as work starts & remaining 50% when work is complete

Nothing is earned until the work is complete.

A percentage method of assessment

Weighted budget values assigned to milestones within a work package

Places a given value on each unit completed

EV is equal to BCWS at all times

SOME EXAMPLE METHODS DESCRIPTION

50/50 – xx/yy

When the work package begins in one period and completes in the next. No way of gaining credit between start and completion. Start and completion valued at 50% (or XX/YY). Completion should have criteria defined. Ideal when the plan consists of several short operations/activities.

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30 70

P1 P2 P3 P4 P5

50 50

Total Budget 100

0-100

No credit can be gained before completion.

Strictly limited to work packages starting and completing in the same reporting period.

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P1 P2 P3 P4 P5

0 100

Incremental Milestones

When work packages exceed 2 reporting periods. 1 milestone a month is ideal. Each milestone should have its own value defined discrete from others. This means that the milestones are not sequential.

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P1 P2 P3 P4 P5

Budget 10

Budget 25

Budget 45

Budget 20

Total Budget 100

Units Complete

For physical counts of product or outputs. Each element is given a value for completion and then the units calculated. This is ideal for measuring items like drawings.

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P1 P2 P3 P4 P5

10 15 15 5 Budget Units 45Total £450

£10/unit

£100 £150 £150 £50

Percent Complete

For long work packages > 3 periods – no quantities to count and no definable milestones. Forecast % complete at end of each period and apply to BAC.

Success criteria should be identified to justify the Percentage claimed. For example 25% can be claimed only when the first draft of a document has been completed.

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Total Budget 1000

10%100

40%400

80%800

100%1000

Apportioned EffortWhen activities are performed in support of other direct activities eg

Assembly work and the associated material. The effort is estimated and planned as a % of the production effort. There must be a method of determining this %.

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50%

50%

Assembly work

Material Draw down

£10,000

£500,000

Level of Effort•Level of Effort

When tasks are are difficult to quantify with respect to accomplishment. Supportive activities – no definable outputs – budget scheduled over the period of performance. EV based on passage of time – EV always equal to planned accomplishment. – There can be no schedule variance. Beware, where effort is not linear, may end up with cost variance if more hours booked than planned.

•LoE – This PMT is best used when it is difficult to track the progress of an activity.

•This only works in circumstances where the forecast dates are the same as the Baseline dates.

•Remember – Earned Value should be credited in the same way it is planned.

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Correctly profiled

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Time nowBAC = 800

ACC BCWS = 400

ACC BCWP = 400

ACC ACWP = 400

Acc BCWS = 400Acc BCWP = 400Acc ACWP = 400Acc SV = 0Acc CV = 0

Incorrectly profiled

• There may be circumstances where it may seem appropriate to re-forecast a LOE package before it starts.

• For example an activity was baselined to start month 1 and then forecasted to start now in month 5. The following slides explain the effect of this on the EV data.

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Incorrectly profiled Month 1

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Time now

ACC BCWS = 100

ACC BCWP = 0

ACC ACWP = 0Acc BCWS = 100Acc BCWP = 0Acc ACWP = 0Acc SV = -100Acc CV = 0BAC = 800EAC = 800

Re-forecast start date


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Time now

ACC BCWS = 200

ACC BCWP = 0



15

Time now

ACC BCWS = 300

ACC BCWP = 0



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Time now

ACC BCWS = 400

ACC BCWP = 0



17

Time now

ACC BCWS = 500

ACC BCWP = 500

ACC ACWP = 120Acc BCWS = 500Acc BCWP = 500Acc ACWP = 120Acc SV = 0Acc CV = 380BAC = 800EAC = 800

WHY!

• This is a strange effect of Earned Value and the PMT of LOE. Although the actual performance has not been worth 500, LOE means that the total performance will equal the value of the Baseline (BCWS) at time now.

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19

Time now

ACC BCWS = 600

ACC BCWP = 600



20

Time now

ACC BCWS = 700

ACC BCWP = 700


What does these mean• Looking at the data as it stands now it tells us:

– We have only one month of work left to do – We are on target to complete with no schedule variance– We have been very efficient we have done £700 for only £360 (positive CV of

£340)– We should under spend on completion and therefore the EAC is to high

• How real are these conclusions:

– Because we know the work was started late, we know more than 1 months work is needed.

– We also know the work is behind schedule, but not from the EV data– As the CAM we would know that only £100 of performance is being achieved

for a cost of £120 per month so we are not efficient– This efficiency in fact means that the EAC is too low.

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22

Time now

ACC BCWS = 800

ACC BCWP = 800


Graph data Cum Performance

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100

200

300

400

500

600

700

800

900

1,000

2004JAN

BMT Sigma Example 1 OC Element: 1 Name: LOECum Element Performance

Time N

ow

Dollars in Thousands

BCWS100BCWP 0ACWP 0


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100

200

300

400

500

600

700

800

900

1,000

2004JAN FEB


Time N

ow


BCWS 200100BCWP 00ACWP 00


25

100

200

300

400

500

600

700

800

900

1,000

2004JAN FEB MAR


Time N

ow


BCWS 300200100BCWP 000ACWP 000


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100

200

300

400

500

600

700

800

900

1,000

2004JAN FEB MARAPR


Time N

ow


BCWS 400300200100BCWP 0000ACWP 0000


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100

200

300

400

500

600

700

800

900

1,000

2004JAN FEB MARAPR MAY


Time N

ow


BCWS 500400300200100BCWP 5000000ACWP 1200000


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100

200

300

400

500

600

700

800

900

1,000

2004JAN FEB MARAPR MAY JUN


Time N

ow


BCWS 600500400300200100BCWP 6005000000ACWP 2401200000


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100

200

300

400

500

600

700

800

900

1,000

2004JAN FEB MARAPR MAY JUN JUL


Time N

ow


BCWS 700600500400300200100BCWP 7006005000000ACWP 3602401200000


30

100

200

300

400

500

600

700

800

900

1,000

2004JAN FEB MARAPR MAY JUN JUL AUG


Time N

ow


BCWS 800700600500400300200100BCWP 8007006005000000ACWP 4803602401200000


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100

200

300

400

500

600

700

800

900

1,000

2004JAN FEB MARAPR MAY JUN JUL AUGSEP


Time N

ow


BCWS 800800700600500400300200100BCWP 8008007006005000000ACWP 6004803602401200000


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100

200

300

400

500

600

700

800

900

1,000

2004JAN FEB MARAPR MAY JUN JUL AUGSEP OCT


Time N

ow


BCWS 800800800700600500400300200100BCWP 8008008007006005000000ACWP 7206004803602401200000


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100

200

300

400

500

600

700

800

900

1,000

2004JAN FEB MARAPR MAY JUN JUL AUGSEP OCT NOV


Time N

ow


BCWS 800800800800700600500400300200100BCWP 8008008008007006005000000ACWP 8407206004803602401200000


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100

200

300

400

500

600

700

800

900

1,000

2004JAN FEB MARAPR MAY JUN JUL AUGSEP OCT NOVDEC


Time N

ow


BCWS 800800800800800700600500400300200100BCWP 8008008008008007006005000000ACWP 9608407206004803602401200000

Questions

• At what month could you determine that an over spend was going to happen, and by how much did you expect it to be.

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Cumulative variances

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-350

-250

-150

-50

50

150

250

350

2004JAN

BMT Sigma Example 1 OC Element: 1 Name: LOECumulative Variance


COST 0.0SCHED-100.0


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-350

-250

-150

-50

50

150

250

350

2004JAN FEB



COST 0.00.0SCHED -200.0-100.0


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-350

-250

-150

-50

50

150

250

350

2004JAN FEB MAR



COST 0.00.00.0SCHED -300.0-200.0-100.0


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-350

-250

-150

-50

50

150

250

350

2004JAN FEB MARAPR



COST 0.00.00.00.0SCHED -400.0-300.0-200.0-100.0


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-350

-250

-150

-50

50

150

250

350

2004JAN FEB MARAPR MAY



COST 380.00.00.00.00.0SCHED 0.0-400.0-300.0-200.0-100.0


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-350

-250

-150

-50

50

150

250

350

2004JAN FEB MARAPR MAY JUN



COST 360.0380.00.00.00.00.0SCHED 0.00.0-400.0-300.0-200.0-100.0


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-350

-250

-150

-50

50

150

250

350

2004JAN FEB MARAPR MAY JUN JUL



COST 340.0360.0380.00.00.00.00.0SCHED 0.00.00.0-400.0-300.0-200.0-100.0


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-350

-250

-150

-50

50

150

250

350

2004JAN FEB MARAPR MAY JUN JUL AUG



COST 320.0340.0360.0380.00.00.00.00.0SCHED 0.00.00.00.0-400.0-300.0-200.0-100.0


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-350

-250

-150

-50

50

150

250

350

2004JAN FEB MARAPR MAY JUN JUL AUGSEP



COST 200.0320.0340.0360.0380.00.00.00.00.0SCHED 0.00.00.00.00.0-400.0-300.0-200.0-100.0


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-350

-250

-150

-50

50

150

250

350

2004JAN FEB MARAPR MAY JUN JUL AUGSEP OCT



COST 80.0200.0320.0340.0360.0380.00.00.00.00.0SCHED 0.00.00.00.00.00.0-400.0-300.0-200.0-100.0


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-350

-250

-150

-50

50

150

250

350

2004JAN FEB MARAPR MAY JUN JUL AUGSEP OCT NOV



COST -40.080.0200.0320.0340.0360.0380.00.00.00.00.0SCHED 0.00.00.00.00.00.00.0-400.0-300.0-200.0-100.0


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-350

-250

-150

-50

50

150

250

350

2004JAN FEB MARAPR MAY JUN JUL AUGSEP OCT NOVDEC



COST -160.0-40.080.0200.0320.0340.0360.0380.00.00.00.00.0SCHED 0.00.00.00.00.00.00.00.0-400.0-300.0-200.0-100.0

Other Effects• Where you are in a situation where more performance is being claimed

than the spend incurred a positive Cost Performance Index (CPI) is created, meaning you are efficient than expected. Where the performance is due to the incorrect LOE re-forecast, an artificial variance has been created. Some Independent Estimates at completion (IEAC) formulas use the CPI, and if this is artificial then the IEAC will not be correct.

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IEAC based on Cur/Cum CPI

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200

300

400

500

600

700

800

900

1,000

2004JAN

BMT Sigma Example 1 OC Element: 1 Name: LOEIEAC Based on CPI


IEAC_Cum800IEAC_Curr800BAC 800


50

200

300

400

500

600

700

800

900

1,000

2004JAN FEB



IEAC_Cum 800800IEAC_Curr 800800BAC 800800


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500

600

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800

900

1,000

2004JAN FEB MAR





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1,000

2004JAN FEB MAR APR





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BCWPCPI= ACWP

BCWP = 500ACWP = 120

CPI = 4.2

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1,000

2004JAN FEB MAR APR MAY





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1,000

2004JAN FEB MAR APR MAY JUN





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2004JAN FEB MAR APR MAY JUN JUL





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2004JAN FEB MAR APR MAY JUN JUL AUG





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2004JAN FEB MAR APR MAY JUN JUL AUG SEP





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2004JAN FEB MAR APR MAY JUN JUL AUG SEP OCT





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1,000

2004JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV





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1,000

2004JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC




Questions?

• Presented by:– Russell Berkeley– Tel: 07515 685458

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The effect of Level of Effort EVT

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