Reading The Practice Standard for Earned Value might not be everyone’s idea of a fun way to spend the afternoon, but I’ve been really trying to understand how EVM works in practice this year. Today, I’m diving into the Determine Measurement Methods process because it seems – to me, at least – that this is probably the most important part. How do we know what to measure and if we are doing it right?
I think EV management software probably takes a lot of the measurement heavy lifting off the project team, but you still have to know enough about what’s going on under the hood to be able to make intelligent, informed decisions and explain what you’re seeing to other people.
This process is where you choose the right method of performance measurement and progress evaluation for each of your work packages.
Who does this? You, as the project manager, should take an active role in leading on facilitating the process, with input from the control account manager who has the detailed knowledge of what measurements would actually work in practice.
In other words, you can’t be taking these decisions by yourself. As you aren’t the expert in doing the work or tracking the work, it’s someone else who has to tell you what’s reasonable for measurement. You can inform and support this, providing tips and ideas when they don’t know what to say, but ultimately I would prefer to be guided by the expert’s decision once we’ve discussed and agreed.
There are five inputs to this process:
These last two are the most important, in my view. You use the IMS and the budget together to create a phased view of how the money relates to the tasks. That’s the backbone of EV.
What to do
With those inputs on your desk, you’re good to go.
The task to do is to determine how you are going to measure progress for each work package.
There are a number of different ways to measure progress, and you can’t really rate them in order of priority or importance because they all have their pros and cons. It’s most important to choose one that relates closely to the work you are doing and will give you the most appropriate, most accurate way of understanding how the work is going.
Typically, you’ll end up choosing one of these:
You can choose whatever measurement approach works for you, the control account manager and the project, but it needs to be something tangible and documented so everyone can see what ‘progress’ means and how it is tracked. You have to be pretty sure about your approach because changing it halfway through the project when you realised you picked the wrong one is going to mess up your EV reporting.
So how do you decide?
Think about what the work is and what the most appropriate way of measuring it would be. For example, how long is the work going on for? You may choose weekly measurement instead of daily measurement if you’ve got to be tracking over a longer period of time.
How risky is the work? Do you need to be totally on top of it with detailed tracking hourly? For low risk tasks that wouldn’t be appropriate.
If your organisation has guidelines, then use them so projects can be compared.
The outputs from this process are:
So what are you doing when you update the control account plans? The documents are created already, and now all you have to do is drop in the performance measurement method that you’ve decided on.
You’ll also want to add in the period over which the progress is tracked, so is that weekly, monthly or some other time period. And what unit you are measuring in: hours, days, money, widgets created or anything else that makes sense for your project.
The point of this project is to come up with ways of tracking progress that are objective, accurate and timely. It sounds hard, but if you think about it, you’ll come up with some ways of measuring that work for you. And if you can’t, perhaps you need to be a little bit more creative or get some expert help in working out how to track – or perhaps EV isn’t appropriate for this project, if there are a lot of tasks that can’t be tracked in an objective way. Because if you can’t track it, you won’t be getting a lot of value out of the EV reporting, which rather defeats the purpose of setting up tracking mechanisms in the first place.
Remember, pick something sensible that works, that the control account manager can work with, and that is documented clearly so everyone knows how progress is being measured. That’s all this process is about. Hopefully, over time and with some experience, this part becomes standard and very easy, as you can lift parts of control account plans from other projects to use on this one.
Next time, I’ll be looking at the next process in the earned value management standard, which is establishing the performance measurement baseline.
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How do you go from someone high up in a position of authority saying it’s OK to begin the work through to the individual team member knowing that it is OK to start a task?
That’s where different levels of authorization come in. This is important for projects using earned value management, because there are often formal approaches that require formal approval and sign off in order to accurately track performance.
According to the Practice Standard for Earned Value (2nd edition, 2011) there are four steps that are typically used to authorize the work:
That seems like a lot of authorization, but it doesn’t need to become a bureaucratic of long-winded process. An efficient process wouldn’t take much time at all. You simply need to know who to inform and what to tell them, and the people responsible for doing the work need to have a clear brief of what to do so they can get on with it
The infographic below sets out the flow of authorization, and you’ll see that I’ve streamlined two of the bullets above to make it easier to follow.
How do you authorize work in your organization? Is it as structured as this? Let us know in the comments below!
What goes into a Control Account Plan?
Categories: earned value
Control account plans (CAPs) are detailed plan for each control account. If the term control account isn’t familiar to you, you probably aren’t using earned value management. The CAP is part of EV and it describes the work that goes into each formally defined chunk of the project. The project is broken up into control accounts for the purpose of controlling the work and monitoring earned value.
So if that’s the way you are managing project performance, what goes into a control account plan?
Honestly, if you are working in a formal earned value environment on a project where EV is the prescribed way of managing performance, you probably have templates within the PMO that you can use to create a control account plan.
However, if you are someone who has just started working in a formal EV environment – let’s say, you’re a functional manager who is now contributing to a project using EV – then it might help to know what you are looking at when your project manager hands you a CAP and either asks you to fill it in or expects you to be able to understand it.
The PMI Practice Standard for Earned Value has a small section in about what goes into a control account plan, and if you are new to EV, I recommend reading the standard. It’s surprisingly easy to read and contains worked examples along with plenty of graphs and charts, so with a bit of perseverance you’ll have a decent theoretical knowledge in no time.
Six things for your CAP
So let’s say you’re looking at a control account plan for the first time. What would you expect to see in there?
1. The name of the control account manager
Someone is responsible for the control account. It is normally one person who takes ownership of a control account and ‘runs’ it. They should be named in the document.
2. What work is required
There should also be a section that describe the work to be done. How you do this is up to you, but it needs to be detailed enough to help people understand what’s required. You probably have some other kinds of requirements documentation as well, and I don’t think it’s necessary to reinvent the wheel in the CAP. If it was me, I’d link out to any existing documentation and just include a summary, but best be guided by whatever templates exist in your organization.
Pop your statement of work in the documentation.
3. The dates
Drop your key milestones into the CAP.
4. Work packages
Work packages are derived from the WBS. They should include the scope of the work, the schedule, and the budget for the tasks covered by the control account.
Again, if you’ve got full WBS and work package documentation elsewhere, it seems silly to copy/paste it all in your CAP and you don’t need to.
The CAP often looks like a spreadsheet, with work packages down the side, the key EV measures like PV and AC) in columns next to them, and dates across the top. Drop the numbers into the relevant cells and update the CAP as the work progresses. It’s a way of keeping track of performance over time.
5. Planning packages
Planning packages are covered by the CAP as well. The same approach for the work package applies: include the scope, dates and costs for the tasks within the planning packages covered by the control account.
The CAP should also include the estimate to complete. Time-phase it. This can be included as another row in the spreadsheet, per work package.
As I understand it, the CAP needs to be a living document, updated regularly with the EV metrics like planned value, earned value, actual cost and estimate to complete, so that you can track performance at control account level.
The Practice Standard includes a snapshot of what one might look like, filled in with some of the data to represent a project in-flight. I’ve made my own template in Excel, drawing from that.
However, it strikes me as something that an EV management system could do perfectly well. As long as the structure was set up correctly and the tasks within the control account were adequately identified, there’s no reason why software tools couldn’t pull out the figures and crunch the data on behalf of the control account manager.
If you do need to set it up manually, hopefully you now have an idea of what it should include, but talk to your EVM experts or your PMO and see whether you can create the plan as a standard report from within your EV tools to save yourself a fair bit of time each month.
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2 unexpected benefits of risk management [Video]
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I’ve been working my way through The Practice Standard for Earned Value in an attempt to really get to grips with the nuances of EVM. It’s one thing understanding the high level principles, but another to understand the individual processes and how everything fits together to give you a rounded process.
The Establish Budget process is a way of converting what you need to do the project (equipment, resource availability and so on) to an actual budget that you can track against and use during project execution. Note that at this time we haven’t actually started the project yet, we’re still planning out how it’s all going to happen. Now is the time to plan out how much our activities are going to cost in a way that aligns with the EV principles.
The Practice Standard doesn’t go into a lot of detail about how to document your budget, so you can choose a technique and a software tool that works for you. Typically, EV management systems need a ‘proper’ financial management and accounting tool that links into the resource management software, so a spreadsheet isn’t really going to be enough.
See what provision is made within your EV set up at work and make sure you are creating your budget in the right tool so it can provide information to the software used for reporting and analysis.
There are three inputs to this process:
The RAM takes the WBS and organisational breakdown structure (OBS) and converts that into a matrix that covers who is managing what control account and who is doing what WBS element. You need these control points so individuals are clear about the estimates and resources for everything on the schedule, so it’s really important to get that right.
If your schedule baseline is rubbish, then your EV data will also be rubbish. It’s so important that the inputs to this process are good quality, otherwise all your numbers will be wrong. Your budget baseline and schedule baseline can be iterated together, but they need to be robust and based on decent information so that you end up with sensible reports at the end.
What to do
There are four steps to creating your budget:
1. Establish the budget structure
This means listing out and understanding the different elements that make up your budget, including:
Once you’ve got your structure sorted, you can move on to the next part.
2. Develop the cost estimate
Next, for each relevant component (the work packages, planning packages and the summary level planning budget) develop estimates.
Estimate at the correct level for the element and as accurately as you can. Control account budgets need to be linked to the time frames for the work, so that’s how the progressive elaboration of the budget and schedule come together.
3. Authorise the work
Next, there’s a formal approval step. This gives the control account owner permission to begin the work.
4. Update the budget log
Finally, update your project management budgeting tool to show that the budget is moving from undistributed i.e. not authorised for work to proceed yet to distributed i.e. linked to a control account that is underway.
That might be a very simple exercise because you’ve allocated everything out at the beginning, or you might be approving chunks of work as you go so some budget is held back until it’s approved.
The budget log is just a way to track what’s been approved for spending so far.
The outputs from this process are:
It’s important to note that EVM uses ‘budget’ and ‘funding’ to mean two very different things. The budget is defined in the Practice Standard as ‘a work planning element that is earned’ when the work is completed. It’s not really the same definition as we would use in a non-EVM setting, such as when someone asks you what your budget is for your next holiday, or what you budget for your food bill each week.
Funding is used to mean the amount of money ‘available to accomplish the work’. This is what I would normally consider to be a budget in a non-EVM project where control accounts aren’t part of project performance management. In the EVM world, funding relates to what you are actually authorised to spend on any given chunk of work.
It’s a useful definition because it keeps the earned value part of performance management separate from the money leaving the bank account, and allows you to manage any conflicts that arise, when, for example, you don’t get approval to spend all the money that has been requested for any given control account.
I learned something new on this dive into the Practice Standard today. What about you?
Next time, I’ll be looking at the next process in the earned value management standard, which is determining measurement methods.
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