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Topics: Cost Management, Scheduling
Applying practically EVM to your project
I am looking to find out how we can practically apply EVM to a project?
Is it applied/ calculated for every task carried out? For example, in construction, we have works related to

1. Civil - New building construction, drainage system, trenching etc..
2. Electrical - Trunking, cable laying etc..
3. Equipment - Moving eqpt to exact location/ rooms, installation and commissioning

It would be great if someone explains this with an example.

Muthu
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I'll try to address a few questions here:

If you already have a way to track both your progress and spending to your plan, then you don't necessarily need to use EVM. It is however the most widely recognized and accepted method. Government projects may require using EVM for that reason. I have managed projects without it many times, and I know more than EVM can tell us because I talk to all the teams to know exactly what is going well or badly on the project.

As projects get very large and complicated, there are simply too many people to talk with, but using EVM I can run a simple report and generate current metrics both on whether we think we will finish on time, and within budget. That can tell me who I need to talk with to understand why their performance does not match their plan, and greatly reduce the number of conversations I need to have before I speak to my bosses.

MS Project and Primavera calculate EV. I have done it manually using Excel. In special cases I have programmers who develop queries to combine the specific data I need.

Consider the typical project spending "S-curve" where spending is low during the development phase, increases dramatically during the performing phase, and drops back to a low level during the closure phase. If I have an 18 month project with 1000 tasks and take some credit for progress each time one starts, and full credit each time one finishes, then I get a high resolution view of whether or not my performance is matching the spending curve. If I only have 3 tasks of 6 months duration and one falls behind, it may take 6 months before I realize that I am 4 months behind schedule by looking only at the EVM data.

That is what Kiron is describing by using the WBS and the appropriate level of work. The longer the task is, the longer it will take the data to show whether you are on plan. It must include all the work, but in enough detail that you don't have a long delay between when things go off plan, and when the data shows the problem.

I hope that helps.
...
1 reply by Muthukrishnan Ramakrishnan
Feb 12, 2021 8:00 AM
Muthukrishnan Ramakrishnan
...
You have addressed many of the queries that really exists in my mind. Let me try and make good use of these notes
It is also critical that there is alignment between you and each work package owner on how progress will be reported. Percentage complete, for example, is a notoriously poor way of evaluating how much work is remaining on an activity...

Kiron
...
1 reply by Muthukrishnan Ramakrishnan
Feb 12, 2021 8:01 AM
Muthukrishnan Ramakrishnan
...
You mean they have to be reported based on no. of days left or spent cost?
With construction, project EVM can (and should) be tied into the billing cycle as you only want to pay (or bill from the contractor's perspective) for the value of the work achieved within the speciic billing period. Typically the contractor (in my world anyway) will provide a billing breakdown and task schedule. The contractor will then take monthly draws based on the work done. Depending on the contract requirements, the contractor should provide a progress report as well however the billing can provide the same information [task value $1000, complete 50%, billing $500].

As an owner you validate what the contractor claims to have done to avoid over-billing. In simplistic terms, if you validate and pay 50% of the contract value half way through the project you are on track if you have a balanced schedule (not front or back weighted). The key work here is VALIDATE.

The hardest part of EVM is the validation of work done - the real value. Value is not a measure of the effort that has gone in, its a measurement of what has been achieved over a specific period of time.
...
1 reply by Muthukrishnan Ramakrishnan
Feb 12, 2021 8:05 AM
Muthukrishnan Ramakrishnan
...
Small organizations will find it difficult to tie up with the billing cycle as they will have situations where they will end up delaying the payment.
Feb 11, 2021 11:46 AM
Replying to Keith Novak
...
I'll try to address a few questions here:

If you already have a way to track both your progress and spending to your plan, then you don't necessarily need to use EVM. It is however the most widely recognized and accepted method. Government projects may require using EVM for that reason. I have managed projects without it many times, and I know more than EVM can tell us because I talk to all the teams to know exactly what is going well or badly on the project.

As projects get very large and complicated, there are simply too many people to talk with, but using EVM I can run a simple report and generate current metrics both on whether we think we will finish on time, and within budget. That can tell me who I need to talk with to understand why their performance does not match their plan, and greatly reduce the number of conversations I need to have before I speak to my bosses.

MS Project and Primavera calculate EV. I have done it manually using Excel. In special cases I have programmers who develop queries to combine the specific data I need.

Consider the typical project spending "S-curve" where spending is low during the development phase, increases dramatically during the performing phase, and drops back to a low level during the closure phase. If I have an 18 month project with 1000 tasks and take some credit for progress each time one starts, and full credit each time one finishes, then I get a high resolution view of whether or not my performance is matching the spending curve. If I only have 3 tasks of 6 months duration and one falls behind, it may take 6 months before I realize that I am 4 months behind schedule by looking only at the EVM data.

That is what Kiron is describing by using the WBS and the appropriate level of work. The longer the task is, the longer it will take the data to show whether you are on plan. It must include all the work, but in enough detail that you don't have a long delay between when things go off plan, and when the data shows the problem.

I hope that helps.
You have addressed many of the queries that really exists in my mind. Let me try and make good use of these notes
Feb 11, 2021 2:54 PM
Replying to Kiron Bondale
...
It is also critical that there is alignment between you and each work package owner on how progress will be reported. Percentage complete, for example, is a notoriously poor way of evaluating how much work is remaining on an activity...

Kiron
You mean they have to be reported based on no. of days left or spent cost?
...
1 reply by Kiron Bondale
Feb 12, 2021 10:49 AM
Kiron Bondale
...
The appropriate progress reporting method depends on the nature of the activity itself. Work remaining might be an applicable approach for some activities whereas level of effort or apportioned might work in others...
Feb 11, 2021 8:23 PM
Replying to Peter Rapin
...
With construction, project EVM can (and should) be tied into the billing cycle as you only want to pay (or bill from the contractor's perspective) for the value of the work achieved within the speciic billing period. Typically the contractor (in my world anyway) will provide a billing breakdown and task schedule. The contractor will then take monthly draws based on the work done. Depending on the contract requirements, the contractor should provide a progress report as well however the billing can provide the same information [task value $1000, complete 50%, billing $500].

As an owner you validate what the contractor claims to have done to avoid over-billing. In simplistic terms, if you validate and pay 50% of the contract value half way through the project you are on track if you have a balanced schedule (not front or back weighted). The key work here is VALIDATE.

The hardest part of EVM is the validation of work done - the real value. Value is not a measure of the effort that has gone in, its a measurement of what has been achieved over a specific period of time.
Small organizations will find it difficult to tie up with the billing cycle as they will have situations where they will end up delaying the payment.
...
1 reply by Peter Rapin
Feb 12, 2021 8:45 AM
Peter Rapin
...
You have to make the decision - take the risks associated with delayed payment OR the risks associated with over-payment.

It should not be that time consuming to implement an EVM process suitable for the nature and complexity of a project. If it can't be achieved within the payment period than it is of limited value as you end up doing a post mortem rather than timely analysis necessary for earned value management. You need real-time data to manage.
Feb 12, 2021 8:05 AM
Replying to Muthukrishnan Ramakrishnan
...
Small organizations will find it difficult to tie up with the billing cycle as they will have situations where they will end up delaying the payment.
You have to make the decision - take the risks associated with delayed payment OR the risks associated with over-payment.

It should not be that time consuming to implement an EVM process suitable for the nature and complexity of a project. If it can't be achieved within the payment period than it is of limited value as you end up doing a post mortem rather than timely analysis necessary for earned value management. You need real-time data to manage.
Feb 12, 2021 8:01 AM
Replying to Muthukrishnan Ramakrishnan
...
You mean they have to be reported based on no. of days left or spent cost?
The appropriate progress reporting method depends on the nature of the activity itself. Work remaining might be an applicable approach for some activities whereas level of effort or apportioned might work in others...
Kiron made good points.
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