Project Management

Confirm your Microsoft Project Schedule is ready for EVM

This eight-step checklist will help you determine whether your Microsoft Project Schedule is ready for earned value management (EVM).

Over the past nine years, I've been studying earned value management (EVM) and its application to IT projects. According to PMI's Project Management Body of Knowledge, EVM is an "objective method to measure project performance in terms of scope, time and cost." If you're unfamiliar with EVM, read my overview before proceeding with EVM metrics in Microsoft Project.

EVM metrics are easy to calculate, as it only requires simple math. According to industry research, there are 40 critical success factors to successfully implement EVM in an organization. One of those critical success factors is the project management team can develop a project schedule and track against a project baseline. A properly developed Microsoft Project Schedule is critical in calculating EVM metrics when using Microsoft Project. A poorly defined Project Schedule will result in poor EVM metrics.

The following is a quick checklist to confirm your Microsoft Project Schedule is ready for EVM.

  1. Confirm the Work Breakdown Structure (WBS) has been correctly defined with the appropriate work packages Meaningful earned value metrics are only as relevant as the tasks they represent. If you've built a poorly defined WBS, earned value can't help you.
  2. Confirm the work resources have the appropriate hourly rates in the Resource Sheet view Microsoft Project determines the work package's budget based on each assigned work resource's hourly rate. If you don't have a defined cost for each resource, your budget will be zero.
  3. Confirm all tasks have resources assigned at the lowest level in the WBS A task establishes its baseline budget and planned value (PV) based on the resource costs assigned to the task. By ensuring resources are assigned to the lowest level in each work package, the cost will roll up appropriately.
  4. Confirm no resources are over allocated Despite our desire to give 110%, a realistic schedule has resources only allocated 100% of the time.
  5. Confirm the total costs for each work package match contractual agreements Microsoft Project builds a time-phased budget for each task and allocates planned work and costs according to the project calendar. If your project contracted for $100,000, the total cost in the WBS should reflect $100,000.
  6. Confirm the project has a project baseline The project baseline establishes the time-phased budget for the project and allows PV to be calculated. If you don't baseline the project, you can't measure what you're trying to manage.
  7. Confirm the project management staff understands the procedures to record actual start, finish, duration, and costs data for the project schedule As the project progresses, it is important that anyone updating the project schedule follows a consistent procedure to record start dates and actual costs. If teams use inconsistent practices, your earned value results may be off.
  8. Confirm the project status date is set in Microsoft Project before examining EVM metrics If you don't specify the project status date, Microsoft Project will assume the current date is the date used for calculating the earned value metrics. Since status reporting usually follows the prior week, you'll want to set the project status date each week to calculate accurate metrics.

There are 39 other critical success factors that organizations should consider before implementing EVM across an organization.

For more information about how to use earned value with Microsoft Project, read my tutorial, How to Calculate EVA in Microsoft Project.

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About

Dr. Andrew Makar is an IT program manager and is the author of How To Use Microsoft Project and Project Management Interview Questions Made Easy. For more project management advice visit http://www.tacticalprojectmanagement.com.

11 comments
jacsas
jacsas

You also will need to set up your reporting periods and specify EV measurement techniques accordingly for your work packages. Relying on percent complete, for example, can be very subjective.

casey
casey

Andrew - Given the reference material on your website I'm surprised you are proselytizing EVM to the TechRepublic readership. EVM is a methodology shown to be difficult, costly and in many cases out of touch with the realities of delivering projects on-time and on-budget. For all but the largest corporate projects, the time and expense required to develop and then execute against an EVM plan is seldom worth the effort. Here are a couple of reasons why: 1. The rate for staff employees (a key financial metric) is considered a sunk cost - meaning that whether the employee worked 2 hours of 10 the true cost to the company will remain the same. The cost to the project therefore is a fictional amount. 2. Resource allocation is generally a mixed bag of dedicated employees, contractors and shared internal resources. Unless great care and effort is taken to homogenize task granularity and time reporting protocol, wide variations of accuracy will destroy any chance of obtaining meaningful information from the PM process. 3. EVM places the emphasis on the wrong thing. In most corporate environments, while budget is important, time-to-market is critical. And time-to-market is based more on understanding the impact of task inter-dependencies than it is spending time re-calculating an imaginary value proposition. Most PM's would get more out of correctly and consistently identifying tasks, level of effort and dependencies, than if they had a staff of EVM project coordinators rationalizing calculations full-time.

viveka
viveka

This makes a lot of sense at the first cut. But here are some real issues when it becomes difficult to implement. This model cannot scale without a full project accounting in place. The infrastructure overhead can be very high. I have tried searching for the 40 critical success factors? Can you provide a link. Also, if management is tracking 25 projects, on 40 different dimensions, how would you consolidate this for meaningful executive reporting? (Exclude any root cause analysis for the purpose of this discussion)

cjbalchin
cjbalchin

Jacsas I agree with Andrew's discouragement of allowing subjective assessments of progress or EV. The WBS is the key to it, followed by a standardisation of the progress of activities, which should be of a related size to the reporting period. For example, activity durations should be about one to three times the reporting period. The standardisation should be of a form: 5% when started 25% when coding complete 50% when testing complete 75% when documentation complete (yes, I mean it!) 95% When integrated. Brook no arguments on the philosophy, but do get agreement on the progress percentages. Two to four interim milestones should be plenty.

amakar
amakar

Hi Jacsas - I can definitely relate the subjective nature of percent complete. I've ran into a number of projects that guesstimate their percent complete. You might find this article on project schedule management and the myth of 90% complete interesting. http://www.tacticalprojectmanagement.com/project-management-tips/schedule-management-tracking.html In my courses, I teach students to compare the baseline duration (or work) to the actual duration (work) completed and use the remaining duration (work) to calculate the percent complete. It is more objective and encourages comparing actual progress to the baseline. It takes a little more time but is helpful for historical estimates. Thanks - Andy

cjbalchin
cjbalchin

Casey Oh ye of little faith! I suspect your lack of confidence or believe in EVM is because you are in the IT world where projects are infamous for ill-defined and changing scope. But there are some successes even in large IT projects, although they usually require an army of implementers as you say. However, in the world of more physical projects, e.g. engineering, construction, fabrication etc in a number of industries, it does work. If you check out the work by Quentin Fleming and others, you'll find that, with sound plans and good consistent data, then wherever the project finds itself at 15-20% of project planned duration, it rarely gets any better and the forecasts are a good indicator of where it will end up. Usually badly.

amakar
amakar

Hi Casey - Thanks for your comments. The above article is a checklist to evaluate your MS Project schedule prior to running EVM calculations. It is just one of the 40 CSF needed for organizations to successfully adopt EVM. The success of an EVM methodology is dependent upon the user base, the project environment, the rules applied to EVM, as well the implementation process. In the research, successful companies implementing EVM have considered EVM one of their main distinguishing factors from other firms. There are other variants to EVM that have proven to be an enhancement to EVM. Ray Stratton of Management Technologies have conducted research on Earned Schedule. In one paper, Earned Schedule proved to be a better indicator of performance than Earned Value since the alignments was to timing vs. cost. Calculating EVM in MS Projet isn't the difficult task. The difficult task is the change management and the awareness. That is why there needs to be flexibility in the EVM methodology for firms to successfully adopt it. For example, an internal IT organization could assign a $1/hour rate for every resource on the project and track SPI for the project without worrying about the CPI or CV. These financial budgets are usually managed in another format as contracts don't always align with the WBS. The key benefit of establishing a EVM methodology is recognizing the importance of tracking a project schedule and monitoring the schedule and cost variances. I've worked with a number of PMs who simply build the schedule but fail to update it to properly forecast an end date. If an organization doesn't adopt EVM but successfully focuses on creating baselines and measuring variances, then the organization has improved is schedule management tracking and started its progression up the maturity model. Good discussion!

monsurqa
monsurqa

EVM will not provide exact status but only an indication about project status. While reviewing a project we should use other tools like NPV, PI, Milestone Completion, HR Utilization, HR Performance and also Risk status to get a complete view of the project.

amakar
amakar

Hi Viveka - You're absolutely correct about EVM being difficult to implement. One key critical success factor for an organization is to have flexibility in its earned value management methodology. Having flexibility allows the EVM application to scale. Based on the scale of implementation there will be a greater dependency on integrated systems with cost codes, work packages, time keeping, and PPM systems. A project or a portfolio can successfully adopt EVM assuming the user, methodology, project environment, and EVM implementation process exhibit several critical success factors. The 40 critical success factors were part of Dr. Euhong Kim's research on an earned value implementation model. My own doctoral research built an assessment tool evaluating these features. You can learn more about the 40 CSF by visiting the Research section of my site: http://www.tacticalprojectmanagement.com/research.html As for management tracking, the use of EVM can be applied as a filter to review the troubled projects. In a portfolio review, portfolio managers can filter an any project that has a SPI less than .90, a CPI less than .95, etc. I wrote an article for Gantthead apply EVM to portfolio reviews in "Productive Portfolio" at http://www.gantthead.com/content/articles/225559.cfm Let me know if you have any other questions! Thanks! Dr. Andrew Makar

addicted2speed
addicted2speed

EVM can be applied at different levels. You simply roll up the objectives from the individual projects into those that could affect other projects. In the ground-level project, you are adding 2's to get a 6... 2+2+2=6. If there are risks to a "2" not happening, that consolidates into a risk of "6" not happening. The executive-level EVM simply uses that the 6 must happen before you can do 6+8=14. If 6 doesn't happen on time, that will negatively affect 14. If there are 25 concurrent projects greater than a certain dollar amount, and 40 dimensions to be measured, your organization should probably have a have a full project accounting/management application in place. If not, that should be project #1, or you at least have a large-scale plotter so you can print out some giant schedules/gantts.

cjbalchin
cjbalchin

Mons Net Present Value is a technique for evaluating projects in a comparative sense. I would suggest that you are fooling yourself if you believe it can help you assess the project's status and forecast the likely outcome. I suspect you'll agree that the latter is one of the main purposes of all project control.

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