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EVA for civil projects

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rashid mon
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Hi Planners,
Can anyone please explain how to establish EVA for civil project, currently I’m struggling to have EV working for this medium civil project with just over 500 activities.

All the help will be appreciated.

Replies

Samer Zawaydeh
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Dear Rafael,

This is general information: http://www.oracle.com/primavera/index.html
and listen to the

"
Achieving Earned Value Management and Program Success with Oracle’s Primavera
"

The essence is to custom tailer your process to monitor the key issues on your project to meet the deliverable.

With kind regards,

Samer
Rafael Davila
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Samer,

As a specification the reference is ok but as a general procedure it is not. Calling it a general procedure would be misleading.

ANSI/EIA Standard 748 is geared to Agencies, limits the application of EV to cost because of a particular need. Most probably requires you to include all WBS and cost components. EV can provide you with more than the whole picture; it can provide you with more specific values. Yes at times less is more as suggested in the paper, contrary to the particular requirements of ANSI/EIA Standard 748. Others do have other needs than those particular to Bureaucratic Government Agencies. Don’t limit the possibilities.

Do not misunderstand me; my point is that specifications are limited to particular needs; this is their purpose, while general procedures should not be so narrow.

Best regards,
Rafael
Samer Zawaydeh
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Dear Rafael,

I have search the net and found the following site that you might find interesting, at the Whole Building Design Guide:

www.wbdg.org/resources/value_analysis.php?r=cost_effective - Cached
"
Earned Value Analysis
by Scott Cullen
Hanscomb Faithful & Gould

Last updated: 10-04-2005

Introduction
Earned Value Analysis (EVA) is an industry standard method of measuring a project’s progress at any given point in time, forecasting its completion date and final cost, and analyzing variances in the schedule and budget as the project proceeds. It compares the planned amount of work with what has actually been completed, to determine if the cost, schedule, and work accomplished are progressing in accordance with the plan. As work is completed, it is considered "earned". The Office of Management & Budget prescribed that EVA is required on construction projects in Circular A-11, Part 7:

"Agencies must use a performance-based acquisition management system, based on ANSI/EIA Standard 748, to measure achievement of the cost, schedule and performance goals."

EVA is a snapshot in time, which can be used as a management tool as an early warning system to detect deficient or endangered progress. It ensures a clear definition of work prior to beginning that work. It provides an objective measure of accomplishments, and an early and accurate picture of the contract status. It can be as simple as tracking an elemental cost estimate breakdown as a design progresses from concept through to 100% construction documents, or it can be calculated and tracked using a series of mathematical formulae (see below). In either case, it provides a basis for course correction. It answers two key questions:

At the end of the project, is it likely that the cost will be less than, equal to or greater than the original estimate?
Will the project likely be completed on time?
"

With kind regards,

Samer
Rafael Davila
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Samer,

A standard or a specification is very limited, it goes to the very specifics, like a design specification. therefore the DOD is right in being specific as what to include and what not to include.

On the other hand a code is more ample it allows for all tha can be, it provides guidance. By the PMI Book of Knowledge being so restrictive in their definition of EV they are merely issuing a sort of a specification and not a more ample code. To me this falls too short of my expectations about what the PMI should be.

As an example the ACI, the American Concrete Institute, issues codes as well as standards and specifications but they are very clear into the distinction of each. For example the ACI 318 is a code while the ACI 301 is a specification, and the ACI 303 is a guide, even the titles tell you so;

ACI 318-08 Building Code for Structural Concrete
ACI 301-05 Specifications for Structural Concrete
ACI 303R-04 Guide to Cast-in-Place Architectural Concrete Practice

Best regards,
Rafael
Samer Zawaydeh
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Dear Rafael,

A standards is a "standard". I fully agree with you that you have to custom tailor your monitoring and control tools according to the project needs.

This standard on the other hand is monitoring the Time and Cost only.

Using the manhours as a monitoring tool instead of the actual cost of the project is done in many industries, I agree. Especially in production facitlities.

With kind regads,

Samer
Rafael Davila
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Samer,

In my opinion PMI is not a good reference, is short sighted, it moves in the direction the wind blows. I don’t believe them to be pro-active in the disclosing of misleading software that wrongly use terms like float, when they should use another term as to show it does not take into account all constraints the software is using in its computations.

The term resource float should not exist, it shold only be float. When you want to differentiate then you should use the term "precedence float" or any other to mean your float computation is limited to precedence logic.

The PMI is myopic in its definition of EV as it is ruling out man-hours as a valid measure.

Did you ever heard about, budgeted man-hours, about earned man-hours and productivity ratio among many others? Is widely used in the Petro-Chem industry, of course PMI do not care.

http://www.planningplanet.com/forum/forum_post.asp?fid=&Cat=1&Top=32807

The problem with the PMI being so easy with software vendors is that by doing so it is promoting mediocrity, now because the PMI is leaving out man-hours many software vendors are following and are also leaving out man-hours in their EV functionality and in the terminology. Yes you can fool the software by assigning a unit cost of one to all man-hours but it is a dirty wayaround as the terminology becomes confusing or even meaningless.

Best regards,
Rafael
Samer Zawaydeh
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Dear Rafael,

I went back to the PMI Practice Standard Earned Value Management and searched in the glossary for Earned Value definition. It was as follows:

Earned Value (EV): The value of work performed expressed in terms to the budget assisgned to that work.

Planned Value (PV): The authorized budget assisgned to the scheduled work to be accomplished.

Actual Cost (AC): Total Cost actually incurred and recorded in accomplishing work performed during a given time period.

These are all cost related. Once we determine the dollar amount, the rest is simple calculations and percentages.

With kind regards,

Samer
Rafael Davila
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Samer,

It is not cost only, it can be man-hours also. Usually it is an option of the Owner.

When using manhour costs you are leaving out, on purpose, cost for materials, equipment ... and in adittion cost per man-hour can vary among trades.

Of course EV can be based on a group of resources or costs accounts, if you use only labor costs it is still based on costs, different from man-hours.

Maybe for US Government jobs it is cost but for other jobs it can be effort/manh-hours, do not interpret this as labor cost, it is not cost per se.

EV is not only done by the US Government, others do use man-hours, they have their particular requirements.

From the "old reference":

..."If set up properly, Earned Value provides a uniform unit of measure for reporting progress of a project. The traditional units that are used include work hours and dollars. For labor intensive efforts, work hours are often considered adequate In such instances, the financial details of the remaining project cost are controlled by the accounting system. These costs include subcontractors, overheads and other direct costs. When the entire project cost is to be controlled from the project control system, then it is more effective to use dollars as the unit of measure for Earned Value. Since each labor hour has a price, dollars can be used to control labor as well. However, when using dollars, additional factors enter into the performance evaluation. This includes salary rate differences, escalation, overhead adjustments and differences, for example. Consider the effect if the plan calls for Tom, Dick and Harriet to do the work, but the actual work is performed by Lucy, Bill and Mary, who have different salaries. The dollar measure will include the effect of the salaries. For project financial control, this is good information. However, for project performance control, this information muddies up the waters."

Ironically the only experience I had wit EV using man-hours was in a Pharmaceutical Job, a cost intensive job where labor cost was probably less than 15% and about 60% specialized equipment the rest all other. Our State Government does not use it as most of their jobs are Fixed Cost and the methodology is best applied in jobs where you have not fixed the cost at the contract signing. It seems like the perfect fit for defense jobs like for the development of a new Stealth Submarine a Bionic Soldier or whatever. No wonder the DOD was a pioneer in its adoption, well, its own version that apparently rules out man-hours.

I got this reference, don’t know yet if using old terminology but also makes reference to use of man-hours. Limiting EV to cost only is short sighted, is ruling out those who need to track performance based on man-hours.

http://www.eh.com.au/Technical%20Papers/020820%20EVPM%20Presentation%20E...

Best regards,
Rafael
Samer Zawaydeh
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Dear Rafael,

The definition is clear, it is cost. The Resources needed to complete each activity have to be transformed into cost. (i.e, Manhours x cost/Manhour = cost).

I know what they have been doing in the past, because i did the number crunching that way also. Now, it is cost control.

With kind regards,

Samer
Rafael Davila
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Samer,

Do not forget the other half of the coin, that is, effort. Not all EV is based on cost; it can also be based on effort (man-hours). It might be that for maintenance jobs effort is a better measure of performance.

Although EV based on effort is uncommon for Government Agencies some industries such as Pharmaceuticals do perform EV based on effort, maybe because it makes sense, maybe because they do not want to openly disclose costs, maybe because of transfer pricing and the impact on taxes. I have no idea of why they prefer effort but can tell you they also do add Committed Costs into their tracking, different from budgeted/actual/payable/accrued costs.

Best regards,
Rafael
Samer Zawaydeh
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Dear Rafael,

In order to answer the original question of Rashid, he must create the three charts correctly;

Planned Value
Earned Value
Actual Cost

Once this is done corretly, the next step is arithmatics.

With kind regards,

Samer
Rafael Davila
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Samer,

The basics are always where you start, about Rashid Mon it might be that knows the basics and he is interested in the implementation of it, so I would continue with the following.

1) Cost and or Resource load the Schedule

...1.1) For EV based on cost: Cost Load your schedule. You can use for earned value a single cost code or a group of cost codes.

...1.2) For EV based on effort: Resource load your schedule. For this purpose you would use manhours, you can select manhours for a single specific resource or for a group.

2) Set your Baseline Plan to be used for EV purposes.

3) Set up your EV as per your software. Here you tell the software wich baseline to use and which costs or resources to use depending on weather EV is to be cost or effort based.

4) Run your period updates, use period postings to get true cost/resource usage vs. time.

5) Run EV.

Samer, please add your comments if you wish, this is informal, any correction will also be welcomed.

Best regards,
Rafael
Samer Zawaydeh
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Dear Rafael,

Thank you for sharing this link. It seems that the subject is complicated, but actually it is not.

The material can be summarized as follows:

Planned Value (PV or BCWS)
Earned Value (EV or BCWP)
Actual Cost (AC or ACWP)

Schedule Variance (SV) = EV - PV
Schedule Performance Index (SPI)= EV/PV

Cost Variance (CV) = EV-AC
Cost Performance Index (CPI) = EV/AC

Estimate To Complete (ETC) = BAC - EV
Estimate At Completion (EAC) = AC + ETC
Variance At Completion (VAC) = BAC - EAC
To Complete Performance Index (TCPI) = (BAC-EV)/((BAC-AC)

I am sure that you know the above, but this is foundation of this subject. The other information is extracted from this.

With kind regards,

Samer
Rafael Davila
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Samer,

Thanks for not including aacei in your last listing as I prefer looking elsewhere.

I will be looking for your references as you always provided me with very good references before.

I found the following that might be of your interest. I also read ANSI-748A-1998 had minor revisions in 2002 and renamed with the reference to 1998 and latest revision year.

http://www.eh.com.au/Technical%20Papers/060703%20Comparison%20of%20EVM%2...

Best regards,
Rafael
Samer Zawaydeh
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Dear Rafael,

This is the list of reference books that I received during the course that I took last summer:

Project Management Using Earned Value

Earned Value Project Management,3e

Practice Standard for Earned Value Management

The ANSI 748-A Standard

ANSI Website www.ansi.org

NDIA website www.ndia.org

DOD EARNED VALUE MANAGEMENT WEB SITE, Sponsored by the Office of the Under Secretart of Defense (Aquisition, Technology & Logistics)

With kind regards,

Samer
Rafael Davila
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Samer,

I heard about Earned Schedule, similar but not equal, to me that Earned Value terminology has changed is new.

Does the US DOD/Dept.of.Defense changed terminology/and or definitions? Does the PMI changed terminology/and or definitions also? Well I don’t particularly like the PMI as it is too passive in the promotion of true PDM as if equal to old CPM.

If only aacei, I do not have access to their files as I am not a member of aacei, I had enough with one of their documents that provided 20 different definitions/options for Time Impact Analysis, a laxative.

Can you give me a non aacei reference to go directly and compare terms between the "old reference" and the "new reference" and my software terminology?

Best regards,
Rafael

P.S. The following link is an introduction to the concept of Earned Schedule.
http://www.pmicos.org/topics/EVMDEC07.pdf
Samer Zawaydeh
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Dear Rafael,

This is an old paper. The terminology has changed but the concept remains the same.

With kind regards,

Samer
Rafael Davila
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Shah. HB
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Hi

Check out here you might some info

http://www.aacei.org/technical/rp.shtml#20R-98
Samer Zawaydeh
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Dear Rashid,

You need to read about the Terminology. The web has enough information. Then you can calculate the EVA ratios. This is all done on one single chart.

Planned Value (PV)
Earned Value (EV)
Actual Cost (AC)

Schedule Variance (SV)
Schedule Perfomance Index (SPI)

Planned Duration (PD)
Estimated Duration (ED)
Cost Variance (CV)

Cost Performance Index (CPI)

Estimate to complete (ETC)
Estimate at Completion (EAC)
Variance at Completion. (VAC)

This is very simple. Please read about all the above definitions on the web. If you still have questions, please let us know.

With kind regards,

Samer