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All,
I know this has been discussed before, but wanted to get some new feedback on the topic.
I have an earned value question associated with rebaselining a schedule on a firm fixed price contract. I’m an owner and I’m using EV concepts to monitor my project. For the first few months I experienced no contract modifications so my CPI value was always 1 with my SPI varying slightly based on how the contractor was doing.
I’m now in month 6 and I have a number of in-scope modifications that are necessary to account for discrepancies in the design. Let’s assume my initial BAC was $1,000,000 and now my modifications in month 6 will add an additional $100,000 in cost. My questions:
My thought is that isn’t a bad thing. It would show my CPI as less than 1 and indicate I’m over my initial plan. If I do rebaseline I’m effectively setting my CPI back to 1 and will never see a variance. What am I missing - good approach, or should I rebaseline at this point?
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DOD options for Rebaselining, the father of the creature, do not solve all EVM issues.
* Rebaselining: Rebaselining is the term used for describing a major realignment of the PMB to improve the correlation between the work plan and the baseline budget, scope,and schedule. Rebaselining may refer to either reprogramming or re-planning.
* Drawbacks: Formal reprogramming generally requires significant effort by both parties, can be time-consuming, and can beexpensive. Formal reprogramming may result in the elimination of cost and schedule performance variances and trends used for making cost and schedule projections. These drawbacks should be weighed against the benefits of providing more reasonable budget or schedule objectives and improved management control .
* Adjusting Variances: A key consideration in implementing an OTB is to determine what to do with the variances against the pre-OTB baseline. There are essentially five basic options. This is a far more detailed effort than these simple descriptions imply, as these adjustments have to be made at the detail level (control account or work package).
Adjusting Variances is Achilles Heel of EVM, none of the DOD options will keep a truly updated baseline while keeping full variance visibility.
Earned Value Managementas applied to CPM is Flawed.
Earned Value is an old concept, was developed over a 100 years before CPM. It was related only to cost as measured in monetary terms and resource hours. At that time it had no flaw. The practices we now call EVM developed out of cost management techniques used in large factories as early as the 1800s. Industrial engineers of the time compared planned vs. actual output, timing, and cost to provide a picture of performance relative to expectations.
Integration of Earned Value with CPM was introduced by PERT. Imnitially PERT statistics were in error as they did not considered the issue on "Merge Bias" this was fixed soon with Monte Carlo methods. The mismatch between Earned Value and criticality was never solved under CPM based EVM.
Earned schedule attempts to handle the criticality issue but ignore the fact that baseline as well as critical path or critical chain is not fixed. In this regard also Critical Chain feeding buffers are flawed.
DOD Earned Value Management Implementation Guide discourages use of EVM on Fixed Price Contracts under 2.2.3.7; Exclusions for Firm Fixed Price (FFP) Contract Type. The application of EVM on FFP contracts and agreements is discouraged, regardless of dollar value...
http://www.goaztech.com/media/documents/evmigoct06.pdf
http://www.technomics.net/files/downloads/scea/2012/Advanced_EVM_SCEA%20...
http://www.earnedschedule.com/docs/schedule%20is%20different.pdf
When Baseline changes EVM looses track of prior history and the never perfect adjustments are difficult.
http://www.acq.osd.mil/evm/docs/OTB-OTS%20Guide%20121205.pdf
The following link compares different project control methodologies.
http://www.spiderproject.com/images/img/pdf/Project%20Control%20Methodol...
Email: PPadmin@planningplanet.com
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