Tips on using this forum..

(1) Explain your problem, don't simply post "This isn't working". What were you doing when you faced the problem? What have you tried to resolve - did you look for a solution using "Search" ? Has it happened just once or several times?

(2) It's also good to get feedback when a solution is found, return to the original post to explain how it was resolved so that more people can also use the results.

What companies are using earned value tracking?

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Stephen Devaux
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I started in the project management training and consulting field in the U.S. in the late ’80s. At that time, only Department of Defense contractors and the very largest of construction companies were using earned value tracking & control.

Over the past twenty years, the Project Management Institute has grown hugely. EVMS is a major part of the PMBOK Guide, and a major area of concentration for questions on the PMP certification exam. And it’s my belief that, if the rest of the project planning process is done properly, earned value tracking becomes a "low hanging fruit," easy to get with very little effort.

But my questions are:

1. Is EVMS, as a tool, actually being implemented in companies and by PMOs?

2. If so, what kinds of applications? New product development? Manufacturing? Pharmaceutical development? IT or IS departments?

3. Do you know of any specific companies, or any specific departments within specific companies, that have implemented it? (Again, beyond aerospace/defense and construction?) And I’m interested in this beyond the U.S.

If you would rather reply to me in a personal message, please feel free.

Thanks,

Steve Devaux

Replies

Andrew Dick
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James,
It sounds like you need a visual aid that takes the sum of all the work you’ve baselined and then all the work you’ve done, and puts it in an unmistakeable format for those who are having trouble coming to terms with the basics as you so correctly put it.

It just so happens I have such a tool.. Basic it is but I’ve used it to great effect to provide management with a simple visual representation of the effort acheived and how much is still required.

Funnily enough the tool was developed by me in response to a managers exclamation that "These reports aren’t pretty enough"

So send me a message with your e-mail and I shall gladly send you a copy both for your amusement and possible use.

Andy
James Griffiths
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Peter,

I dare you to step into the lions’ den and blithely explain that "all techniques have their limitations". These guys have enough difficulty in understanding the most BASIC elements of EV - never mind its subtleties and limitations. It’s taken five years of client insistence to even get it on the management’s radar. I’ll inform them about it when I fancy a job-change.

James :-)
Peter Holroyd
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James,
all techniques have their limitations, part of our role is to explain these to management - can’t you just report that the SPI accum index is of no useful value.
There must be a longest path you can report against as an alternative with float utilisation.

James Griffiths
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Hi Stephen,

Thanks for your response. I appreciate the principle of your reply and fully understand the points that are contained therein.

The "whole picture" is slightly more convoluted - although in some ways it might be considered more simple.

In essence, there is no particular order in which the packages need to be done (purely a "design" exercise with little cross-package logic and no true CP) - and as long as they all get done by the end of October, then that’s generally fine by the client. However, in order to derive the resource profiles and provide a basis for monitoring and driving the project, it was essential to baseline it. Now, on some packages, work has been done ahead of its baseline date - but has been done at the expense of packages that were due to start on day 1. At the summary level; as long as the total work done is of the correct magnitude, in accordance with the period’s BCWS, and applied to activities that form part of the baseline, then the individual package’s SPI is of little consequence. Of primary concern is the CPI, as that will indicate WHERE the money is being spent, thus defining whether individual activities are exceeding their baseline budgets. If they are being exceeded, then this has greater implications for the resource’s ability to complete the outstanding work, as well as increasing the EAC.

Thanks again for your input Stephen.

James.
Stephen Devaux
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James,

A fascinating example of (one of the reasons) why the way that EV is applied to schedule is problematic.

What you are describing happens all the time with EV (i.e., getting BCWP credit for BCWS costs that are not yet in the denominator). The only reason that its particularly egregious in this case (to the point of causing a mathematical error!) is because it’s happening right at the start of the project, when there’s nothing else in the denominator, either. When it happens a couple of months later (as it frequently does!), it might just result in an SPI of 1.20, which most people would happily accept, despite the fact that it may have zero real implications for schedule performance.

First: the standard, accepted application of EVMS will give you an SPI of infinity. Whether your customer likes it or not, that’s the math. If submitting that as your report, I would show the math, and buttress it with a raw SV report (+ $100,000) and a statement that "if the current BCWP dollars were adjusted earlier in the BCWS to the actual start of work, then the current SPI would be 1.00 (or whatever)."

Second: Is the work that has been advanced on the critical path? Because if it’s not, it makes absolutely no difference to the project duration. The CP determines the project duration, so even though doing work off the CP ahead of schedule jacks up the SPI, it’s merely a metrics distortion that does not affect the project duration (unless it thereby frees resources to work earlier on CP activities, but that’s another kettle of fish). This is the reason that I always recommend that, for schedule tracking, the BCWS be on the backward pass (LS and LF dates) where there is no float distortion, and credit not be allowed for work done ahead of schedule. But my recommendation is not the standard way.

BTW, in the event that the work you’ve done IS on what was (and still may be) the CP, I’d try to show this by a DRAG Cost report: how much the "true cost" of each of the CP activities, and ultimately of the whole path, has been reduced by starting the work earlier, and thus pulling in the expected duration.

BTW, is this an outage project (I’m thinking not!)? If so, pulling in the CP even as much as two days must be worth millions, far more than any EV report is going to recognize. If this advance is on the CP (or, again, frees up resources to advance the CP), I urge you to find a concrete way to quantify the credit you truly deserve!
James Griffiths
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Hi Guys and Gals - I need some urgent advice on a point of principle:

Situation: We have 34 work packages (WPs) which all get summarised into a single set of EV curves. One of those WPs has started significant earlier than the baseline schedule - therefore there is no associated BCWS for the period. I claim the relevant value of BCWP (Earned Value) for that package. However, if using the equation BCWP/BCWS to calculate the individual work package SPI, I obviously get a "Division-By-Zero" - which is a mathematical error.

Does convention state:

1. I move a BCWS value, equivalent to the BCWP, into the relevant period - thereby giving me an SPI of 1.00 for that particular WP (although technically speaking I’m infinitely ahead of schedule). However, if I do this, then the summarised BCWP/BCWS SPI does not indicate that we have done anything ahead of schedule.

2. I do not move any BCWS value forward into the period, and I just accept the fact that, at the individual package level, I cannot get an SPI value. When summarised, though, the total BCWP/BCWS package values should correctly account for the fact that we’ve done some work that is ahead of schedule (which is nearly unheard of, round here).

3. Any other options?

To me, it seems that Option 2 is the logical choice - owing to the fact that we are doing EV at a summarised level, and not at the individual WP level. However, if you need to drill-down and examine the EV at each WP, then an "error" will be noticed (and these people really hate any form of mathematical error.
Technically, we should not re-baseline because there is no reason to do this, as there is no change in scope etc.

Your urgent advice please.

Thanks indeed.

James.
Anoon Iimos
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Stephen,

The fact is plumbing was never done in the beginning so the whole thing stinks from the start.

And there’s no choice but to take it, hoping that it can be worked out along the way based on previous experience, but as we all know that things changes in time as well as costs. So the problem lies on the sewerage lines and the septic tanks, which cannot be figured out because there’s no proper Plumbing!

In other words, EV won’t work.
Stephen Devaux
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Frank,

The CLUB is Cost of Levelling with Unresolved Bottlenecks. As Vladimir has correctly pointed out in many PP discussions, projects are delayed not only by activity durations and logical relationships, but by constraints, especially resource bottlenecks. The CLUB is designed to measure how much the delay of a specific bottleneck at a specific time in a specific resource is costing in reduced project profit.

The general idea is that CPM logical relationships, if designed properly, are generally much more difficult to "work around" than resource bottlenecks. If the CLUB of a resource on a project is $200,000, and it can be resolved by spending $20,000 to increase availability, it becomes a fairly easy case to make. (And, BTW, in my experience, numbers like those often understate the case!)

Unfortunately, project managers and planners often try to "plan around" such resource restrictions in their CPM schedules, assuming that, although Activity A could be done in 36 hours, or one week, by a dedicated resource called Hobbit, no one around here ever gets a dedicated Hobbit! Hobbits are always multitasked, so we assemble our CPM schedule with Task A estimated for four weeks. And, since everyone in the organization always does this, it becomes impossible:

1. To show how much the lack of a dedicated Hobbit is costing in reduced project profit on one project.
2. To show how much the lack of two or three Hobbits is costing in reduced project profit across our portfolio.
3. For the functional manager of a consistently bottlenecked and overworked department to adequately justify the needed new hires. New hires cost dollars (euros, yen, etc.), and the only way to justify them is by quantifying exactly how much NOT having them is costing in dollars of lost profit.

Applying this concept is not that complicated, but it would take a lot more pages. A summary can be found in the sixth article in the Total Project Control series, "Paving the Critical Path", at Projects@Work at:

http://www.projectsatwork.com/content/articles/234378.cfm

I hope that helps.


P.S. PP Administrator, I realize that my responses to Frank are OT for this thread. But after referring him to my posts in the other thread, I still felt a need to say a bit more. And I felt it would be presumptuous of me to start a separate thread for DRAG and the CLUB. If you want to move or break out these last two posts, please feel free. Also, how would you like me to handle this sort of thing in the future?

Steve

Stephen Devaux
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Frank Neal wrote:

"Hi Stephen, I have not read the book, but would love to know what the terms DRAG and CLUB relate to. I apologise if you have explained elsewhere in the forum and more than willing to go to the specific thread if there is one."

Sorry to be slow getting back to you on this, Frank. In addition to some health issues, I have also been busy helping a client whose customer wants to pull in the completion date from January of next year to November of this year. They’ve sent me the current schedule (only about 600 activities) and asked me to identify how much time each CP activity is currently adding (i.e., its DRAG), so they can get the "most bang for the buck" pulling it in. This is exactly how DRAG should be used and, frankly, the analysis is a helluva lot more fun that watching my Windies team get stomped by South Africa in the Cricket World Cup!

You’ll find, I think, a fairly comprehensive discussion of DRAG in the separate Critical Path thread in this subforum. I explained it posts 37, 44, 46 and 47, I believe. I also referenced some articles:

http://www.chiefprojectofficer.com/article/135

http://www.projectsatwork.com/content/articles/234282.cfm

And other articles, webinars, etc. referenced at my website:

http://www.totalprojectcontrol.com/about/articles/articles.html

Additionally, there is an exercise in DRAG computation in a simple (FS only) network under the Exercises tab at the site:

http://www.totalprojectcontrol.com/exercises/exercises.html

Warning: The Projects@Work articles require registration, but it’s free. The two older Webinars are archived by the respective PMI SIGs, but I believe they cost $10 or something if you are not a memeber of the SIG. The newest Webinar "The Cost of Tripping on the Critical Path!", is being broadcast live tomorrow (Thursday) at 1 pm Boston time (EDT USA). It costs $5, but if anyone here wants to tune in, send me a personal message in the next six hours or so and I’ll send you a promotional code to get it for free. You can access the info and register with the code at:

http://www.met-sig.org/products.aspx?category=68&product=301

I’ll deal with the CLUB in a separate post.

Stephen Devaux
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Trevor wrote:

"If I could use a sailing analogy, you are right. A boat spends all of its time "off-course" and trying to get "on-course", and it starts measuring how far off course it is and what the rates of getting further off-course or on-course are."

Trevor, I have a good friend who is a retired U.S. Navy Aviation Navigator, and he uses exactly the same metaphor! I think it’s a very apt one.


"So, in deciding which flavour of EV, which particular mix of costs, choose one which is most predictive re progress. Ok, which one(s)? Work (hours) only? But there are different classes of hours, expensive and cheap, as well as those on or not on the Critical Tasks."

And that’s the key, isn’t it? And the only possible answer is: "It depends!" Every project is different, and what may work well on one project may be much less predictive on another. Often, the best we can do is try to avoid the obvious pitfalls and distortions, some of which have already been discussed in this thread:

1. The Purchased Items Distortion, where the budget for equipment and material purchases can sometimes dwarf the weights of much riskier and more volatile labour-intensive activities.

2. The Disbursement Delay Distortion, where a BCWS is set up on the basis of cost accruing when an activity is performed, but the ACWP is tracked out of a finance system operating with a four-to-six week delay.

3. The Float Distortion for schedule metrics (SV and SPI), where an SPI of .88 may be entirely due to non-critical activities being delayed within their float (which, of course is EXACTLY what should be done if the critical path is slipping! Ain’t it wonderful -- doing exactly the correct thing to in order to meet schedule can actually make our SPI look worse!). This last is easily remedied by a couple of minor adjustments, including using a separate BCWS for schedule, with the milestones on the BACKWARD pass. Why does almost no one do this?

One thing I have been recommending in my seminars for the past fifteen years is that sometimes a very experienced project manager may have the best sense of which really ARE the risky and volatile activities. I suggest considering an additional "EV weighting" method called PMVs, for Project Manager Values. Under this method, the PM would set up a baseline in which $10,000 or $100,000 of PMVs are distributed across milestones on the basis of the the "size of the sighs of relief" that the PM wil take when each milestone is achieved. A very dodgy milestone on the CP might get $150, whereas a big budget equipment purchase might only get $5. Once the baseline is set, it gets tracked against and used to identify trends like any other EV system.

The "art" of excellent project management will never be replaced. All the methods are just plumbing -- but, damn, it makes a stink when the plumbing is badly done!
Stephen Devaux
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Anoon,

I know it’s hard to believe, and I hate to be the one to burst your bubble, but I have evidence:

Buildings collapse.
http://archive.salon.com/books/review/2000/07/13/wearne/

Airplanes fall.
http://www.esdjournal.com/articles/Lightning/russian%20crash.htm

Boats sink.
http://www.kltv.com/Global/story.asp?S=6331334

And I spent an extra 45 minutes last weekend driving around downtown Boston looking for a hotel because my GPS system kept sending me down exit ramps that had been permanently detoured a few months earlier.

Actually, this latter tends to happen a lot more often than the greater catastrophes. I wonder why that is?

Could it have to do with risk mitigation? After all, a lost hour of my time is probably worth a tiny bit less than even the two lives lost on the Sea Diamond, never mind the 114 in the Kansas City Hyatt. How do you think they mitigate risk? By going to an extended level of caution and "quality control", do you think?

Yes, I’d guess it’s possible to have estimates of effort on activities that are accurate more than 99% of the time: just take every estimate and add a bunch of standard deviations. Or, simpler, just add a single zero at the end. If a 50-50 estimate seems like 2,000 manhours, change it to 4,000, or 20,000, and you’ll probably exceed it less than 1% of the time (only probably because of Parkinson’s Law).

Actually, Anoon, I can now see the error of my ways. You have shown me the Antarctic light! I would hereby like to recommend to all readers of PP that, whenever they are bidding on a contract, they routinely bid 10 times more than they think they will need.

And the beauty is, one contract like that and you can sometimes retire!
Anoon Iimos
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Nieman,

I’m not wearing reading glasses but I’d used one just to understand what’s going on in here (and I hope I did).

Only after a hole in one and an Arctic bath that I managed to realize that its still the month of April.

Again, with all due respect (especially to Prof. Stephen), I’d like to reiterate that "accuracy" is achievable, otherwise buildings will collapse, airplanes will fall, boats will sink and GPS and Glonas won’t work!

EV is not a method used just to establish trends or to roughly see if you’re losing or not. It depends on how you use it! (i’m not using it to be honest!)
Trevor Rabey
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Stephen,

If I could use a sailing analogy, you are right. A boat spends all of its time "off-course" and trying to get "on-course", and it starts measuring how far off course it is and what the rates of getting further off-course or on-course are.
Certainly, accuracy is highly over-rated.

It is said (you say) that the value of EV lies in its capacity to be predictive.
But I have some paper somewhere that says that EV patterns established within about 2 - 4 reporting periods are enough because those early CPI and SPI numbers are hard to shake off.

I think one good reason to run EV is that it proves whether or not you can get your hands on the data to do it.
Usually, there is never a good enough baseline to get BCWP or BCWS, or you can’t get ACWP fast enough to do anything with it.

Prediction and anticipation, peering into the entrails to decipher the future, well that just has to be the key to everything. Planning has a pedigree all the way back to the Delphic oracle.

So, in deciding which flavour of EV, which particular mix of costs, choose one which is most predictive re progress. Ok, which one(s)? Work (hours) only? But there are different classes of hours, expensive and cheap, as well as those on or not on the Critical Tasks.
Richard Spedding
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Anoon,

I think you are under so much cloud that the sun is not shining too brightly. Maybe its because you are approaching the solstice and there is not much light each day in Antarctica.
I think Stephen has been as open and clear as he can be. EV is only one of the metrics used to determine how a project is doing. It is a logical extension of the primary one, which we all subscribe to (I think) the Critical Path through the schedule or programme, and how this varies throughout the life of a project. We can extend this to include an S curve to better show to management how well (or poorly) the schedule is being achieved. Our surveying brothers will weigh in with the cost (what we have bought the project for to date). If we are quite clever with our programme and how we allocate resources to the schedule we can confirm this and also produce an estimate of the project value (what we can sell it for).
The developer team cost in the construction industry will include the project management costs, head office costs, professional team costs, the contractors costs (which will be the value - to the contractor), the cost of buying the land and or building(s) for the project, and also the cost of borrowing the money to finance the project. The EV is the expected income the client can expect over the lifetime of a project, factored into a nett present worth.
The cost to the contractor will include a proportion of his head office costs, his site office, welfare and supervision costs, subcontractor costs, mechanical plant costs, building material costs etc. The EV is the various sums that he has tendered to the client for the works, whether it is a schedule of milestone payments or a remeasure contract or somewher in between.
Both these EVs are supremely important to the relevant organisations, because if the EV is not greater than the cost then the company is losing money, or is going to. Equally, if the organisation can obtain these forecasting numbers soon enough, then steps can be taken to try to rectify the situation. The most important thing is the speed at which the metrics can be obtained, not necessarily the absolute accuracy of them, which is why Stephen says that they do not need to be accurate. Therefore tying them in to the project schedule which is updated at least monthly, and probably more often, gives a regular, rapid, update.
The main problem with the principle in UK is the surveyors / commercial managers unwillingness to let go what they see as one of their functions, particularly to the planners who are not seen as being involved in financial performance or the project. It would also involve the recruitment of more planners, and they are as readers of this forum know, not easily available, at the expense of less surveyors, and they are not easily available either, but probably get paid more.
Anoon Iimos
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Stephen,

Though I had a bad night (my sleeping bag is leaking), I was fortunate to see the sun shines this morning until I open PP that clouds began to gather over my tent.

However, the term "Value" for me is like Virtue. I suppose you’re right when you said that a certain word is meant for its intent. And I guess my intentions are good, though I don’t have that gift (of cleverness) same as you are. I’m only driven by curiousity and the necessity to survive. I’m not selling books (and also not buying) but I’d be grateful to receive a free one!

Going back to EV, my opinion is, consistency lies on the common unit used (Value), money and time are never consistent, but you got other units in terms of quantities which are equitable to time and money.

I believe that accuracy is achievable! (if you intend to) and there is a driving unit which is Function!

You can call it Earned Function (EF)
Frank Neal
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Hi Stephen,
I have not read the book, but would love to know what the terms DRAG and CLUB relate to. I apologise if you have explained elsewhere in the forum and more than willing to go to the specific thread if there is one.
Please advise
Stephen Devaux
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Anoon wrote:

"Value is a generic term, depending on the unit of measure that has been agreed (may it be in cost or man-hours etc.)"

I guess I’m not sure what you mean by "a generic term". And far be it from me to argue with the Red Queen’s proclamation that: "a word means what I want it to mean - neither more nor less." However, I use it to refer to the noun "value" per the first three definitions (and particularly #3) in the Fourth Edition of the American Heritage Dictionary of the English Language:

"1. An amount, as of goods, services, or money, considered to be a fair and suitable equivalent for something else; a fair price or return. 2. Monetary or material worth: the fluctuating value of gold and silver. 3. Worth in usefulness or importance to the possessor; utility or merit: the value of an education."

This is the "value" the expectation of creating which makes a customer/sponsor decide to invest $X of "cost". The DIFFERENCE between this expected "value" (however gnerated) and the cost is the raison d’etre of every project, and therefore is definitely NOT the cost.

Anoon also wrote:

"IMHO, the accuracy of EV lies on the level of details."

The understanding and use of EV lies in recognizing that the purpose is not accuracy, but rather a measure of the degree of budgetary INaccuracy. EV was developed by the U.S. DoD because they’d give a contractor $150 million to do a project, and after a year $149 million would be spent and 10% of the work would have been done. EV broke the budget into weighted milestones so that if the first $20 million was spent on milestones that were budgeted for just $15 million, the DoD could get a sense that the project was "trending" toward being $50 million over budget. (More detailed analysis of where the overspending was occurring might ameliorate or exacerbate those numbers.)

Accuracy is a very overrated (and highly unachievable!) quality of project planning. Project control techniques like EV are designed to start measuring the inaccuracies of the plan, analyzing the trends, and creating updated expectations based on actual performance. In the words of General Dwight Eisenhower: "In preparing for battle I have always found that plans are useless, but planning is indispensable." EV analysis makes future predictions based on the variance between performance and plan, planning still having been an indispensable process even when the plan is highly inaccurate.

Anoon also said (in the Critical Path thread):

"one thing for sure! if there is no Schedule, there is no Critical Path!"

This is patently false, and a very unfortunate misapprehension under which project managers/planners who do not understand critical path method frequently labour. Every project, whether using critical path analysis, resource-loaded schedule, or making no attempt to schedule at all, has a critical path.

If a project has three activities (A = 40, B = 30, C = 30) arranged logically as FS relationships, and a fourth activity (D = 10) with no logical predecessor nor successor, the longest path (and the project) SHOULD take 100. However, if the true nature of the other path is:

Delay in starting D = 95
D = 10

then the true (ABCP!) critical path, and the project duration, will be 105. This will remain true whether or not any attempt was made to develop any project schedule whatever -- the only difference being that developing a CPM schedule would have shown the planner that "Delay in starting D" could not be more than 90 without it becoming critical and lengthening the project duration.

Further, the critical path, as Charlie has said, is of huge importance in that:

1. It ALWAYS determines the length of the project,
2. Which in turn impacts how much the value will be, when it will be created, how much the cost will be (through Marching Army Costs), and, most important,
3. How much "profit" will be generated through the project investment.

(Bearing in mind that, in a contract situation, the actual terms may distort these numbers into being very different for the customer vs. the contractor!)

Ultimately, the project manager/planner is certainly free to ignore any and all scheduling. But that does not make the critical path go away -- it only implies that it will be considerably longer than it might need to be! The critical path is there in every project -- you can plan, optimize and manage it, or not. But any project manager/planner who does not understand the intimate details and value (yes!) of critical path analysis is a charlatan.

Anoon also said: "Stephen, Further, this is the relevance of defining and estimating an Activity Duration accurately. It has nothing to do with DRAG or CLUB (Night)."

I’m sorry, I thought the thread was about earned value, not activity durations. One is cost, the other is schedule, and for whatever reason, project control tries to conflate the two.

Making schedule projections based on a cost metric is like asking: "If the 18-hole golf course has a par of 72, and a player has shot 5,6,4,5 for the first four holes which had pars of 4,5,3,4, how many hours and minutes will it take him to play all 18 holes?"

Actually, it’s even worse than that, because as I said in another thread, schedule is ruled by the critical path (yes, whether or not the project was ever scheduled!), and earned value shedule metrics (SV and SPI) do not differentiate between critical path activities and activities with float. (I also discussed how to correct for this.)

Certainly, I am all for estimating activity durations accurately. (And actually, I believe I read somewhere that it did happen once, on a small project back in ’71, I think -- don’t remember the details, though). Usually, many durations will vary from estimates to greater or lesser degree. For scheduling purposes, what’s important is to be able to see, and see quickly(!) what the impact is on the critical path, on the possible "migration" to a new CP, on the changes in DRAGs and DRAG Costs of future CP activities, and on the "windows of availability" for future resources.

This last is, of course, only tangentially related to their CLUBs. In general, I have tried not to take issue with your incorrect statements in these threads (the one about there being no critical path without a schedule was posted over a week ago). I certainly don’t want to argue with you, and you are free to ignore my input.

But I do know a bit about both scheduling and earned value. And if you want to denigrate critical path analysis and ridicule terms such as DRAG and CLUB, at least have the goodness to first read the book where they are explained.
Anoon Iimos
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It is easy to set up the construction activities when you got all the documents ready. But for Engineering / Design Works, I suppose you have to analyze it by discipline / function. Number of Drawings / Documents will not tell you where you are exactly with engineering works (remember Drawings are subject for scrutiny). The only people who can determine the progress of engineering works are the Designers themselves.
Rodel Marasigan
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Frank,

In addition to agreed weight factor or percentage I highly recommend having an agreed parameter/ rules of credit or production step in monitoring your progress.

Ex: Equipment Installation
a) 30% - Set Base Plate/ Lift Preparation
b) 40% - Lift Off Trailer/ Place
c) 10% - Re-Check Alignment
d) 10% - Bolt down/ Torque
e) 10% - Final Inspection/ QA/QC
------
100%

Ex:Piping Installation
a) 25% - Handling/ Setup in Place
b) 35% - Jointing (Welding, Screwed, Bolt-up)
c) 10% - Valves/ Inline Items
d) 10% - Pipe Support
e) 15% - Hydrotest
f) 05% - Punch List
------
100%

If these are setup and agreed then the client will have a clearer picture of what you’re claiming even they have not seen anything installed on site.

Regards,
Rodel
Trevor Rabey
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Frank,
This process of obtaining a "weight factor" goes like this, right:
Task A, $30
Task B, $50
Task C, $100
Total = $180
Weight factor:
Task A = 30/180 = 0.167
Task B = 50/180 = 0.278
Task C = 100/180 = 0.556
So now they all add up to 1, or 100%.
Then what?
When all 3 Tasks are, say, "half done", is "overall Progress":
(0.5 x 0.167)+(0.5 x 0.278)+(0.5 x 0.556) = 0.5 (or 50%)?







Anoon Iimos
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Stephen,

Further, this is the relevance of defining and estimating an Activity Duration accurately. It has nothing to do with DRAG or CLUB (Night).
Anoon Iimos
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IMHO, the accuracy of EV lies on the level of details. Value is a generic term, depending on the unit of measure that has been agreed (may it be in cost or man-hours etc.)

Summarized milestones will not give you accuracy unless you break it down into measurable activities in terms of absolute values (i.e. m3, m2, lm, kg, etc) with corresponding costs and man-hours. This is where productivity rates come in.

So to make EV work, you need productivity rates.
Frank Neal
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I need a common measure to link EPC together for measuring % complete of the total.
My belief for measuring % progress is that the most important elelment is consistency. (Apples and Apples) As an example I believe the Dollar $ Value (which is common across all tasks) should be taken and allocated over every possible activity in the schedule. This should be used as the common weighting factor. This Weighting factor ( DO NOT call it cost , from now on)will generate a curve from 0% to 100%. Total project. Progress can measured for EPC by, say No. of dwgs for engineering tasks, say milestones for procurement, place order, start manufacture, deliver to port, receive on site etc, and construction can be measured by installed quantities, say 100lm pipe (50lm installed),hence 50% complete. Use the weighted value (Cost).to determine overall % complete.
Unless you guys out there know better.
Trevor Rabey
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James, how can the cost of kit be claimed at the procurement process if the contract is fixed price for the lot, the whole project, rather than some sort of cost-plus or re-imbursable contract, or a hybrid mixture of fixed price for some stuff and cost-plus for other stuff?

Trevor Rabey
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Eugene,

I didn’t read your message carefully enough.
You explained that "weight" is just a negotiated and agreed number.

This makes it pretty much meaningless, and a waste of time, doesn’t it?
Knowing "progress" measured like this doesn’t really tell us anything about progress at all or offer any clue about what to do about it to fix progress?
Trevor Rabey
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Stephen,
wouldn’t you say that BCWS, BCWP and ACWP are all mis-named and mis-interpreted in two ways?

First, it is of course about cost, not value (whatever that is).

Second, they should be BCTS, BCTP, ACTP, ie T=Task, since it is about measuring the progress of Tasks, not Work (Hours) (as these terms are applied esp in MSP).

There are lots of different suggestions about which Costs to include or exclude from EV calculations, for all sorts of different reasons, but shouldn’t we start from a proposition that every last cent (Work Costs, Materials and Equipment Costs, Fixed Costs) that can be associated with a Task should be included?

Ok, sure, Tasks with expensive gear look a bit distorted because they put spikes and lumps into the EV, but is it really a distortion or is it just characteristic spikiness, ie characteristic of the kind of project.

Isn’t part of the "distortion problem" just a matter of when to accrue the Costs?
Trevor Rabey
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Eugene,

1. the weightage - please, what is this "weightage"? how is this decided? Who decides? Is it some subjective, agreed number, and what kind of considerations determine it, or is it derived from some objective number or something that can be measured?


2. the "actual" progress - is this some objective number, something that can be measured and if so what is it measured from? If the Task is say "lay 10000 bricks" is this "actual progress" the number of bricks actually laid?


3. the "weighted" progress (= col.1 x col.2)


Eugene K
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frank i think the client’s requirement is not critical but just a WANT for high level reporting.

my suggestion is to chart a table of all the "projects" (and detail with the major phase, engineering, procurement, construction, t&c, handover)
yes. a TABLE with 3 main columns,
1. the weightage
2. the "actual" progress
3. the "weighted" progress (= col.1 x col.2)
for convenience, the weightage add up to 100%.
Together with the client agree on the aportion of these weightage.

other than that, life goes on as usual. u progress the activities as u normally do. u do u claims as u normally do, etc.

For this high level "weighted" progress report, just transfer the corresponding summary progress captured as u normally do, to the "actual" progress column.

The table will calculate and report the "weighted" overall progress, as the client wanted and based on the weightage they agree on.

if they wanted it represented as an S-curve...
just create a resource WGT (weight) and assign them to the respective activities according to the weight apportioned in the table. (reminder: u need to divide the weight for engineering to all engineering activities so the overall weight apportioned to each phase equals to that agreed in the table) you may need to factor the weight to higher denomination to avoid round-offs to zero.

remember, this is solely for the purpose of generating this high level overall weighted progress report. nothing more...
Stephen Devaux
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Since we’re getting into a rather detailed discussion of earned value, I think it’s important for me to repeat something that so many people (including PMI!) tend to forget: earned value is NOT about value -- it’s about cost!

"Using dollars, you may have a task like install expensive equipment, so little EV until last minute then large EV when installed."

Yes, this is sometimes called "The Purchased Items Distortion" -- the fact that materials-and-equipment intensive activities, due to their large budgets, can sometimes have an impact far greater than their likely volatility or risk. Labor intensive activities usually tend to be more "volatile".

"other is manhours, which is the reverse of above, as very little man hours spent on installing expensive equipment.
say a few men and a crane for lowering into position."

Weighting by manhours is considered the "remedy" for the Puchased Items Distortion.

"We are also measuring Engineering, procurement, as well as construction but the problem is when we are reporting say 30% complete, they go to site and see nothing there!."

You didn’t say whether you were using milestones or continuous activities. If you’re reporting EV within continuing activities ("This activity is 60% done, so I get credit for 60% of it’s EV."), I’m sympathetic to their position. That’s why I suggested 1/3 - 2/3 milestone weighting system. If they don’t like that, try negotiating 25% - 75%, or whatever.


Are they more concerned with schedule or cost? If schedule, then I’d also suggest two further stipulations:

1. That no milestone will be considered achieved until the period in which it is scheduled to occur.
2. That the baseline for schedule data (BCWS) be the backward pass dates (ALAP) of the critical path schedule. That way, there is no distorting float on the milestones in the BCWS (everything is critical!)

BTW, I think those two suggestions should always be used for EV tracking of schedule.



James Griffiths
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Frank / Stephen,

I’m eager to join this discussion, owing to the fact that I’m in the process of trying to persuade certain clients to calculate EV in certain ways. Unfortunately, I’m extremely pushed for time - but please continue between yourselves.

FRANK - Your client is arguing a silly point about the installation of expensive kit. The value of the kit should have already been claimed as part of the procurement process. The installation itself is just that: Installation. As part of EV, it has no other inherent value other than the cost of the activity. Unfortunately, your clients are still in the "old way of thinking" - which is the bane of modern planners.

Cheers.

James.
Frank Neal
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Many thanks stephen, What would you propose for the EV. They do not want manhours or dollars. Their argument is:-

Using dollars, you may have a task like install expensive equipment, so little EV until last minute then large EV when installed.

other is manhours, which is the reverse of above, as very little man hours spent on installing expensive equipment.
say a few men and a crane for lowering into position.

We are also measuring Engineering, procurement, as well as construction but the problem is when we are reporting say 30% complete, they go to site and see nothing there!.
Are there any standards that state its best to use Dollars, but view dollars as a weight factor.
Stephen Devaux
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Frank,

I’d recommend using only start and finish milestones, weighted 1/3 for start milestones and 2/3 for finish milestones. (1/3 - 2/3 is preferable to 50 - 50 because it provides less incentive to just start a bunch of activities in order to get the EV.)

This will remove the issue of "what percent complete" is an activity. On US DoD projects, it is also possible to use %complete if (and only if!) there is an "objective criterion" for weighting within an activity. For example, if an activity consists of assembling 100 drawings and is budgeted for 10,000 hours (or dollars), it is sometimes acceptable to weight each at 100 hours.
Frank Neal
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I have a similar problem, our client wants us to provide the % complete for the project.! sounds easy, but the project is $3 Billion dollars (US) spans over 10 years and includes almost everything possible, Ports, Industrial, Residential, sevices, infrastructure etc. We have suggested Earning value utilising physical % complete of installed quantities with the construction phase and measure engineering / drawings by earned man hours, etc..The problem is using a common denomenator for overall %, we have suggested $’s and or manhours but both have been rejected. They are looking for a weighted value, any ideas on how to come up with SIMPLE way?

thks
Eugene K
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my experience and opinion...
EV yes a confusing terms... Earned? Value?
it is just another (yes another) method of measuring progress (achievement)...
maybe it started before we have planning software which uses CPM where the progressed barchart already indicate if the project is delay or not! it early days, maybe schedule was just timescaled sketch. so progress and delay cannot be determined from this static chart. hence some geneius (i wonder who, want to pay my tribute) create the EV Technique to chart the plan (bcws) and the progress aka EV(bcwp) and actual (acwp). Oh i purposely left out the unit bcoz i think u can use whatever unit that is relevant, cost, manpower, material, etc.
fyi, we still use EV charts to reason with trades subcons if their progress is slow due to insufficient input (manpower input less than plan) or low productivity (manpower REPORTED to be high but work progress is low).
Andrew Tan
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For EV, I found it quite hard to establish earned value.
From PMP, earned value consists of cost and schedule value.
This 2 will give you the project earn value and is use to analyse the impact of cost and schedule.
Unfortunately, GIGO. Once your initial inputs are wrong, the whole things get screwed up. This is especially true for oil/petrochemical industry.
My client, a 60 year old experienced control mgr uses m.hrs to calculate Eng EV while milestones to asses Procurement EV.
Stephen Devaux
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Thank you all so much for your replies. It’s intersting that the U.K. seems to be moving ahead and implementing EV more than most U.S. organizations outside of aerospace/defense and construction.

Jane, it’s wonderful to hear from a former student! I remember your name, but not precisely which PMI class you were in (I’ve taught a lot of them!) Was the class of mine that you attended in 2002 at the Annual Symposium in San Antonio, or was it part of PMI Seminars 2003 series?

Either way, please fell free to contact me -- I’d be delighted to chat about methods for getting organizations to implement earned value. And I’m trying to put people who are implementing PM and the Total Project Control approach in touch with each other, to share ideas and resources. I’m just starting a bulletin board for that very purpose. If you’re interested, go to http://www.totalprojectcontrol.com/
and click on the FORUM tab. As I say, it’s just getting started, so don’t expect great wisdom there yet! (Unless you contribute it, of course!)

My own thoughts about earned value:

1. It is more of a project sponsor’s (or customers’) tool than a project manager’s tool. EV metrics are lagging indicators, and if a PM needs those metrics to find out the project is a month late and 20% over budget, it may already be too late! Jane, just keep making those engineers give you the schedule info you need -- that’s the only way to plan and manage schedule on a day-to-day and week-to-week basis.

2. But EV is very useful to allow senior managers and sponsors to identify trends (especially cost trends!) before the project really gets out of control. Are we still headed in the right direction, or are we just spinning our wheels and spending time and money without significant progress?

3. Although earned value terms are scary to a lot of people (all those acronyms!), it’s really a very simple concept, analagous to par in golf (or Duckworth-Lewis projections, for all you cricket fans!).

4. And it really is remarkably simple to implement! Especially if you are not constrained by bureaucratic red tape requirements. If the PM does all the things s/he should do in planning a project (WBS, activity-based resource assignments and cost, schedule, cost accrual schedule), then a simple earned value baseline comes for free, right out of any software package! And you just have to charge resources against the activities (even at a summary level) to get some value out of the process. Also, you don’t necessarily have to do all resources -- even simple workhour reporting is sufficient to provide valuable guidance on many projects.

5. EV cost numbers and CPI, especially collected by functional departments, are very valuable metrics -- schedule numbers and SPI, not so much. SPI can be distorted by float, unless it is implemented correctly (on the ALAP schedule), which is rarely done.

6. It is a largely unrecognized but crucial fact that earned "value" is a completed misnomer -- earned value is about cost, not value! And no, the two things are not the same!
James Griffiths
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Well said, Mimoune.

I quite agree with you, in that it’s all very well for them people to say "do this". What they don’t realise is the burden of administration that such data collection imposes. Moreover, they seem to think that once a programme is written, it takes only five-minutes to update.

James.
mimoune djouallah
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Dick

Just to take the example of a simple project

Let say we have only 20 activities, for each activity, I have three kind of resources labor, materiel and equipment ( in house and hired thus not the same price) so I have each time to update 20X4 = 80 data field, both for cost and quantity. And of course I forget to count all those overhead item and supervising expense.

“Unfortunately, the development and maintenance of a work element database can represent a large data collection and organization effort. four hundred separate cost accounts and four hundred activities would not be unusual for a construction project. The result would be up to 400x400 = 160,000 separate work elements. Of course, not all activities involve each cost account. However, even a density of two percent (so that each activity would have eight cost accounts and each account would have eight associated activities on the average) would involve nearly thirteen thousand work elements. Initially preparing this database represents a considerable burden, but it is also the case that project bookkeepers must record project events within each of these various work elements. Implementations of the "work element" project control systems have typically fondered on the burden of data collection, storage and book-keeping. “ by Chris Hendrickson

mimoune

PS: i don’t know the licence used for this book, but i hope i did not infringe some weird IP issue
Andrew Dick
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EV is just one of the many tools used in Project Management, some of the ones I’ve been exposed to over the years include some of the classics like;
We’ve always done it that way!
The last bloke set it up - not my fault
The wet finger in the air

Just to name a few.

But in all seriousness I have used EV with exceptional success on Aircraft maintenance where when the servicing started we knew that there was going to be at least 60% of the costs on the project as Unknown, Unknowns.

It doesn’t make it very easy to do the EVM but we created some different ways of adding tasks to the schedule for the unknowns and had an upfront contingency budget for the unknowns baselinedin the schedule to start with.

We enjoyed a 98% success rate of predicting final costs for the servicings at te 50% stage.

Our estimating procedure for the unschedule maintenance activities took a few runs to get to work but in the end we were very successful.

So when people say that "the work in field is hard and it is impossible to give accurate data etc" it just means they have little or no idea as to estimating methods.
mimoune djouallah
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Hello all

I thought EV is “de facto standard” for project control, at least, in “ state of the art” companies, so please can you enlighten us on others method used instead to track projects.
@Jane
Honestly, I was rather happy to read about your experience, I am not alone;) as in my company each time I speak with PM that they have to give us their project actual based on activities, they simply response by the usual rhetoric about how the work in field is hard and it is impossible to give accurate data etc…

mimoune
Stephen Devaux
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Trevor, sorry to be slow responding. But you made several thoughtful points, and I wanted to be able to take the time to respond equally thoughtfully.

Trevor wrote:

1. "Stephen, wouldn’t you say that BCWS, BCWP and ACWP are all mis-named and mis-interpreted in two ways?... Second, they should be BCTS, BCTP, ACTP, ie T=Task, since it is about measuring the progress of Tasks, not Work (Hours) (as these terms are applied esp in MSP)."

Trevor, I agree that I’d prefer those terms, in that they more accurately reflect the essence of the purpose and application. But to me, that’s a much less important battle than the dangerous conflation of "cost" with "value", a problem hugely exacerbated by the 2000 PMBOK Guide’s changing the name of the BCWS to "Planned Value (PV)"!

2. "First, it is of course about cost, not value (whatever that is)."

Whatever it is, and whatever is generating it, it’s the whole reason someone’s spending (i.e., "investing") that cost and expending the effort and time, on EVERY PROJECT! That seems like a pretty important reason fror not being confused about it.

And however much it might actually be, the one thing we can be sure of is that SOMEONE (customer, sponsor, employer) is expecting the value to be greater than the cost! And the size of the difference between those two metrics (a difference primarily dependent on the interaction between scope, schedule and cost) is "project profit" and should be THE most important metric of the relative (as opposed to binary!) degree of project success.

3. "There are lots of different suggestions about which Costs to include or exclude from EV calculations, for all sorts of different reasons, but shouldn’t we start from a proposition that every last cent (Work Costs, Materials and Equipment Costs, Fixed Costs) that can be associated with a Task should be included?"

Not in my opinion. For determining project budget/actual cost, absolutely! But from the purpose of project control, the purpose of earned value controls is to be a predictor of future performance. As such, the method that will produce the EV metric with the best predictive value should be used.

Some costs (i.e., labour), and the costs of some activities (labour-intensive, design, re-work), are often more "statistically significant" than others (i.e., equipment). This is one reason why, in making future cost projections, it’s often important to compute EV by functional area -- if Design worked at a CPI of 0.50, but all the Design work is finished, to "straight-line" that 0.50 CPI into the project cost ETC without recognizing its distortive potential is being deliberately obtuse.

If I may use a cricket analogy, the way that cricket batting averages are computed is one of my pet peeves. They do not include not outs in the denominator, essentially making the assumption that the runs scored in such innings are "magically" accumulated, and added to the numerator! Thus Steve Waugh’s and Brian Lara’s batting careers look similar: Waugh at 51.06 and Lara at 52.88.
However, Waugh had 46 not outs in 260 Test innings! Compared to Lara’s 6 in 232!

One can say whatever one likes about these two as players, captains, etc. But there is no question that when the two walked out to the middle, there was a clear expectation that Lara would score more runs. For the averages to have any predictive value, they should be computed like earned value milestones with 50-50 weighting -- .5 for each innings started and .5 for each out. This would lead to a Waugh average of 46.11 vs. 52.19 for Lara.

4. "Isn’t part of the ’distortion problem’ just a matter of when to accrue the Costs?"

No, although that’s certainly an important potential distortion, too (the "Disbursement Delay" distortion, to be precise). But for purposes of predictive value (which EV is really about), the distortion based on the volatility of different cost types is very real.

(Of course, schedule metrics like SPI potentially incorporate the much greater "distorter" of float, by ignoring the overwhelming importance of the critical path. I discussed how to avert this in my earlier post.)


Andrew Dick
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Ahhhhhhhhhh... EVM...
Yes a buzz word or phrase.

But - when you can harness the power of the dark side it is a very effective tool.
The biggest problem faced by myself, (and I would imagine, a whole bunch of other planners and schedulers), is the BUZZ around the buzz word.

Some project managers and companies for that matter have suffered from the ’Sales Pitch’ of the companies which pedal the various tools, I liken it to a CEO in a candy shop. Where he sees all the pretty pictures and nods his/her head when the nice salesperson exclaims that the company will save an inordinant amount of money by the "Simple but Effective" implementation of their software.

What a lot of us end up running is a time recording system with MS Excel hanging off the back to produce pretty pictures because the salesman didn’t include the report writing plug in in the price and management only saw that as an addon they didn’t want.

When the power of the dark side is to be tamed and used, there are many things you should think about and have in place for an EV system to be effective.
Some of these include, Earned Value Techniques, Earned Value Claiming guidlines, Baseline control (God help the poor planner/scheduler who has to explain the concept of a baseline to his manager).

Then if you are one of the fortunate (unlucky) ones who have to record costs through your schedule, you will need to struggle and fight to get the guys on the shop floor to not only submit their timesheets but then try and tell them why they need to book to the right number. Then to make matters worse your going to probably need to explain why, how, when you need to collect the current Status information to update the schedule progress after actuals have gone in.

All in all, there would be many people who could explain the whole thing in much more detail and I would think there are many many more people with the ’Lessons Learnt’ knowledge to help.

All I can offer is to just keep chipping away at it and sooner or later the EVM system will be running or you’ll be on medication in a nice clean room with soft walls and no mirrrors.

Andy
Rashid Iqbal
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People like to use this buzz word more then to employ it in a project. Ussally it is used for controlling costs of major work items (that make the 80% of the projetc costs). The big companys that are using it, have ussally a lot of work subcontracted and controlling the subcontracted work on EV is a different concept.

It’s full application is not very simple, it requires the entire system to be changed/upgraded.
jane thompson
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Steve,
I was asking myself the same question recently; wondering have I missed the boat by not fully understanding or implementing EV! Is my value lessened by no EV experience. My company is a DoD Subcontractor and we have only talked EV and would only do it if it was a requirement. I have to fight the engineers to even get a good schedule! Again, only if they are made too. I am trying to implement cost-loaded, resource-loaded schedules, to capture actuals. The natural result would be EV, yielding a true picture of the projects’ health.
I have attended one of your classes, 11/2002, Total Project Control, and it was wonderful! As your book states, and I tend to agree, EV is feared.

"May all your Critical Paths Be Golden"
Thank you, Jane
Tunde Layeni
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Hello Steve,

EVMS has recently become popular in the UK,It is mostly used on large infrastructure projects.I know Network rail/Transport For London uses it,the company i am currently assigned to North London Gas Alliance would implement it from April.

As projects become more complex,there has been criticism on poor performance on high profile projects,this has made earned value popular with project sponsors.

James Griffiths
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Hi Steve,

Virtually the whole of the UK Nuclear Decommissioning industry tends to use EVM. We use it for the design and manufacture of our handling equipment - for use in Nuclear Power Stations - but I fear that is probably because the client insists - rather than the enlightenment of our management.

I find it extremely useful and tremendous fun to play with. However, there are just too many people who massively over-complicate the process and, as a result, get it totally wrong.

Cheers.

James.