Key Note Conf. for Advancing Project Controls June 27 th, 2017 Denver, Colorado

Transcription

1 Key Note Conf. for Advancing Project Controls June 27 th, 2017 Denver, Colorado Pradip Mehta, PMP, CCE, PSP, EVP, PMI-SP, RMP Vice President, Project Controls AECOM Corporation

2 Agenda 1. Earned Value Concept 2. Earned Value Parameters 3. Common Barriers to Implementing Earned Value 4. Cost Variance 5. Schedule Variance 6. Performance Measurement Methods 7. Statistical Forecasting Techniques 8. Actual Cost Reconciliation 9. Case Study 10. Earned Value on Small Projects 11. Earned Value on Large Projects (Non-Federal) 12. Conclusion 13. Q & A

3 Applying Earned Value on Both Small and Large Projects

4 Earned Value Concept Project description paint four (4) walls Project duration = four (4) days Total budget = $400 ($100/each wall) Progress Measurement at the End of Third Day Performance Measurement Element Description Planned Value (Three Walls) Actual Cost Earn Value (One Wall) Cost Variance Schedule Variance Estimate at Completion Variance at Completion Value $ $ $ ($100.00) ($200.00) $ ($400.00)

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6 Common Barriers to Implementing Earn Value

7 Cost Performance Report!!! 1. CONTRACTOR a. NAME: Generic Construction Company b. LOCATION: Denver, CO 5. CONTRACT DATA b. NEG COST 0 $183,852 c. EST COST AUTH UNPR COST PERFORMMANCE REPORT FORMAT 1 - WORK BREAKDOWN STRUCTURE 2. CONTRACT a. NAME: Generic House b. NUMBER: Generic c. TYPE: FFP d. SHARE RATIO: d. TGT PROFIT/FEE 3. PROGRAM a. NAME: Generic House b. PHASE (x one) [ ] RDT&E [x] PRODUCTION Form Approved OMB No REPORT PERIOD a. FROM: 01-Jan-02 b. To: 31-JAN-02 a. QTY e. TGT PRICE f. EST PRICE g. CONT CEILING h. EST CEILING $0 $36,148/20.00% 219, , EST COST AT MGMT EST AT CONT BUDGET COMPLETION COMPL (1) BASE (2) VARIANCE (3) 7. AUTHORIZED CONTARCTOR REPRESENTATIVE a. BEST CASE $227,009 a. NAME (Last, First, Middle Initial) b. TITLE b. WORST CASE $165,467 Ted Smith Manager c. MOST LIKELY $226,158 $183,852 -$42,306 c. SIGNATURE d. DATE SIGNED 31-JAN PERFORMANCE DATA CURRENT PERIOD CUMULATIVE TO DATE AT COMPLETION ACTUAL BUDGETED ACTUAL ITEM BUDGETED COST COST VARIANCE COST COST VARIANCE BUDGET EST VAR WORK WORK WORK WORK WORK WORK SCHED PERF PERF SCHED COST SCHED PERF PERF SCHED COST (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) Concrete 9,670 8,757 26, ,393 9,670 8,757 26, ,393 11,485 28,873-17, Framing 7,089 5,355 6,250-1, ,089 5,355 6,250-1, ,147 28, Plumbing ,704 5, Electrical ,070 14, Interior ,328 7, Roofing ,730 1,730 0 OVERHEAD 16,062 14, ,745 14,317 16,062 14, ,745 14,317 75,684 61,371 14,313 b. COST OF MONEY C. GEN & ADMIN 5,429 4, ,702 5,429 4, ,702 23,237 18,537 4,700 d. UNDISTRIBUTED BUDGET e. SUBTOTAL (PM Baseline) 38,269 33,149 32,400-5, ,269 33,149 32,400-5, , , f. MANAGEMENT RESERVE 18,385 g. TOTAL 38,269 33,149 32,400-5, ,269 33,149 32,400-5, ,852

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9 Earned Value Parameters EAC BAC Variances Cost variance (CV) CV = BCWP ACWP Schedule variance (SV) $ Schedule Variance Cost Variance SV = BCWP BCWS Variance at completion (VAC) VAC = BAC - EAC Time Now Completion Date Performance indicies Cost efficiency (CPI) CPI = BCWP ACWP Schedule efficiency (SPI) SPI = BCWP BCWS

10 Earned Value Based Performance Measurement

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12 Cost Variance

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14 Schedule Variance

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16 Performance Measurement Methods

17 Physical Percent Complete/Estimate to Complete Scenarios on a Soft Task Scenario #1 (Accomplishment to Date/Percent Complete Evaluation) Task Description % Complete to Date Spent to Date Earned Value to Date Cost Variance to Date Total Budget Total Current Estimate Variance at Completion Groundwater Modeling 80.00% $78,000 $80,000 $2,000 $100,000 $100,000 $0 Scenario #2 (Assessment of Remaining Work/Estimate to Complete) Task Description % Complete to Date Spent to Date Estimate to Complete Earned Value to Date Cost Variance to Date Total Budget Total Current Estimate Variance at Completion Groundwater Modeling 65.00% $78,000 $42,000 $65,000 ($13,000) $100,000 $120,000 ($20,000)

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19 Statistical Forecasting Estimate at Completion

20 Statistical Forecasting Methods

21 To Complete Performance Index (TCPI)

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23 Actual Cost Reconciliation Credit for work performed needs to be reconciled with the actual cost of work performed, particularly in case of subcontractors/vendors. Typical Subcontractor Work Payment Cycle Work Performed Month X Cost of Work Processed (Invoiced) Month x + 1 Cost of Work Paid Month x + 2 Actual cost of work performed by the subcontractors may not be reflected in the month-end cost report. Hence, an estimated cost of the subcontractors needs to be accrued in the accounting reports.

24 Subcontractor Accruals Month X (subcontract cost not accrued) WBS Element % Complete Spent to Date Earned Value to Date Cost Variance to Date Budget Drilling 70% 30,000 *1 70,000 *2 40,000 *3 100,000 *1 Spent to date reflects subcontractor s invoice to date as of month X-1. *2 Earned value reflects progress as of month X. *3 False positive cost variance due to lack of accrual. Month X + 1 (subcontract cost accrued) WBS Element % Complete Spent to Date Earned Value to Date Cost Variance to Date Budget Drilling 100% 110,000 *1 100,000 *2 (10,000) *3 100,000 *1 Spent to date reflects subcontractor s invoice to date as of (month X) and accruals of month (x + 1). *2 Earned value reflects progress as of month (X + 1). *3 Cost Variance to date represents true variance.

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26 Case Study 1

27 Case Study 1 Critical Path Analysis Schedule Variance Analysis At the end of the 5 th month Activity % Complete Planned Budget to Date Earned Value to Date Schedule Variance Total Budget Available Float A * 20% 10,000 5,000-5,000 25,000-2 months B * 20% 10,000 5,000-5,000 25,000-2 months C + 80% 5,000 20,000 15,000 25,000 1 month D + 80% 5,000 20,000 15,000 25,000 1 month E * 20% 10,000 5,000-5,000 25,000-2 months F + 80% 5,000 20,000 15,000 25,000 1 month G * ,000-2 months H * ,000-2 months 45,000 75,000 30, ,000 Critical activities + Non critical activities Project shows positive schedule variance but project is behind schedule.

28 Case Study 2

29 Case Study 2 Critical Path Analysis Schedule Variance Analysis At the end of the 5 th month Activity % Complete Planned Budget to Date Earned Value to Date Schedule Variance Total Budget Available Float A * 100% 10,000 10, ,000 0 B * 100% 20,000 20, ,000 0 C + 100% 10,000 10, ,000 2 months D + 50% 40,000 20,000-20,000 40,000 2 months E * ,000 0 F , ,000 40,000 2 months G * ,000 0 H * , ,000 60,000-60, ,000 Critical activities + Non critical activities Project shows positive schedule variance but project is behind schedule.

30 Earned Value on Small Projects

31 Earn Value Implementation on Small Projects WBS Element/Task % Complete Total Budget Earned Value to Date Actual Cost to Date Variance to Date Estimate at Completion Variance at Completion Task A 100% 20,000 20,000 25,000-5,000 25,000-5,000 Task B 50% 40,000 20,000 15,000 5,000 35,000 5,000 Task C 25% 30,000 7,500 10,000-2,500 35,000-5,000 Task D 0% 10, ,000 0 Total 100,000 47,500 50,000-2, ,000-5,000

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33 Earned Value Implementation on Large Projects (Non-Federal Programs)

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35 Conclusion

36 References

37 References Web sites

38 Questions/Comments

39 Contact Information Name Pradip Mehta, PMP, CCE, PSP, EVP, PMI-SP, RMP Title Vice President, Project Controls Company AECOM Corporation Address Phone Number +1 (212) (609) PMI is a registered trade and service mark of the Project Management Institute, Inc.

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41 Earned Value Implementation on Federal Programs / ANSI-748 Guidelines

42 Earned Value Management Requirements and Reporting Directive From the Office of the Under Secretary of Defense (c. 2008)

43 EVMS / ANSI-748 Criteria

44 EVMS Criteria - Organization

45 EVMS Criteria Planning and Budgeting

46 EVMS Criteria - Accounting

47 EVMS Criteria Analysis & Management Reporting

48 Elements of Contract Baseline

49 Elements of Contract Baseline Relationships Total Contract Price Total Contract Cost Profit/Fee Contract Budget Base (CBB) Performance Measurement Baseline (PMB) Management Reserve (MR) Distributed Budget Undistributed Budget (UB) Control Accounts Work Packages Planning Packages

50 Cost Performance Report 1. CONTRACTOR a. NAME: Generic Construction Company b. LOCATION: Denver, CO 5. CONTRACT DATA b. NEG COST 0 $183,852 c. EST COST AUTH UNPR COST PERFORMMANCE REPORT FORMAT 1 - WORK BREAKDOWN STRUCTURE 2. CONTRACT a. NAME: Generic House b. NUMBER: Generic c. TYPE: FFP d. SHARE RATIO: d. TGT PROFIT/FEE 3. PROGRAM a. NAME: Generic House b. PHASE (x one) [ ] RDT&E [x] PRODUCTION Form Approved OMB No REPORT PERIOD a. FROM: 01-Jan-02 b. To: 31-JAN-02 a. QTY e. TGT PRICE f. EST PRICE g. CONT CEILING h. EST CEILING $0 $36,148/20.00% 219, , EST COST AT MGMT EST AT CONT BUDGET COMPLETION COMPL (1) BASE (2) VARIANCE (3) 7. AUTHORIZED CONTARCTOR REPRESENTATIVE a. BEST CASE $227,009 a. NAME (Last, First, Middle Initial) b. TITLE b. WORST CASE $165,467 Ted Smith Manager c. MOST LIKELY $226,158 $183,852 -$42,306 c. SIGNATURE d. DATE SIGNED 31-JAN PERFORMANCE DATA CURRENT PERIOD CUMULATIVE TO DATE AT COMPLETION ACTUAL BUDGETED ACTUAL ITEM BUDGETED COST COST VARIANCE COST COST VARIANCE BUDGET EST VAR WORK WORK WORK WORK WORK WORK SCHED PERF PERF SCHED COST SCHED PERF PERF SCHED COST (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) Concrete 9,670 8,757 26, ,393 9,670 8,757 26, ,393 11,485 28,873-17, Framing 7,089 5,355 6,250-1, ,089 5,355 6,250-1, ,147 28, Plumbing ,704 5, Electrical ,070 14, Interior ,328 7, Roofing ,730 1,730 0 OVERHEAD 16,062 14, ,745 14,317 16,062 14, ,745 14,317 75,684 61,371 14,313 b. COST OF MONEY C. GEN & ADMIN 5,429 4, ,702 5,429 4, ,702 23,237 18,537 4,700 d. UNDISTRIBUTED BUDGET e. SUBTOTAL (PM Baseline) 38,269 33,149 32,400-5, ,269 33,149 32,400-5, , , f. MANAGEMENT RESERVE 18,385 g. TOTAL 38,269 33,149 32,400-5, ,269 33,149 32,400-5, ,852