Integration between EVM. and Risk Management

Transcription

1 Integratin between EVM 1 and Risk Management Prpsal f an autmated framewrk Anabela Teres, Pedr Ribeir, Manuel Cards Centre ALGORITMI, University f Minh Campus de Azurém, Guimarães, Prtugal anabelat@dps.uminh.pt, pmgar@dsi.uminh.pt, mpcards001@gmail.cm

2 2 Intrductin The use f prject management Relatively recent; Mtivated by the need fr rapid and effective respnses t the changing business envirnment. Prject mnitring and cntrl One f the cmpnents f prject management with the greatest need f develpment; Verify the state f the prject during executin; In case the parameters are utside the apprpriate range, crrective measures can still be taken; Cnclude n prject cntinuity within the parameters cnsidered adequate. Risk Management Anther way t prmte prject s success; Minimizing the risk f nt achieving the prject bjectives; Creating early respnses t the risks that may arise. Earned Value Management (EVM) Mnitr and cntrl prject status; Values estimated in the planning phase - cmpared with the prject executin values; Determine prject s state; Adjustments that lead t prject success.

3 3 Intrductin Gals f this research Investigate the linkage between EVM and Risk Management; Build a framewrk fr integrating the tw methdlgies; Use the framewrk t create prject mnitring and cntrl tls. Apprach used Similar t that prpsed by the Assciatin fr Prject Management (APM) [1] Based n the Prject Management Bdy f Knwledge (PMBK ) frm PMI [2] and the integratin prpsed by Hillsn [9] Using: Risk stratificatin; Different respnses t each frm f risk; Intrductin f the varius risk cmpnents int the EVM methdlgy.

4 4 Literature Review and Main Cncepts The unique nature f the prjects creates uncertainty. This uncertainty generates several scenaris. Uncertain events r cnditins may affect ne r mre prject bjectives. Need t make risk assessment during planning. In PMBK this area f expertise is called prject risk management [2]. When the prject is already in executin, in the mnitring and cntrl phase, it is necessary t have tls that allw the evaluatin f the state f the prject. In case f cst r time slippage, ne can act and thus avid r limit the prblem. T d this, PMBK recmmends t use Earned Value Management (EVM) [2]. In EVM, prject perfrmance measured in relatin t a cst baseline [3]. Metrics t indicate if prject is ahead r behind schedule. Metrics t indicate if prject is spending mre r less than planned. Pssibility t predict the ttal final cst f the prject.

5 5 Literature Review and Main Cncepts EVM (base variables) [2] Planned Value (PV): The apprved budget fr the wrk scheduled t be cmpleted by a specified date. Nte: The ttal PV f a task is equal t the task s Budget At Cmpletin (BAC). Earned Value (EV): The apprved budget fr the wrk actually cmpleted by a specified date. Actual Cst (AC): The csts actually incurred fr the wrk cmpleted by the specified date. [10]

6 6 Literature Review and Main Cncepts EVM (perfrmance indicatrs) [2] Schedule Variance (SV): The difference between the amunts budgeted f the wrk dne and the wrk planned. Schedule Variance (SV) = Earned Value (EV) Planned Value (PV) Cst variance (CV): The difference between the amunt budgeted and the amunt actually spent fr the wrk perfrmed. Cst Variance (CV) = Earned Value (EV) Actual Cst (AC)

7 7 Literature Review and Main Cncepts SV = EV PV CV = EV AC [10]

8 8 Literature Review and Main Cncepts EVM (perfrmance indicatrs) [2] Schedule Perfrmance Index (SPI): The rati f the apprved budget fr the wrk perfrmed t the apprved budget fr the wrk planned. Schedule Perfrmance Index (SPI) = Earned Value (EV) Planned Value (PV) Cst Perfrmance Index (CPI): The rati f the apprved budget fr wrk perfrmed t what yu actually spent fr the wrk. Cst Perfrmance Index (CPI) = Earned Value (EV) Actual Cst (AC)

9 9 Literature Review and Main Cncepts EVM (perfrmance indicatrs) [5,50] SV = EV PV CV = EV AC SPI = EV PV CPI = EV AC

10 10 Literature Review and Main Cncepts Bth PV and EV are based n the Perfrmance Measurement Baseline (PMB), which is built frm the Wrk Breakdwn Structure (WBS) and its schedule in the planning phase. This plan, with the budget based n the wrk packages per mnth, can be used t measure prject perfrmance. PBM - Perfrmance Measurement Baseline

11 11 Literature Review and Main Cncepts It is als necessary t have a technique that matches the physical prgress f the wrk [4]. Physical prgress f wrk by the end f July

12 12 EVM and Risk Management Integratin Mdel Develped Based n the apprach f EVM t Risk management presented in PMBK [2], Practice Standard fr Earned Value Management [5] and Practice Standard fr Prject Risk Management [6], the different types f risks were summarized. Summary f prject risks

13 13 EVM and Risk Management Integratin Mdel Develped Steps t deal with the knwn and practively manageable risks: Risks identificatin, characterizatin and dcumentatin. Qualitative analysis (prbabilities and impact n prject bjectives, priritizatin f risks). Develp respnses (aviding, transferring, mitigating r accepting the risk). Aviding, transferring, and mitigating cause cst and time prject changes. Prject changes brught abut by the qualitative analysis translate int a mre realistic Cst Baseline and therefre better EVM indices. Knwn and practively unmanageable risks - n way t treat them (impssible t eliminate / the risk has been accepted). This type f risk is guaranteed by a cntingency reserve. EVM indexes are crrected nly in case the risk ccurs. Unknwn risks - unspecified prject uncertainty - management reserve.

14 14 EVM and Risk Management Integratin Mdel Develped EVM and Risk Management Integratin Framewrk:

15 15 Prttype fr Prject Mnitring and Cntrl Supprt Example f a PMB with cumulative Planned Value (PV) PV 0 - initial versin befre the risk analysis PV 1 - final apprved versin after risk analysis

16 16 Prttype fr Prject Mnitring and Cntrl Supprt T estimate the final value f the prject, taking int accunt the uncertainty, we can cnstruct a table with prbabilistic distributins assciated t cst values. Using Mnte Carl simulatin [7] with the cst mdel, we can btain a prbabilistic distributin f the pssible cst results fr the prject. Fr this purpse we an add-in fr Micrsft Excel frm Palisade Crpratin. The three pint estimatin technique f PERT (Prgram Evaluatin and Review Technique) was used t imprve the accuracy f the estimates fr the csts f the activities [8]. The management reserve is the amunt added t the ttal prject budget t respnd t the verall prject risk and therefre shuld be dependent n uncertainty. The management reserve was estimated frm the 3 pint technique in cnjunctin with the Mnte Carl simulatin.

17 17 Prttype fr Prject Mnitring and Cntrl Supprt Distributin btained with the Mnte Carl simulatin

18 18 Prttype fr Prject Mnitring and Cntrl Supprt Management Reserve and PMB

19 19 Prttype fr Prject Mnitring and Cntrl Supprt Risks identified and nt treated practively are guaranteed by a cntingency reserve. Risk expsure table

20 20 Prttype fr Prject Mnitring and Cntrl Supprt Risks included n the PMB

21 21 Cnclusins The bjective f this wrk was the prpsal f a framewrk t supprt the mnitring and cntrl f prjects, based n the integratin f EVM with Risk management. The prpsed integratin is based n the EVM methdlgy, risk stratificatin and a risk management methdlgy. Because EVM is based n the cmparisn f prject executin values with planned values, intrducing risk management, we get an EVM with mre mnitring and cntrl capabilities. Risk is recrded as ne f the variables n which EVM depends. S the crrectin f the EVM perfrmance indexes intrduced by the risk management increase the quality n the infrmatin prvided.

22 22 Future Research Because EVM is dependent n ther cmpnents f prject management, such as WBS, timeline, cst accunting methds, a mre advanced framewrk culd include these cmpnents. The same can be said f risk management, where fr example the analysis f knwn risks requires a well-develped qualitative treatment. In the prttype presented, the csts and schedule are manually placed n the PMB page. One pssibility f extensin wuld be its intercnnectin with cmmercial sftware, such as MS Prject. Finally, in the current mdel, nly the influences f the risk in cst were cnsidered, but the time r schedule is als influenced. A natural extensin wuld be the inclusin f time in the framewrk. Acknwledgments. This wrk has been supprted by COMPETE: POCI FEDER and FCT Fundaçã para a Ciência e Tecnlgia within the Prject Scpe: UID/CEC/00319/2013.

23 23 References [1] APM, Interfacing Risk and Earned Value Management. 2008, Princes Risbrugh, Buckinghamshire: Assciatin fr Prject Management. [2] PMI, A guide t the prject management bdy f knwledge (PMBOK guide). 2013, Newtwn Square, Pennsylvania: Prject Management Institute, Inc. xxi, 589 pages. [3] Fleming, Q. and J. Kppelman, Earned value prject management. 2010, Newtwn Square, Pennsylvania: Prject Management Institute. viii, 231 p. [4] Anbari, F., Earned value prject management methd and extensins. Prject Management Jurnal, (4): p. 12. [5] PMI, Practice standard fr earned value management. 2011, Newtwn Square, Pennsylvania: Prject Management Institute, Inc. xiv, 153 p. [6] PMI, Practice standard fr prject risk management. 2009, Newtwn Square, Pennsylvania: Prject Management Institute, Inc. xi, 116 p. [7] Mney, C.Z., Mnte carl simulatin. Vl : Sage Publicatins. [8] Mder, J.J. and C.R. Phillips, Prject Management with CPM and PERT [9] Hillsn, D. Earned Value Management and Risk Management: A practical synergy. in PMI Glbal Cngress Nrth America Anaheim, Califrnia, USA: PMI. [10] Prtny, Stan (2010) Prject Management Fr Dummies, 3rd Editin, Wiley Publishing, Inc.

24 24 Thank yu!