PRACTICE STANDARD FOR EARNEDVALUE MANAGEMENT

PRACTICE STANDARD FOR EARNEDVALUE MANAGEMENT

1. CHAPTER 1. INTRODUCTION

   • Has been developed as a supplement to A Guide to the Project Management Body of Knowledge
   • Is a document that describes established norms, methods, processes, and practices
   • Is designed to provide readers who are familiar with the fundamental practices of project management
   • Purpose of this Practice Standard
     • Identifi es a subset of project management practices that are used for earned value management.
     • Promotes a common vocabulary
   • Relationship to the PMBOK ® Guide
     • The Practice Standard for Earned Value Management
       • Focuses on the effective integration of those project management practices that are used for earned value management.
     • The PMBOK® Guide
       • Identifi es a set of internal and external environmental factors.
       • Have a positive or negative infl uence on the outcomes
         • Organizational culture, structure, and processes
         • Government or industry standards
         • Infrastructure
         • Company work authorization systems
         • Project management information systems
       • There are two main categories
         • Processes and procedures
         • The corporate knowledge base
       • The following is an abbreviated lis
         • Processes and procedures
         • Standard project life cycles
         • Policies
         • Templates
         • Financial control procedures
         • Change control procedures
         • Work authorization procedures
         • Corporate knowledge base
         • Project fi les
         • Lessons learned
         • Historical information from past projects
         • Estimating information from past projects
   • Assumptions
     • Additional assumptions include
       • The organization has the corporate policies and procedures to support EVM.
       • The organization has the integrated information systems necessary to implement EVM.
       • The project management team has the knowledge and skills needed to plan, execute, and control projects using EVM.
       • Project team members and other stakeholders have suffi cient training and understanding of EVM concepts to plan their work accordingly.
   • Structure of the Practice Standard
     • Introduction.
       • Introduces the concept that will be described in the chapter. Includes a graphic with inputs and outputs.
     • Inputs.
       • Identifi es the documents necessary to conduct the process.
     • Description.
       • Describes the methods, tools, and techniques used to conduct the process.
     • Outputs.
       • . Identifi es the documents or outcomes that are a result of the process.
     • Considerations.
       • Discusses variables and perspectives that an EVM practitioner needs to keep in mind when implementing the process.
     • Summary
       • Summarizes the information in the chapter.

2. CHAPTER 2:EARNED VALUE PROJECT MANAGEMENT OVERVIEW

   • Introduction
     • Developed as a supplement
     • Provide a standard for project management practitioners and other stakeholders
     • Provide a reference for the basic concepts and applications of earned value management
   • EVM and the Project Management Process
     • Is consistent with good project management as outlined in A Guide to the Project Management Body of Knowledge
     • Project planning is mostly a matter of determining:
       • What work must be done (scope) and in what pieces (work breakdown structure
       • Who is going to perform and manage the work (responsibility assignment matrix)
       • When the work will be done (schedule).
       • The cost and quantity of the labor, material, and related resources the work will require.
   • Basic EVM Terminology
     • Actual Cost (AC
       • The realized cost incurred for the work performed on an activity during a specifi c time period.
     • Budget at Completion (BAC).
       • The sum of all the budgets established for the work to be performed on a project.
     • Contingency Reserve.
       • Budget within the performance management baseline that is allocated for identifi ed risks
     • Control Account
       • A management control point where scope, budget, actual cost, and schedule are integrated and compared to earned value
     • Distributed Budget.
       • The budget for project scope that has been identifi ed to work breakdown structure
     • Earned Value (EV).
       • The measure of the work performed, expressed in terms of the budget authorized for that work
     • Estimate at Completion (EAC).
       • The expected total cost of completing all work expressed as the sum of the actual cost to date and the estimate to complete
     • Estimate To Complete (ETC).
       • The estimated cost to fi nish all the remaining work
     • Management Reserve (MR).
       • An amount of the project budget base (PBB) withheld for management control purposes.
     • Performance Measurement Baseline (PMB).
       • . An approved integrated scope-schedule-cost plan
     • Planned Value (PV).
       • The authorized budget assigned to scheduled work as of a given reporting date
     • Planning Package.
       • The estimated cost to fi nish all the remaining work. Adding the ETC to the actual cost
     • Project Budget Base (PBB).
       • The starting point upon which original budgets are built.
     • Summary Level Planning Budget (SLPB).
       • A time-phased budget for future work that cannot be reasonably planned down to control accounts.
     • Undistributed Budget (UB).
       • The budget for project scope that has not yet been identifi ed to WBS
     • Work Package.
       • The work defi ned at the lowest level of the work breakdown structure
     • Work Breakdown Structure (WBS).
       • is a hierarchical decomposition of the total scope of the work to be carried out
     • Work Breakdown Structure Dictionary
       • A document that provides detailed deliverable, activity, and scheduling information
   • Basic EVM Concepts
     • Defi ne product and project scope and decompose work to a manageable level.
     • Assign clear management responsibility for discrete work elements.
     • Plan the activities of the project into a logical schedule.
     • Develop a time-phased budget for each element of the WBS.
     • Select EV measurement techniques for each work package prior to execution.
     • Establish a performance measurement baseline based on the previous fi ve steps.
     • Develop a structure for collecting costs into the same accounts and time periods where performance is being measured.
     • Determine earned value by objectively measuring the physical work progress according to the earned value technique selected for the work.
     • Analyze cost/schedule performance.
     • . Forecast cost /schedule performance.
     • Project the estimates at completion.
     • Report performance problems and take appropriate corrective action.
     • Maintain integrity of the PMB
   • Considerations
     • This practice standard may be applicable to smaller scale projects as well