(EVM-1848) CIS "Utilization of Earned Value

Management for Monitoring Production Facilities"

Dmitriy Skorobogatov

Elena Rybina

BIO of Elena Rybina

• Degree

Specialist Degree (Developing spacecraft and upper stages)

• University

Bauman Moscow Technical State University (Graduate)

• Years of experience

8 years in professional fields listed below

• Professional fields

Project management, software development, cost control

• Something what you do not know about me

I worked in Siberia in winter

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BIO of Dmitriy Skorobogatov

• DegreeSpecialist Degree (Theoretical and Experimental Physics of Nuclear Reactors)

• UniversityNational Research Nuclear University MEPhI, Moscow (Graduate)Institute of Control Sciences V.A. Trapeznikov , Moscow (Ph.D-student)

• Years of experience7 years in professional fields listed below

• Professional fieldsProject management, consulting

• Something what you do not know about meMy experience in nuclear science and barmen skills help me

to figure out EVM

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SETTING THE OBJECTIVES

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• This presentation identifies major features, which have

significant impact on using Earned Value Management

in these projects:

The major

features

Technology intensive equipment

Plenty of utility networks

Technology intensive nature of a schedule

Severe constraints on commissioning dates

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• The presentation identifies 3 key points:The key points

Measuring project progress in the context of contractor data manipulation

Calculating EVM indices in technology intensive projects where major equipment represents a substantial part of the project budget

Forecasting project execution dates and utilizing EMV indices.

APPLYING EVM FOR EQUIPMENT

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• Project progress is mainly

determined by progress of the

complete cycle: design – fabrication

– delivery – installation –

commissioning of equipment

• Delivery of equipment to the stock

does not weigh much in terms of the

project overall progress. Installation

and commissioning activities are

much more important for this

equipment.

• Current situation allows the

Contractor to manipulate with earned

value indices. To demonstrate

greater earned value and project

progress the Contractor will try to

deliver equipment as soon as

possible to ensure higher EVM

indicators

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Activity Name Activity Type in Primavera Step Weight

Procurement request Milestone 0%

Execution of a vendor contract Task dependent activity 10%

Development of equipment drawings Task dependent activity 25%

Approval of equipment drawings Milestone 0%

Equipment fabrication Task dependent activity 45%

Acceptance of equipment by the Customer at the fabrication company premises

Milestone 0%

Ex-works shipment Task dependent activity 5%

Delivery to the site Task dependent activity 10%

Equipment is delivered Milestone 0%

Spare part delivery Task dependent activity 2%

Documents delivery Task dependent activity 3%

• Planned cost of equipment is split into two parts: 20% of the overall cost of

equipment

is split into activities on design-fabrication-delivery and 80% - into installation

and commissioning activities.

• Cost of design-fabrication-delivery cycle is distributed through

standard series of steps in accordance with their ‘unit weight

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Before After

Current situation allows the Contractor

to manipulate with earned value indices.

the Customer incurs financial losses,

wastes time

and does not have objective reporting

data on the project progress execution.

A ‘smooth’ S-curve is generated to reflect

the project overall progress and to

demonstrate progress for the whole cycle:

design – fabrication – delivery – installation

– commissioning.

It is no longer possible to manipulate with

EVM indices by the Contractor .

EVALUATION OF PROJECT PROGRESS INCONTEXT OF MANIPULATION BY THE

CONTRACTOR

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• The main way of manipulation is early implementation of expensive or simple

activities contrary to the previously agreed schedule and work processes.

• The activities with lowest cost values and significant restrictions on the ultimate

intensity of work performance were deferred to the end

• Project financing is affected on an annual basis and can be adjusted quarterly,

thus earned value for the previous periods is one of the major indices taken into

account when determining the scope of finance for the next year

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High rate of works performance (SPI>1) in

the first half of the project, and from these

data the Customer expected that the

project would be finished on time or earlier

than the planned date, but then there

happened a dramatic drop in earned value

rates, which did not change significantly

later. Finally, this project was executed

with considerable schedule delays though

the Customer could not foresee that and

timely take administrative measures

(including the decision to replace the

Contractor).

CD FD

EV

PV(t)

0

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EV ≠0PV=0

mEV is different from traditional earned value since it takes into account

only earned value, which occurred within the planned dates or later

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if 𝑃𝑉𝑡 = 0

then:𝑀𝐸𝑉𝑡 = 0

if 𝑃𝑉𝑡 ≠ 0 𝑖=0𝑡 𝐸𝑉𝑖 = 0

𝑀𝐸𝑉𝑡 = 𝐸𝑉𝑡

if 𝑃𝑉𝑡 ≠ 0 𝑖=0𝑡 𝐸𝑉𝑖 ≠ 0

𝑀𝐸𝑉𝑡 = 𝑖=0𝑡 𝐸𝑉𝑖

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*However, there is a significant condition of using mEVt index and respective derived

indices. If the activity is critical or near critical (i.e. its positive float is =<5 days) then for

such activities: 𝑀𝐸𝑉𝑡 = 𝐸𝑉𝑡

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Before (classical EVt) After (mEVt)

CD FD

EV

time

PV(t)

0

mEV(t)

Contractor manipulates with

earned value indices.

The project was executed with

considerable schedule delays though

the Customer could not foresee that and

timely take administrative measures

CD FD

EV

PV(t)

0

Minimize the attempts of

changing the previously approved

processes of activities performance.

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Optimistic: 𝑆𝑃𝐼 = 𝐸𝑉/𝑃𝑉

𝑃𝑒𝑠𝑠𝑖𝑚𝑖𝑠𝑡𝑖𝑐: 𝑝𝑆𝑃𝐼 = 𝑚𝐸𝑉/𝑃𝑉

𝑅𝑒𝑎𝑙𝑖𝑠𝑡𝑖𝑐: 𝑟𝑆𝑃𝐼 = (𝑆𝑃𝐼 + 𝑝𝑆𝑃𝐼)/2

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Optimistic forecast, which is based on EV index and demonstrates optimistic situation on earned value rates at earlier stages of the project execution

Pessimistic forecast, which is based on mEV index and demonstrates pessimistic situation on earned value rates at earlier stages of the project execution

CD pFD time

costPV(t)

0

mEV(t)

EV(t)

eFD

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• Develop real reporting on the project execution progress. This index takes into

account only the activities performed according to the plan or earlier. This allows

avoiding the situations when the Contractor intentionally tries to perform the most

expensive and quickest activities at earlier stages and deferred activities at later stages

of the project and significantly decrease the earned value rates.

• Minimize the attempts of changing the previously approved processes of

activities performance. If changing the processes of activities performance is a coercive

measure then planned earned value indices shall be repeatedly agreed with the

Customer taking into account a new schedule.

• Motivate the Contractor for real instead of falsified reduction of project

execution dates.

FORECASTING ESTIMATE COMPLETION DATES

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SPI can be calculated at any level of aggregation: both for an individual activity

and for work packages combined on the ground of various analytical attributes.

Moreover, this index can be calculated at any required level of details along the timeline,

provided that the interval to determine this index is not less than the frequency of

gathering EV actuals. The next step is proper extrapolation of this index to the remaining

scope of work.

Calculating SPI for each Contractor

Calculating SPI for main types of activities

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Advantages• Often a Contractor performs a series of

activities (i.e. various types of activities)

in a project for a long period of time, that

is why to calculate SPI index, a vast

scope of data can be used and forecasts

can be built for a long time ahead (for the

whole remaining scope of work of this

Contractor).

• The calculated SPI index allows

evaluation of a Contractor from the

viewpoint of meeting the construction

dates. Then management decisions are

made with respect to certain Contractors,

even replace the Contractor, if required.

• This technique allows maintaining a

Dictionary of involved Contractors and

their respective SPI indices. This

information can be taken into account for

future projects.

Disadvantages• In practice, the accuracy of

planning and the degree of meeting

the planned dates mainly depends on

the type of activity and project type, not

on the Contractor.

• If a major Contractor needs to be

selected then this technique means

only averaging SPI index for all project

activities, which negatively affects the

accuracy of forecasting.

• Specialties of Business in Russia and

Commonwealth of Independent States

countries requires that many similar

projects are executed in remote areas.

Moreover, large territory of countries

makes it impossible to mobilize a lot of

the Contractor’s full-time staff and

equipment to the site.

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Advantages

• In practice, the accuracy of planning and

the degree of meeting the planned dates

mainly depends on the type of activity and

project type, not on the Contractor.

Therefore, use of activity-related SPI index

gives more accuracy during forecasting.

• This technique allows maintaining one in-

house dictionary of activity types and apply

it at all project stages for forecasting real

dates of activities performance, which are

not contractor-related. It can be applied at

the earliest project stages when the

Contractor is not selected yet.

• This technique is efficiently applied when

one major Contractor is involved

Disadvantages

• Many efforts need to be invested to

develop and update one dictionary of

activity types with respective SPI

indices.

• Types of activities in a project are very

tightly localized in one time period,

therefore accuracy of forecasting

decreases, since forecast for a specific

type of activities can be built correctly

only before activities of this type are

completed.

• It is more difficult to make management

decisions with respect to certain

Contractors based on activity-related

SPI indices. Additional reports need to

be generated to evaluate performance

of each Contractor.

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𝑎𝑆𝑃𝐼𝑥 =1

𝑐𝑇∗

𝑡=1

𝑐𝑇

𝑎𝑆𝑃𝐼𝑥𝑡

𝑎𝑝𝑆𝑃𝐼𝑥=1

𝑐𝑇∗

𝑡=1

𝑐𝑇

𝑎𝑝𝑆𝑃𝐼𝑥𝑡

arSPI𝑥=(aSPI𝑥+apSPI𝑥)/2

cT – number of time periods from the start of activities performance to the data dateaSPIxt – contractor-averaged SPI for the ‘t’ time period.apSPIxt - contractor-averaged pSPI for the ‘t’ time period.arSPI𝑥 for each ‘x’ Contractor the schedule performance index, averaged for all reporting time periods from the project start

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Software package, which includes Oracle® Primavera P6™“.and PM.BI

solutions, is used to forecast the project execution dates.

Oracle® Primavera P6™“.is used to develop the initial project schedule, to enter the

activities planned dates and cost, to update schedules, and to calculate EVM

traditional indices. Oracle Primavera P6® defines the following parameters for each

activity of the schedule

• Planned dates of performance• Planned cost of activity• Contractor for activity

performance• Type of activity (in accordance

with in-house dictionary of activity types)

• If project activity is critical or near critical.

• EV value is determined during the schedule update for all reporting time periods from the project start

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I𝑚𝑝𝑜𝑟𝑡 𝑑𝑎𝑡𝑎 𝑓𝑟𝑜𝑚 𝑂𝑟𝑎𝑐𝑙𝑒 𝑃𝑟𝑖𝑚𝑎𝑣𝑒𝑟𝑎

𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝒎𝑬𝑽, for all activities and for all time periods to the data date

arSPIx value for each ‘x’ Contractor

If the Contractor for performance of the future activities is either not selected yet or selected but no actuals were available to calculate its arSPI index

𝒂𝒓𝑺𝑷𝑰 =1

𝑋∗ 𝑥=1𝑋 𝑎𝑟𝑆𝑃𝐼𝑥 , arSPI –arSPIx index averaged for all

Contractors

X – overall quantity of project Contractors, for which actuals are sufficient to calculate arSPIx index.Import data arSPIx values to Oracle Primavera

Calculate eDix=pDix* arSPIx

eDix – forecasted duration of future ‘i’ activity, performed by ‘x’ Contractor, pDix - planned duration of future ‘i’ activity, performed by ‘x’ Contractor

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PV (t) – planned earned value curve;EV (t) – actual earned value curve (optimistic);mEV (t) – actual modernized earned value curve (pessimistic);ceEV (t) – forecasted earned value curve for current plan, not taking SPI indices into accounteEV (t) – forecasted modernized earned value curve, taking into account extrapolation of arSPIx index to the remaining scope of project work.

CONCLUSION

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Planning and monitoring of the whole design-fabrication-delivery cycle of major equipment. ‘Smoothened’ earned value progress S-curve, which makes it possible to calculate SPI index broken down into the time periods.

Use of modified earned value index – mEV. This index provides the manager an objective picture on project progress, excluding possible attempts of manipulation with traditional EVM indices by the Contractor. Moreover, this index calculates realistic SPI index.

Forecasting project execution dates taking into account current dynamics of project execution. Forecasting is based on calculating SPI index of performed activities with respect to Contractors or activity types and further extrapolation of this index to the remaining scope of work.

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Project stakeholders receive unbiased information on project progress.

Contractor is motivated to adhere to the agreed approach of activities performance and to the agreed plans

Contractor is motivated to gain real reduction of project execution dates instead of reduction falsified at early project stages.

QUESTIONS/COMMENTS?(PLEASE USE MICROPHONE)

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