(Technical paper) Cis utilization of earned value management for monitoring production facilities

Dmitriy Skorobogatov

Elena Rybina PMSOFT

Sean T Regan, Ph.D. CCP, CEP, MRICS LGM International, LLC

Julie Owen Metro

Member number: 78880

CIS "Utilization of Earned Value Management for Monitoring Production

Facilities"

February 27, 2015

Developed by PMSOFT, CJSC Page 2 of 23

1 List of tables .................................................................................................................................... 3

2 Table terms ...................................................................................................................................... 4

3 Abstract ........................................................................................................................................... 5

4 Introduction .................................................................................................................................... 6

5 Applying EVM for Equipment .......................................................................................................... 7

6 Evaluation of project progress in context of manipulation by the Contractor ............................. 11

7 Forecasting project execution dates ............................................................................................. 17

8 Conclusion ..................................................................................................................................... 22

9 Sources .......................................................................................................................................... 23


1 List of tables

Table 1 «Terms» ...................................................................................................................................... 4

Table 2 Major steps in equipment delivery ............................................................................................ 8

Table 3 Overall dates of activities ......................................................................................................... 12

Table 4 Actual earned value indices by activities .................................................................................. 12


2 Table terms

Table 1 «Terms»

Term Definition In Accordance CIS Definitions

EVM Earned value method

EV Earned value

VOWD Value of work done

CD Current date

pFD Planned finish date

SPI Schedule performance index

pSPI Pessimistic schedule performance index

rSPI Realistic schedule performance index

mEV Modified earned value

BCWS Budgeted Cost of Work Scheduled

PV Planned Value

AC Actual cost

ACWP Actual cost of work performed

eFD Estimated finish date

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 account

eEV (t) Forecasted modernized earned value curve, taking into account extrapolation of arSPIx index to the remaining scope of project work

arSPIx Schedule performance index averaged for all reporting time periods from the project start

apSPIx Time-averaged pSPI for the whole duration of activities performance by ‘x’ Contractor


3 Abstract

The Earned Value Management System (EVMS) is one of the most effective and commonly used tools

for project control and forecasting project execution. EVMS was proven based upon sound

methodological principles and is relatively unchanged for the many decades. However, many variable

factors appear related such as the specific type of project, contractors, and a range of external

conditions. These factors require fine-tuning of EVMS tools for correct implementation. This paper

addresses the following aspects of EVM application:

1. Measuring project progress in the context of contractor data manipulation

2. Calculating EVM indices in technology intensive projects where major equipment represents

a substantial part of the project budget

3. Forecasting project execution dates and utilizing EMV indices.

The paper describes both methodological and practical aspects of EVM application considering the

factors above. Practical implementation of EVM will be demonstrated based upon a Russian

company case study. The Russian company is involved in technology intensive production and

utilized for the practical framework discussion purposes.


4 Introduction

Execution of technology intensive production facilities construction projects has certain features.

This article identifies major features, which have significant impact on using the Earned Value

Management in these projects.

Technology intensive equipment. From the viewpoint of managing project cost it means first of all high cost of such equipment both as unit cost (cost of a perspective facility is determined mainly by equipment cost) and absolute cost, secondly – duration of fabrication-delivery-installation cycles. High requirements to the cycles monitoring processes in managing a project are associated with long duration of those equipment-related cycles.

Plenty of utility networks. Activities on design and installation of utility networks play critical role in execution of technology intensive production facilities construction projects. Very often, these activities are associated with high level of installation efforts, low ultimate intensity and relatively low cost of use equipment and materials.

Technology intensive nature of a schedule. It means on the one hand, there are high demands to strict adherence of the activities process flow and on the other hand, the requirement is to maintain a detailed schedule where detailed activities are interrelated in terms of process flow.

Severe constraints on commissioning dates. Since production capacities are meant, the dates of these facilities commissioning are directly associated with financial indicators of the whole company having a new facility to be included in the production cycle of that company. In some cases only quick start of the production process will ensure the company business success in the market.

The last item requires a special attention since almost all projects of this kind are aimed either at

growth of performance indicators of an industrial enterprise (to be integrated into the production

process) or at setting up output of new products. In both cases, the time factor is critical. Therefore,

the solutions below are first of all aimed at ensuring correct reflection of current status of the project

execution progress and at forecasting the execution dates considering current dynamics of the

project execution. It is also important that this task was set when there were no processes and the

risk management system at place.

The article contains three substantial parts:

Applying EVM for planning and monitoring of activities on equipment delivery in technology intensive production facilities construction projects.

Upgrading earned value indices for measuring project progress in context of manipulation by the Contractor.

Forecasting project execution dates.

The proposed solutions were developed for a series of large industrial holding companies in the

Commonwealth of Independent States.


5 Applying EVM for Equipment

As mentioned above, one of the features in execution of technology intensive production facilities

construction projects is using expensive equipment. At technology intensive production facilities,

equipment cost is the decisive component in the budget of projects on construction and expansion of

the company industrial facilities. This part explains how equipment delivery progress is measured

from the viewpoint of planning and control. In EVM traditional approaches, the essential part of

earned value occurs on the date of equipment delivery. Significant ‘surges’ were observed on earned

value S-curves on the dates of equipment delivery due to high unit cost. General view of S-curve for

these conditions is given in the Figure 1.

Figure 1 EVM curve taking into account equipment delivery

This is not acceptable from the viewpoint of measuring the overall project progress for the following

reasons:

Project progress is mainly determined by progress of the complete cycle: design – fabrication – delivery – installation – commissioning of equipment due to high cost and technology intensive nature of equipment. However, the delivery date only does not measure the project overall progress correctly.

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 but at the same time, equipment can remain in the stock, uninstalled for a long time waiting for completion of early works. Finally, the Customer incurs financial losses, wastes time and does not have objective reporting data on the project progress execution.


Therefore, equipment planning and control technique was developed, which takes into account

approaches of VOWD technique. For this purpose, a modified PV index was introduced. The following

two principles are applied to calculate this index for every activity associated with equipment:

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’. A list of standard steps [3,4] is given in Table 2. Quantity of steps may vary depending on the type of equipment and materials and on other conditions (availability in the stock of the Fabrication Company, etc.). Overall cost of steps for delivery of one item of equipment or materials shall equal 20% of the equipment cost. Cost of one-step is calculated by multiplying the step weight by 20% of the equipment cost, with which this activity is associated.

Table 2 Major steps in equipment delivery

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%

In this approach, earned value with respect to major equipment is tracked for all activities associated

with various cycles of equipment delivery. Finally, the earned value S-curve gets ‘smoothened’ (with

respect to equipment), and shifts to later dates (to installation dates). Equipment overall progress

schedule presented in terms of weighting is given in Figure 2.


Figure 2. Equipment overall progress schedule is given in terms of percentage points

Overall S-curve given in Figure 1, which reflects project overall progress is given in Figure 3.

Figure 3. ‘Smoothened’ earned value S-curve (with respect to equipment)

During project execution, the EV index for activities mainly associated with equipment shall be also

determined taking into account the PV modification described above.

Having applied the solutions described above, the following results can be gained:

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.

Project progress is calculated taking into account ‘weight’ of every activity associated with equipment. Including the fact that from the viewpoint of overall progress it is more critical to execute installation and commissioning cycle than simply deliver equipment to the stock.


It is no longer possible to manipulate with EVM indices by the Contractor and this form of reporting stimulates the Contractor to complete installation and commissioning activities instead of delivering to the stock as soon as possible.

The approaches above are appropriate for long lead equipment and high unit cost in the project

budget.


6 Evaluation of project progress in context of manipulation by the Contractor

If the technique above allows eliminating manipulation by the Contractor with respect to major

equipment then with respect to the rest of the project – manipulations are still possible. The main

way of manipulation is early implementation of expensive or simple activities contrary to the

previously agreed schedule and work processes. In this case, the Contractor demonstrates higher

earned values at earlier periods, and as a result, performance index is significantly higher, but later

the earned value rates decrease considerably since the activities with lowest cost values and

significant restrictions on the ultimate intensity of work performance were deferred to the end. At

the same time, the Customer was sidetracked at the beginning of the project by high values and did

not forecast significant schedule deviations to the end of the project. Such manipulation is used

especially with respect to activities on installation of utility networks as these activities last for a long

time but cost very little, and the Contractor attempts to defer them to the end (sometimes contrary

to work processes) but to perform the most expensive and quickest activities at the beginning. This

situation gets even worse due to the reason described in introduction to this article and due to the

fact that a great deal of utility networks need to be installed at technology intensive production

facilities construction projects. It is also important that 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. The Contractor

is aware and is always interested in demonstrating higher earned values at earlier time periods. This

is required not only for consolidation of positions as a Contractor with respect to the assigned scope

of work but for the purpose of ‘booking’ higher project budget of the Customer for the next planned

period, and escaping the situation of underfinancing for the reason of under-budgeting.

A general view of planned earned value S-curve and actual earned value S-curve, which was

generated as a result of manipulations by the Contractor, is given in Figure 4.

Figure 4. Curves EV (t) and PV (t) taking into account data date actuals

Figure 4 explains that there was a 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).

Earned Value Management was modified to avoid such situations. As a result of modification, a new

index mEV was introduced – modified earned value.

This index is different from traditional earned value since it takes into account only earned value, which occurred within the planned dates or later. An example to explain the essence of this index and its calculation method is provided in Table 3. There are three activities with the following parameters:

Table 3 Overall dates of activities

Activity Planned start (number of the time period)

Planned finish (number of the time period)

Planned total cost

Activity 1 2 3 130

Activity 2 1 1 60

Activity 3 2 2 90

These initial data are given taking into account the timeline in Figure 5.

Figure 5. Planned data

Table 4 contains actual earned value indices for every activity.

Table 4 Actual earned value indices by activities

A modified earned value index (mEV) is introduced here. This index is calculated by the following

algorithm:


Rule 1

If for the selected activity in the given ‘t’ period there was no planned earned value, that is:

𝑃𝑉𝑡 = 0 (Eq 1)

then:

𝑀𝐸𝑉𝑡 = 0 (Eq 2)

Rule 2

If for the selected activity in the given ‘t’ period the planned earned value is other than zero, that is:

𝑃𝑉𝑡 ≠ 0 (Eq 3)

And the earned value for the previous periods (when activities were performed) equals zero:

∑ 𝐸𝑉𝑖𝑡𝑖=0 = 0 (Eq 4)

EVi – the earned value for the selected activity in the given ‘i’ period

Then:

𝑀𝐸𝑉𝑡 = 𝐸𝑉𝑡 (Eq 5)

Rule 3

If for the selected activity in the given ‘t’ period the planned earned value is other than zero, that is:

PVt ≠ 01 (Eq 6)

And the earned value for the previous periods (when activities were performed) is other than zero:

∑ 𝐸𝑉𝑖𝑡𝑖=0 ≠ 0 (Eq 7)

Then:

𝑚𝐸𝑉𝑡 = ∑ 𝐸𝑉𝑖𝑡𝑖=0 (Eq 8)

Figure 6 contains a summary table of calculated mEV index and taking into account the timeline.

1 At the same time in all previous time periods the planned earned value equaled zero. That

means this activity was initially planned to be performed in the ‘t’ time period.


Figure 6. Actual data

Figure 6 shows that mEV is the index, which prevents manipulation with EVM indices and motivates

the Contractor to perform activities in accordance with the previously approved schedule.

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 (Eq 9)

This is because for critical or near critical activities early earned value means that preceding activities

in this chain were performed and a real increase above the planned rates of construction is seen. This

also motives the Contractor for performing critical activities, which directly impact the project

completion date. Thus, earned value schedule, given in Figure 7 will have one more curve added.


Figure 7. Curves EV (t), PV (t) and mEV (t) taking into account data date actuals

Further forecasting and extrapolation of curves EV (t) and mEV (t) for the whole project in the situations above in context of manipulation by the Contractor, generates a new estimate-to-complete date (efD) in Figure 8.

Figure 8. Curves EV (t), PV (t) and mEV (t) taking into account forecast to the project end

A new mEV index allows gaining the following effects:

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.


The overall situation of earned value taking into account mEV index is given in Figure 8 and presents

two curves as follows:

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.

The indicators derived from mEV indices are calculated below. Two methods of SPI index calculation

are given below since forecasting the project completion dates (by applying EVM) is the most

important factor:

Optimistic:

𝑆𝑃𝐼 = 𝐸𝑉/𝑃𝑉 (Eq 10)

Pessimistic:

𝑝𝑆𝑃𝐼 = 𝑚𝐸𝑉/𝑃𝑉 (Eq 11)

The realistic index is calculated by means of plain averaging:

𝑟𝑆𝑃𝐼 = (𝑆𝑃𝐼 + 𝑝𝑆𝑃𝐼)/2 (Eq 12)

This index is used for forecasting the project completion dates.


7 Forecasting project execution dates

Application of EVM to forecast project cost at completion is described in details in many books,

articles and best practices [1, 2]. Tools and techniques of applying EVM to forecast project dates are

described poorly. This part explains a detailed technique and the way it is practically applied.

The main index, SPI, for forecasting the dates in a few ways was calculated in the previous part. This

index 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 [1, 2]. 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.

First of all, the analytical work packages are identified for further calculation of the averaged SPI in

order to apply this SPI to the remaining scope of work in terms of the same analytical work packages.

Two major approaches were discussed in the process of developing the technique:

Calculating SPI for each Contractor. In this case, the proposal is to calculate the averaged SPI for all activities of the selected Contractor, based on the actuals. Then during forecasting this calculated index is applied to the remaining scope of work of the Contractor by multiplying the duration of the remaining scope of work of the Contractor by SPI.

Calculating SPI for main types of activities. In this case, the proposal is calculate the averaged SPI for all activities within certain type of activities, based on the actuals. Then during forecasting this calculated index is applied to the remaining scope of work of this certain type by multiplying the duration of the remaining scope of work of this certain type by SPI. In such case, the two-level in-house dictionary describes types of activities. The first level is represented by main types of activities: receipt of Initial permissive documentation, performance of Design and survey activities, performance of Construction and installation activities, performance of Procurement activities, performance of Field supervision activities, performance of Commissioning activities. At the second level, each activity is broken down into more detailed types of activities, such as early works, installation of drainage facilities, ventilation [3].

Both approaches described above have their advantages and disadvantages. The advantages and

disadvantages of the first approach are given below:

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 when selecting a Contractor 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.

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. Therefore, the main resources for any of the selected Contractors will be the resources, which are localized in the areas adjacent to the construction site. It means that labor resources and equipment will be mainly the same regardless of the selected Contractor. This somehow eliminates the effect of the contractor-related SPI.

The advantages and disadvantages of the second approach are given below:

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. This is because often a Contractor performs a few types of activities.

Any of the above approaches on calculation and use of SPI index can be applied depending on the

project type and conditions of the project execution. However, an important advantage of

contractor-related SPI approach is simplicity, which is extremely important at early stages of

implementing the technique of forecasting project execution dates into the practice of project

management in a Company. Therefore, it is the contractor-related SPI approach, which is currently

mainly applied.

The technique of SPI time-averaging is determined after defining the approach to itemize analytical

groups to calculate averaged SPI.

To implement time-averaging, the previously introduced SPI and pSPI indices were calculated for

every time period, for which earned value actuals were calculated and then arithmetic mean values

were calculated from the activities start to the data date:

𝑎𝑆𝑃𝐼𝑥 =1

𝑐𝑇∗ ∑ 𝑎𝑆𝑃𝐼𝑥𝑡

𝑐𝑇𝑡=1 (Eq 13)


aSPIx – time-averaged SPI for the whole duration of activities performance by ‘x’ Contractor

cT – number of time periods from the start of activities performance to the data date

aSPIxt – contractor-averaged SPI for the ‘t’ time period.

For pSPI index accordingly:

𝑎𝑝𝑆𝑃𝐼𝑥 =1

𝑐𝑇∗ ∑ 𝑎𝑝𝑆𝑃𝐼𝑥𝑡

𝑐𝑇𝑡=1 (Eq 14)

apSPIx – time-averaged pSPI for the whole duration of activities performance by ‘x’ Contractor

cT – number of time periods from the start of activities performance to the data date

apSPIxt - contractor-averaged pSPI for the ‘t’ time period.

The approach described above allows the most accurate calculation of the aSPIx and apSPIx indices.

Finally, for each ‘x’ Contractor the schedule performance index, averaged for all reporting time

periods from the project start, is obtained.

arSPI𝑥 =aSPI𝑥+apSPI𝑥

2 (Eq 15)

Now this index needs to be applied to each remaining activity, which ‘x’ Contractor will perform in

the project. The planned duration of the remaining activities is multiplied by arSPIx index and the

project schedule is calculated. Practical application of this approach reveals that averaging arSPIx

index equally along the whole timeline is not a very good decision, since significant correlation occurs

between arSPIx index and a season if activities are performed in a region with severe climatic

conditions. To develop this approach further arSPIx index is averaged for the following major seasons:

winter, summer and autumn/spring.

Software package, which includes Oracle Primavera P6® and PM.BI2 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 [3]:

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.

2 This solution is a BI-system based on Microsoft SharePoint® and Microsoft SQL® integrated

with Primavera P6®. Microsoft®, Microsoft SharePoint®, and Microsoft SQL Server® are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries.


EV value is determined during the schedule update. All these values are imported to the PM.BI

system broken down into the time periods, and the system calculates the following derived values:

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, then PM.BI calculates contractor-averaged arSPI

index by means of plain averaging:

𝑎𝑟𝑆𝑃𝐼 =1

𝑋∗ ∑ 𝑎𝑟𝑆𝑃𝐼𝑥

𝑋𝑥=1 (Eq 16)

arSPI –arSPIx index averaged for all Contractors

X – overall quantity of project Contractors, for which actuals are sufficient to calculate arSPIx index.

As soon as PM.BI calculates all arSPIx values, they need to be exported to Oracle Primavera P6® for

each future activity performed by ‘x’ Contractor. Thus, a new user field ‘arSPIx’ is created for

activities in Oracle Primavera P6®. After this user field is filled by current arSPIx values, then a project

with ‘What-If’ status is created in the system, and forecasted duration of each activity is estimated by

means of global replacement:

eDix=pDix* arSPIx (Eq 17)

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

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

After forecasted duration of all future activities is estimated, then project schedule needs to be

recalculated and the forecasted schedule needs to be analyzed.

Figure 9 gives a general view of one possible report to analyze the obtained results. The report

contains the following curves:

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 account

eEV (t) – forecasted modernized earned value curve, taking into account extrapolation of arSPIx index

to the remaining scope of project work.


Figure 9. Resulted curves

The presented report depicts the actual current project status in the context of manipulation by the

Contractor and also allows project completion date forecasting. These reports provide unbiased

project information and urge the Contractor to adhere to the schedule and not game the EVM

system through falsified reduction of project execution dates.


8 Conclusion

This article discusses the approaches to apply EVM indices to technology intensive production

facilities construction projects. Since the major and the most stringent constraint in implementing

such projects is schedule restriction, it means that the main objective of the solutions above is to

ensure project implementation in accordance with scheduled dates. The described methodology

contains three key parts:

Planning and monitoring of the whole design-fabrication-delivery cycle of major equipment, where certain approaches are applied to motivate the Contractor for reduction of execution dates for the whole cycle, not parts of it. This technique provides a ‘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.

The following positive effects were obtained after practical application of this methodology:

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.

In practice of project management the described approaches can be applied as a whole and

independently, depending on the Company current needs and its maturity level.

The article describes techniques and approaches with respect to technology intensive production

facilities construction projects, however the presented approaches can be used in other types of

projects. In particular, mEV index and respective project execution dates forecasting can be applied

in IT project. In those projects, arSPIx index can be associated with a certain developer, tester,

consultant, etc.

Further development of the presented methods will be aimed at increase of forecasting accuracy, in

particular, at increase of arSPIx index estimation accuracy and combination of approaches to

calculate SPI indices with respect to Contractors and types of activities, and aimed at other important

conditions to be taken into account during project execution.


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Earned Value Method in the Operational Management of the Projects

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DEV.01—How to Write a Technical Presentation

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Recommended Practice 10S-90—AACE Glossary and Terms

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http://www.amazon.com/s/ref=dp_byline_sr_book_2?ie=UTF8&field-author=Joel+M.+Koppelman&search-alias=books&text=Joel+M.+Koppelman&sort=relevancerank