Earned Value Management (EVM) for SharePoint – Part One

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Earned Value Management (EVM) for SharePoint – Part One

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Added by June 23, 2014


While teaching our Project Management Professional Certification (PMPC) course last week, this question was presented once again.

Are there any Earned Value Management tools for SharePoint?

My answer is always “yes”, although I could not answer more thoroughly. This two part blog is an attempt to aid those of you who might be searching for a viable Earned Value Management (EVM) solution associated with SharePoint servers. A secondary goal is to provide you with some of the criteria that might be used for your own comparative evaluations. Just one caveat – I have not had the time to do live evaluations of the solutions so my comparisons are based on data available from the various vendors and other third parties. The vendors represented were selected based upon my search and selection criteria. You may find others – and I would be happy to add them to my review list since I plan to conduct an evaluation in the future – so please share them with me.

Part one of the blog is for those of you less familiar with Earned Value Management. A quick overview of EVM follows. Earned Value Management was originally created by the US Department of Defense as a means to track and report the completion of work conducted on a project. We have all experienced the scenario wherein costs and schedule were being tracked while work is being performed, often to discover after the fact that completion estimates were incorrect or inaccurate. Remember that ten week project where work was reported at 10% complete per week even though the actual deliverable was not as nearly complete? EVM provides a powerful method to monitor and control both cost and schedule on a project. (For those of you preparing for the CAPM or PMPC – EVM is a tool that resides at the intersection of the Monitoring and Controlling Process Group and the Cost Management Knowledge Area of the PMBOK® 5th Edition.)

The foundation of the EVM method is the cumulative cost curve or “S-Curve” calculated as a project’s cost baseline. Rather than merely comparing costs against a budget, the baseline provides a cost based financial burn rate. Once you have sequenced the activities on your project, calculated the durations for each activity, and estimated the costs for the activity, you may draw (or computationally create) your S-Curve. You may only spend your budget for each activity during the planned time frame associated with that activity. The S-Curve is merely a representation of aggregate expenses across the duration of the project.

Graph -Cumulative Cost or S-Curve of EVM for SharePoint

As an experienced project manager, you know you want to generate $1 value for every $1 you spend. As a result, the S-curve represents both your planned spending rate and your planned rate of value creation. The total value of any activity is represented by its total budget at completion (BAC). The S-Curve therefore represents your Planned Value (PV) over time or at any specific point in time. The Earned Value (EV) of an activity is calculated by multiplying the percentage of work (or value generation) completed at any point in time relative to the total value of the activity (BAC). In equation format: EV= BAC x %complete. (Make sure to pick a good metric – which is a Quality Management Knowledge Area consideration.) The fourth and final variable associated with EVM is Actual Costs (AC) – pretty straight forward since this is the actual money spent at the point in time on the schedule that you desire to compare Earned Value.

We draw the S-Curve during planning and then track our Actual Costs and Earned Value (related to BAC) as we execute the project. The following diagram offers an example for plotting the S-curve (PV from zero to BAC), as well as AC and EV across time. In this example AC exceeds the Planned Spending rate – a bad indicator, and EV falls below the Planned Value – another indicator of project failure. We don’t really want to compare against Planned Value, however. After all, this method is called Earned Value Management, not Planned Value Management. We always make our performance comparisons against Earned Value – how effectively we are reaching the value of BAC.

Graph -BAC Badget at Completion EVM for SharePoint

Simple comparisons enable the power of EVM. An S-Curve may be created for an activity, a set of related activities referred to as a work package, a set of work packages representing a deliverable, or for the entire project. As such, EVM can be used to measure and report the entire project, and the variance, impact, or contribution of any project element or set.

There are several equations associated with EVM including sets that enable project forecasting. Four foundational equations enable even the most powerful project dashboard system. The other equations and tools maybe used within a dashboard system, though are not required for mere performance reporting features. The four basic equations and their application are:

Cost Variance (CV) = EV – AC
What is the absolute difference between value and spending at a point in time?

Cost Performance Index (CPI) = EV/AC
What is the scale of the cost variance?

Schedule Variance (SV) = EV-PV
What is the difference between created and planned values at a point in time? (In other words, are we on schedule for value creation?)

Schedule Performance Index (CPI) = EV/PV
What is the scale of the schedule variance?

Related project dashboard systems do not need to report actual numbers. Herein lays the power of EVM for management tracking and reporting systems. One does not need to know the details underlying a project to quickly assess whether it is being performed to schedule and cost plans. As professional project managers, we have properly identified all the work to be generated by using a comprehensive Work Breakdown Structure (WBS) from which our work packages and activities are derived. As such EVM provides a means to assess the delivery of Scope as well as cost and time. We complete our project’s Triple Constraint – scope, time, and cost – and manage to the foundation of project methodologies with EVM.

All we need to know is good = green and bad=red? Okay, so a color continuum, power dials, or other display features may be used although the underlying math does not change.

Let’s look at Cost variance (CV) for an example. CV=EV-AC. If the value generated is more than the money spent, that is a good result. EV-AC is a positive number. Positive is good, and we are under budget. As I emphasize in the classroom, big number minus little number is positive – and positive is GOOD. Little number minus big number is negative, and negative is BAD. Good is under budget, bad is over budget. If EV and AC are identical, then we are right on target!

We can do the same thing for Schedule Variance (SV). Good = ahead of schedule, Bad= behind schedule.

The next question that management will likely ask might be “how good (or how bad) is it?”

Enter CPI and SPI. We already know that EV=AC is right on target. In such an instance EV/AC=1. The value of “1” for CPI or SPI means right on target. We also know if EV is larger than AC, we have a good result; and EV/AC would be greater than one. For CPI and SPI greater than 1 is good and less than 1 is bad. CV and CPI will have the same result, as will SV and SPI, relative to good or bad. We can take the results further… the difference between CPI and SPI results and the value ‘1’, tell us our variance. In other words, how far from ‘on target’ we are at a given calendar point.

If EV is 5 and AC is 4 – we know this is good. And the ratio EV/AC would be 5/4 or 1.25. Relative to ‘on target’, we are 25% under budget. (On target is 1.0, so 1.25-1.0=.25 or 25%). We can use the same approach for variance over budget. (EV=$7 and AC =$9, would be .7777 or 22% over budget.)

Using SPI (i.e. EV/PV) in a like fashion, we can determine variance to schedule as well. Labeling results as percentages ahead or behind schedule.

So how does EVM apply to a dashboard solution?

We can report relative status for activities, work packages, deliverables, and the project using simple representations. The dashboard can be as simple or complex as we desire – from emoticons to active power meters – based on extremely simple underlying mathematics. We do not need very much information if we start with a carefully planned baseline. We just need to regularly update spending and work progress.

EVM can be easily tracked and reported in a spreadsheet, and once simply explained the representation may be understood by all stakeholders.

The power of EVM, however, is best applied when the project planning and management tools integrate EVM concepts from the beginning of project design, through execution and control. Microsoft Project Server supports a variety of integrated EVM dashboard solutions. Microsoft Project Server is not the only Project Management Information System available. With growing SharePoint deployments, students continually ask what might be available for SharePoint integration?

Now that you better understand Earned Value Management – jump forward to the second part of the blog for some selection criteria and possible SharePoint EVM candidate solutions.

Steven Fullmer
Interface Technical Training Staff Instructor

Steve teaches PMP: Project Management Fundamentals and Professional Certification in Phoenix, Arizona.

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