Earned Value management This presentation is just a

Earned Value management • This presentation is just a short introduction to a few terms and concepts. I am sure there will be training sessions in the next few months. • Lyn Evans is introducing this technique for the LHC as soon as it can be implemented. • Intended for projects (rather than exploitation), especially pluri-annual ones. • There will be BHT-style tools provided. • Uses Microsoft Project. • Used widely in the US by DOE, in particular for managing the US contribution to LHC (spread over 3 national labs, each with its own ideas on project management).

Earned Value management • Currently, the tools we use for project management are Ø a time planning of the jobs Ø the yearly budget allocation Ø the information from BHT about what is paid Ø the information from BHT about what is committed

Earned Value management CHF budget committed paid time

Earned Value management Job planning time

Earned Value management • What is new is the evaluation by the technical responsible of the % completion of each current item of each work package in each evaluation period (month); this is then translated into an earned value for that job. • This enables a much more precise evaluation of where the project is with respect to cost and schedule, and enables a moving update of the cost to completion.

Earned Value management Why use this system? • early and accurate identification of trends and problems • accurate picture of project status (cost, schedule, technical) • allows early course correction • is apparently popular with those who use it

Earned Value management: Example • Work package Ø budget: Ø time allowed: Ø the job: 100, 000 CHF 12 months produce 10 units • Status today Ø spent to date: Ø time elapsed: Ø result to date: 65, 000 CHF 6 months 4 complete units produced, 2 partial • How is this part of the project doing? How do I know how it is doing? • How far along am I? 65%, 50%, >40%?

Earned Value management Course corrections are easier when you have time to make small adjustments It’s too late when you’re this close to the iceberg!

Earned Value management • BCWS= budgeted cost of work scheduled (cumulative). This is the budget profile as a function of time. • BCWP=budgeted cost of work performed (cumulative). This is the budgeted cost for the fraction of the work really performed in the time interval concerned (e. g. month). • ACWP=actual cost of work performed, cumulative This is the actual cost of what was done in the time interval concerned.

Earned Value management • Cost variance= CV= BCWP-ACWP • Schedule variance= SV= BCWP-BCWS Positive is favourable, negative is bad • Cost index (efficiency)=CPI=BCWP/ACWP • Schedule index (efficiency)=BCWP/BCWS Favourable is >1, bad is <1 • BAC=budgeted cost at completion • EAC=estimate at completion

Earned Value management • The contractor establishes a management control system – May be required to show that system meets 32 criteria • An integrated baseline plan is established – work is defined, scheduled, and resources are allocated • Work and resources are driven down to lowest level for execution • A work authorization system is set up that controls changes to the baseline • Budgets are “earned” as work is completed = EARNED VALUE • Status provided against baseline – schedule and cost variances are isolated • Problem assistance – early warning – corrective plans • Early insight provided into final estimated cost

Earned Value management Job planning time

Earned Value management EAC CHF BAC SV CV BCWS ACWP BCWP Time now Time

Earned Value management • Could be used by us for PIL, CTF 3, LHC-PS cavities But we need some training, especially in setting up the work packages, milestones, etc. It will only work if it is set up correctly and if the managers at all levels believe in it. • Some difficult points Need to integrate staff costs and material costs. Delays in accounting so that the actual spending does not correspond to the work done. Treatment of contracts with down payments that don’t correspond to work done.