Earned Value Reporting – To Complete Schedule Performance Index

In this article on Earned Value Reporting we’ll look at something similar to the To Complete Cost Performance Index – the To Complete Schedule Performance Index, or TCSPI. The To Complete Schedule Performance Index tells us the required schedule performance index that will be needed to meet the schedule.

The book “The Project Management Question and Answer Book” by Michael Newell and Marina Grashina is the source for much of this overview.

What is the to complete schedule performance index?

The to complete schedule performance index, or TCSPI, is similar to the TCCPI except that it calculates a required schedule performance index that will be necessary to meet the project schedule. This measure is rarely used. It is included here for completeness. It has the same problems as the TCCPI and is even more abstract and difficult for people to understand.

The calculation for the TCSPI is done by dividing the work remaining by the remaining schedule.

TCSPI = (BAC – BCWP) / (BAC – BCWS)

It can be seen that as a project’s schedule performance index moves below one, the TCSPI will increase and become greater than one. Although called an “index”, this is not really accurate since all indexes indicate something bad when they fall below one and this index indicates something bad when it is greater than one.

There is a mathematical difficulty with this term as well. If a project is over budget toward the end, it is possible for the BAC and the BCWS to be equal. This produces a division by zero and a point of discontinuity.

Under normal conditions it results in a value that indicates the required performance that the project must have from now until the end of the project.

Example:

Suppose a project is somewhere near 50 percent complete:

BCWS = $100,000

BCWP = $95,000

ACWP = $97,000

BAC = $200,000

SV = BCWP – BCWS

SV = -$5,000

What is the TCSPI?

TCSPI = (BAC – BCWP) / (BAC – BCWS)

TCSPI = (200,000 – 95,000) / (200,000 – 100,000)

TCSPI = 1.05

Notice that if the schedule variance remains the same as the end of the project approaches, the TCSPI increases rapidly. Suppose we have the following when the project is approximately 95 percent complete:

BCWS = $195,000

BCWP = $190,000

ACWP = $192,000

BAC = $200,000

SV = BCWP – BCWS

SV = -$5,000

What is the TCSPI?

TCSPI = (BAC – BCWP) / (BAC – BCWS)

TCSPI = (200,000 – 190,000) / (200,000 – 195,000)

TCSPI = 2.00

As we approach the end of the project, the schedule variance has not changed, but the TCSPI has changed from 1.05 to 2.00. This means that the work that must be accomplished from now to the end of the project must take place at a rate that is twice as fast as was originally planned.

Earned Value Reporting – Schedule Performance Index

In this article on Earned Value Reporting we’ll look at the Schedule Performance Index. The Schedule Performance Index refers to how the project is performing in terms of actually following the project schedule.

Much of the following information came from Newell and Grashina’s book entitled “The Project Management Question and Answer Book.”

What is the schedule performance index?

The schedule performance index is a measure of how well the project is doing in terms of following the project schedule. It is a comparison of the project tasks that were planned to be accomplished to the work that was really accomplished. The index is a value that allows projects of different sizes to be compared.

The schedule performance index is like the schedule variance discussed previously with one important difference. When we calculated the schedule variance, the result was a figure in dollars. If the dollars were negative, the variance was considered bad, and if the dollars were positive, the variance was considered good. The problem with this method is that it is difficult to compare projects of different size to one another. It would be better to have a measure that gives the health of the project regardless of its size. For this purpose we will use indexes.

Instead of subtracting the budgeted cost of work scheduled from the budgeted cost of work performed, as we did when we calculated the schedule variance, we will divide the same two numbers.

SPI = BCWP / BCWS

SPI = EV / PV

We can see that if the project is following its plan, the amount of work accomplished and the amount of money spent to accomplish it are the same, and the resulting value will be one. So, an index of one means that the project is following its plan.

If the budgeted cost of work scheduled is greater than what is being accomplished, the denominator in the fraction will be larger than the numerator, and the resulting value will be less than one. This is a bad condition. If the budgeted cost of work scheduled is less than what is being accomplished, the resulting number will be greater than one and this is considered good.

Example:

A project is two weeks behind schedule at the time of the calculation. The project has fifteen people working full-time. Assume that each person costs $1,000 per week. BCWS at this point in the project is $500,000. What is the schedule performance index?

The project is two weeks behind schedule and there are fifteen people working full-time on the project. This results in being behind schedule by thirty person-weeks or $30,000.

SPI = BCWP / BCWS

The BCWP is $500,000 ? $30,000 = $470,000.

The BCWS is $500,000.

SV = BCWP – BCWS = -$30,000

SPI = BCWP / BCWS = $470,000 / $500,000 = 0.940

Notice that a smaller project such as one that had a BCWS of $50,000 and a BCWP of $47,000 would also have a schedule performance index of 0.940. Again, this helps the project manager who is managing different parts of a project in which the sizes of the parts are different. The schedule performance index, like the cost performance index, indicates the health of the project regardless of its size.

Earned Value Reporting – Intro Part 2

In the previous Intro Part 1 article we began to look at Earned Value Reporting as described in Newell and Grashina’s book “The Project Management Question and Answer Book.” In this Intro Part 2 article, we’ll exam Cumulative Variance Reports before diving deepr into other EVR concepts and reporting mechanisms.

Cumulative Variance Reporting

Sometimes in very large projects there is a problem with representing the project plan and the other earned value factors on a cumulative basis. When the project budget is very large, the vertical scale of the report is so small that minor but important variations cannot be seen well. In this situation a variance reporting method can be used.

To plot the earned values on a variance chart as shown in Figure 2 we simply plot a horizontal line and label it zero. Now, instead of plotting the actual values of the BCWS, BCWP, and ACWP we plot the differences between the BCWS and the other two earned value reporting factors. When we do this, the vertical scale that we need is greatly reduced in size since we are concerned only with plotting the difference between the earned value factors and not the entire budget of the project.

FIGURE 2

The next one, the ACWP or AC, is pretty simple too. This stands for the actual cost of work performed. Like the BCWS it is a plot over time of expenditures. This time, instead of plotting the project’s planned expenditures we are plotting the project’s real expenditures over time. At the end of each reporting period, we take the total amount of money that was spent on the project during that period and plot it as an addition to the total amount of money that had been spent as of the last reporting period.

It is important that every expenditure that is made on the project be collected and be collected in a timely way. The timing of the collection of the actual cost of work performed must match the anticipated timing of the expenditures that were planned and plotted as the BCWS. This is terribly important since, if expenditures are collected early or late in the project in relation to the project plan, the earned value report will show a positive or negative variance when there may really be none.

The ACWP plot is a cumulative plot as well. If the project expenditures are actually what they were planned to be, then the ACWP and the BCWS lines will plot one on top of the other. If the lines do not coincide, there is something different from the plan taking place in the project. We are either spending too much or too fast or we are not spending enough or fast enough to meet our plan.

The next factor is the BCWP or EV. This is the only one that is a little tricky. BCWP stands for the budgeted cost of work performed. It is sometimes called the earned value as well. This is where we get the name of the earned value report. Like the BCWS and the ACWP, the BCWP is a plot of money over time. If you recall, we said earlier that each of the project tasks has a budget and schedule associated with it. The BCWP is a plot of the work that was actually accomplished. If we complete a task that had a budget of $1,000, then the BCWP for that task when it is completed is $1,000. We plot this on a cumulative basis as well. It does not matter whether we spend $1,000 or $2,000 or any other amount to accomplish this task, we earn and plot only the budgeted amount in the BCWP.

Like the ACWP, the BCWP should plot right on top of the BCWS line. If the plot of the BCWP is above or below the BCWS line, it means that the number of tasks that are being completed is greater than or less than the plan. This tells us that we are ahead of or behind schedule. If we have done all of the tasks that were supposed to be done at this point in time, the cumulative value of the BCWP will be precisely equal to the BCWS.

When we put all three of these plots together, we have the earned value report. The plots should plot right on top of one another if the project is being done on time and in accord with the budgeted amount that was in the project plan.

Example:

Suppose a project is in progress and as of today the planned expenditures for the project were to have been $500,000. Suppose also that there were five tasks and the tasks had budgets of $30,000, $100,000, $250,000, $100,000, and $20,000, respectively. The actual cost of each of the tasks that were worked on was $11,000, $120,000, $230,000, $105,000, and $20,000. Tasks 1, 2, 3, and 4 are complete.

What are the BCWS, ACWP, and BCWP (PV, AC, and EV)?

• BCWS is $500,000
• ACWP is $486,000
• BCWP is $480,000

From these figures we can see that the accomplishments of the project as of today are somewhat less than what was planned for. This is the difference between the earned value and the planned value to date. The planned value is the BCWS and the earned value is the BCWP. This means that we are $20,000 behind schedule.

We can also see that the actual cost is $14,000 less than the planned expenditures to date. This means that we are somewhat under budget. Unfortunately we are $14,000 under budget but also $20,000 behind schedule. If we add the $20,000 of work that should have been completed but was not, we find ourselves projecting a $6,000 over budget condition. It could be that things are actually worse than they appear at first glance. If the performance to date continues, the amount over budget will probably be even higher at the end of the project. This is usually considered a bad situation.

Earned Value Reporting – Intro Part 1

Some organizations place significant importance on Earned Value Reporting as part of their project management practice while others do not. I personally have yet to work for or with an organization that placed any emphasis on this aspect of PM reporting whatsoever. That’s unfortunate, thought it has made my reporting job easier over the years.

For the purposes of this and the next few articles, we’ll look at EVR and some of the different reporting scenarios that are used to show progress and value for the PM process and the PMO. Much of this information is coming from the book “The Project Management Question and Answer Book” by Michael Newell and Marina Grashina.

What is an earned value report?

An earned value report is the preferred method for measuring progress in projects. It has the advantage of showing on one piece of paper the pertinent performance criteria for a project. From the earned value report the time-phased, planned expenditures for the project can be seen along with the actual cost of the project work that was accomplished and the amount of work that was actually completed. From this report the cost variance and schedule variance can be calculated.

There are several factors in the earned value report that we must know in order to use it effectively. These factors are the budgeted cost of work scheduled (BCWS), the budgeted cost of work performed (BCWP), and the actual cost of work performed (ACWP). These three elements form the basis for the earned value reporting system.

PMI has seen fit to change this almost universally accepted alphabet soup. It remains to be seen whether PMI will be able to persuade the entire project management community to make the change or whether PMI will have to change back to the more widely accepted way of calling things. There are certainly going to be some difficulties since most managers use PV to mean present value and EV to mean expected value. We shall see. In the year 2000 version of the Guide to the Project Management Body of Knowledge (PMBOK), PMI refers to these as follows:

Budgeted Cost of Work Scheduled (BCWS) = Planned Value (PV)

Actual Cost of Work Performed (ACWP) = Actual Cost (AC)

Budgeted Cost of Work Peformed (BCWP) = Earned Value (EV)

We will keep the traditional terms, which are still commonly accepted.

The first one of these factors is the BCWS or PV. This stands for the budgeted cost of work scheduled or the planned value. Once you catch on, you will say that it is just what it says it is. It is a plot of the budgeted cost of the project activities on a cumulative basis over a horizontal axis of time. All project tasks have a task cost that was derived from the estimated cost of each activity and a schedule that says when the activity will take place. The BCWS is simply a plot of these values according to when in time the expenditures are expected to take place. So, this is pretty simple to see, as it is just the project plan plotted out in terms of dollars of budget showing when those dollars are expected to be spent.

This is a method of showing the project plan in an easy-to-see way on a single piece of paper. By showing it in a cumulative way we can see the total expenditures to date for the project as well as the total cost of the project all on the same piece of paper. Notice in Figure 1 that the shape of the curve is similar to the letter S. Nearly all of the planned value curves for projects will have this shape because projects generally start out spending money slowly and then increase the rate of expenditure, reach a peak where money is being expended at its greatest rate, and then reduce the expenditure rate until the project is ended.

FIGURE 1

Next

In Intro – Part 2 we will look at Cumulative Variance Reporting.

Ten Guidelines for Managing Passwords in the Enterprise

As a follow-up to my article entitled “The Most Serious Data Threat May be Sitting Next to You,” Mark Sanford from Click Studios sent me a link to their article on “10 Guidelines for Managing Passwords in the Enterprise.” Since data security and data integrity is a critical issue on any enterprise IT project that involves significant data – and they all do – this is extremely timely and appropriate.

Mark and Click Studios have graciously allowed for their article to be provided to the readers of PM Tips. I strongly urge you to also visit their site and the original article here.

10 Guidelines for Managing Passwords in the Enterprise

Today the world is totally dependent on information technology, and many corporations struggle to effectively manage and store passwords securely for their employees. Every other day you hear of large companies exposing customer account details to non-intended audiences, due mainly to poorly managed IT systems and processes. The confidentiality and integrity of sensitive data is paramount to the operations of any size business, and the following guidelines should be considered when choosing any type of electronic password management system (PMS).

1. Remove the need for employees to remember passwords, or even worse, write them down

A key cause of bad password management practices is many employees don’t have a system in which to records their passwords, resulting in them having to either remember them, or write them down and store them in an unsecure manner. The password management system (PMS) must provide adequate functionality, removing the need for employees to remember passwords.

2. Centralize the management of passwords

Centralization of an organization’s passwords is the first step in gaining control of the IT accounts used to operate their business, otherwise there is no visibility or governance of their usage.

3. Ensuring the integrity of sensitive data

To ensure the integrity of data stored in an electronic PMS, there are a few key things to consider:

• Passwords should be encrypted with 256bit AES encryption, and a unique Initialization Vector used for every install
• Users should authenticate against the PMS using their Microsoft Windows domain account credentials
• PMS must provide the option to use two-factor authentication for the user(s) who administer the system
• Sensitive code of the PMS should be obfuscated, to prevent reverse engineering by system or web administrators
• PMS must mitigated against system or database administrators granting themselves access to unauthorized data

4. Make the passwords easily accessible

Users must be able to get to the PMS from any location, must not rely on any client installs, and must give them quick and easy access to their passwords.

5. Must promote the use of strong passwords

The PMS must promote the use of strong passwords, of which the policy for password strength is set by the administrator(s) of the system. Visual representation of password strength must be available when entering passwords, or when reporting against, so the user is constantly reminded if a password’s strength is poor.

6. Must promote regular resetting of passwords

A key component of bad password management practices is not resetting passwords at regular intervals. The PMS must have one or more options for reminding users that passwords are about to expire.

7. Must be portable and recoverable

There is little use centralizing your organization passwords if you’re unable to get to them in case of a disaster. The PMS must provide the mechanism by which all passwords can be exported to a separate file, to be stored outside of existing IT systems – preferable with trusted security personnel.

8. Changes must be traceable and auditable

All large organizations require governance over access to IT systems, and its imperative the PMS must support traceability of all events within it, and must be easily reportable. This applies to standard usage by employees, or administration of the PMS.

9. Must be scalable

If you intend to implement an enterprise class PMS, its crucial the system can scale with your organization, otherwise your investment (time and money) may be wasted.

10. Must be simple to use

As with any IT system, acceptance by its audience is crucial to its success. Provide users with a poorly designed interface, and you will meet resistance at every step. To successfully employ a PMS and realize the benefits it can bring, the PMS must be very simple to use and provide the user community with sound help documentation if required.

(Click Studios – 18^th October 2009)