Rule of Thumb

Project management is complex enough to provide a nice sandbox for experimenting with all kinds of novel ideas. Earned Value Analysis is not very novel any more, but I haven’t seen it used much around. So I looked into it.

I am using Microsoft Office Project Standard 2003, which sound a bit outdated, but it’s a start.

I entered two tasks, each of them lasting 10 days, each of them having a single, but different resource 100% allocated to that task. In effect, both resources will work on their tasks 8 hours a day for two weeks. For simplicity, I used round number of 10 €/hr for resources standard rates.

Both tasks will take 80 hours to complete, costing 800€ each. Now let’s save the baseline for the entire project, set the status date (Project, then Project Information and Status Date) past the last date of this sample project, entered Actual Work of 4 hr for Day 1 on both tasks and let’s look at the Task Usage view plus Earned Value table.

It shows a couple of fascinating numbers.

Let’s decipher acronyms first:

• BCWS - Budgeted Cost of Work Scheduled - Cumulative timephased baseline costs up to the status date or today’s date.
• BCWP - Budgeted Cost of Work Performed - Cumulative value of the task’s, resource’s, or assignments’s percent complete multiplied by the timephased baseline costs.
• ACWP - Actual Cost of Work Performed - Costs incurred for work already done on a task, up to the project status date or today’s date.
• SV - Schedule Variance - Difference in cost terms between the current progress and the baseline plan of a task, all assigned tasks of a resource, or for an assignment up to the status date or today’s date. Actually, it is BCWP-BCWS.
• CV - Cost Variance - Difference between how much it should have cost and how much it has actually cost to achieve the current level of completion up to the status date or today’s date. Actually, it is BCWP-ACWP.
• EAC - Estimate At Completion - Expected total cost of a task based on performance up to the status date. EAC is also called forecast at completion (FAC). It is calculated as ACWP + (Baseline cost - BCWP) / CPI.
• BAC - Budget At Completion - Total planned cost for a task, a resource for all assigned tasks, or for work to be performed by a resource on a task.
• VAC - Variance At Completion - Difference between the BAC (Budgeted At Completion) or baseline cost and EAC (Estimated At Completion) for a task, resource, or assignment on a task.

In the above example, since status date was moved past the expected end of tasks, BCWS is equal to the total Baseline Cost, or BAC (which is actually the same field under two different names) of the entire tasks, which is 800 €.

ACWP equals to 4 hr x 10 €/hr = 40 €. Makes sense.

What about BCWP? 76,18 €? Funny number. Where does it come from? The key to the answer lies in the percent complete part of the formula, which says: BCWP = [Percent complete] x [Baseline Cost]. And percent complete is calculated as [Actual Duration] / Duration. Let’s see the numbers:

The fun comes from Duration, which increased by half a day because resource A only did half of the work on the first day. Percent complete is therefore 1 / 10,5 = 0,9524 (rounded to 10% by MS Project) and if we multiply this with Baseline Cost of 800€ we come to 76,18 € for BCWP.

OK, one mystery down, plenty to go. Take a look at assignment data. That’s the line under the task, with resource A. BCWP is with 40€ value way different than tasks BCWP 76,18 €. The reason for this is the fact, that MS Project uses % Work Complete to calculates assignment BCWP, which is calculated as [Actual Work] / [Work]. Assignment BCWP is calculated as [Assignment % Work Complete] x [Assignment Baseline Cost]. In numbers, % Work Complete = 4 hr / 80 hr = 5% and BCWP = 5% x 800 € = 40 €.

Instead of heaving two different calculations of basically the same data, you can change how MS Project calculates Earned Values from % Complete to Physical % Complete. You can change this individually for each task by adding Earned Value Method column into the view and modifying its values, or you can modify default setting in Tools, then Options, Calculation, Earned Value and Default task Earned Value Method. This only affects new tasks.

Compare now T1 with % Complete method and T2 with Physical % Complete:

Neat.

Organizational changes are natural part of projects. By definition, projects are changing the state of things and almost always, this includes processes and procedures and consequently how people do things in their day-to-day business.

There are many theories an models but Kübler-Ross model applied to change management is fundamental one.

In its original form, Elisabeth Kübler-Ross wrote in her 1969 book “On Death and Dying” about the “Five Stages of Grief”:

• Denial: Example - “I feel fine.”; “This can’t be happening.”‘Not to me!”
• Anger: Example - “Why me? It’s not fair!” “NO! NO! How can you accept this!”
• Bargaining: Example - “Just let me live to see my children graduate.”; “I’ll do anything, can’t you stretch it out? A few more years.”
• Depression: Example - “I’m so sad, why bother with anything?”; “I’m going to die . . . What’s the point?”
• Acceptance: Example - “It’s going to be OK.”; “I can’t fight it, I may as well prepare for it.”

• Denial: Example - “This isn’t relevant to my work.”
• Resistance: Example - “I’m not having this.”
• Exploration: Example - “Could this work for me?”
• Hope: Example - “I can see how I make this work for me.”
• Commitment: Example - “This works for me and my colleagues.”

This happens to all of us. It is important to understand, that this is a natural reaction and should never be taken personally. Project manager should avoid at all costs bringing this conflict to a personal level as it makes it difficult or impossible to recover from it later.

It is important that project manager keep the team involved during denial and resistance phases, especially trying to understand their current position. Translated into project management, this is the time to do requirements analysis. This can open the vents of piled up unresolved issues and problems.

Tipping point is where negotiation starts and scope crepe occurs. Project manager really needs to be tough in following the goals and objectives.

Exploration is where training can occur. People in exploration phase accepted that the change is imminent and are gaining interest in it. It is futile to do any training before this stage.

When in hope stage are empowered to accept the change. They’re comfortable doing user testing and self exploration.

During commitment phase, they’re believers. They know why this is good for them and the team. Now is the time to write new processes and procedures.