So your schedule says your project will finish on time So your schedule says your project will finish on time . . . is that all it is really telling you? Christopher Payne, PE, CCM Mairav Mintz, PE, CCM Omoniyi Ladipo, CCM, CCP, EVP  2018 Project Management Symposium

Learning Objectives Learn how common distortions and practices make CPM schedules less useful than they should be. Understand earned value metrics in cost-loaded schedules. Examine insights gained from research of thousands of cost-loaded schedules. Understand distinction between “schedule delay” (days) and “progress delay” (earnings). See practical applications of these concepts.

What We Know Projects are often behind and finish late. Owners/construction managers consistently misinterpret schedules. Combined schedule and EVM review can help. Our research findings support this. Our project experience supports this. EVM is the acronym for earned value management Project Management Institute defines EVM as a management technique for integrating scope, schedule, and resources, and for objectively measuring project performance and progress. The performance is measured by determination of the work accomplished (earned value) and comparing this to the actual cost of the work accomplished (actual cost).

The Obvious Signs in CPM Schedule Review Is the critical path reasonable? Does the schedule show negative float? Is the project predicted to finish on time? Is progress recorded accurately? Are schedule revisions explained and justifiable?

CPM Schedule Review & EV Analysis We conducted schedule review and EVM in tandem on a number of our projects. Our observations confirm that the best determination of project health is through the use of concurrent measurement of progress in time and earnings.

Origin of Combined cpm Review & EVm Analysis

How Has Combined Review Emerged? A result of a contract requirement. Project team understood the benefits resulting from looking beyond the critical path projection of completion and known distortions Concurrent measurement using CPM and EVM has emerged for various reasons. While CPM schedule review has been standard for a very long time, within government sector, EVM has been a standard requirement for project performance measurement for specific types and cost thresholds. Project teams have become smarter and more knowledgeable about the benefits of monitoring progress and performance beyond schedule critical paths but by also examining the cost metrics carefully to better understand and manage risks. In private industry, CPM schedule review has also been a standard requirement and savvy contractors had realized the benefits of using EVM as well to better mange their risks. Owners also realize that they need to better manage their risks by monitoring EV metrics on cost plus contracts and even when contracts are let on fixed price terms.

CPM is the acronym for critical path method. Cpm schedule review

CPM Schedule Review Owners examine contractors schedules to: Determine whether project is on, behind, ahead of plan through current critical and near critical path review. Forecast when the project will be completed through current critical path review.

CPM Schedule Review Some owners examine contractor schedules to: Review resource and cost loading plan, earnings and projections Construction industry has been slow to adopt Requires detailed updates to reflect accurate progress. Requires detailed review of baseline plan versus previous and current updates.

COMBINED Cpm schedule review and EV analysis CPM is the acronym for critical path method. COMBINED Cpm schedule review and EV analysis

Performance Measurement Baseline Owners develop and analyze the PMB PMB: A time-phased budget plan for accomplishing work, used to measure contract performance. Developed using the data in the Baseline Schedule. Owners develop and analyze the performance measurement baseline for the master schedule, and contractors have to utilize this to develop the project’s PMB for the owner’s review. A PMB is a….

EVM Parameters Owners use parameters such as: Planned Value (PV) or Budgeted Cost Earned Value (EV) Actual Cost (AC) Derive EV schedule metrics and cost metrics 

EV Analytics EV Schedule Metrics: EV Cost Metrics: Schedule Variance (SV) Schedule Performance Index (SPI) EV Cost Metrics: Cost Variance (CV) Cost Performance Index (CPI) Estimate at Completion (EAC) As the names imply, variances indicate the magnitude of the variation from the approved baseline, that is between plan and accomplishment. The SV and CV indicate linear variations while the performance indices indicate the efficiency factors. The indices can sometimes be used together to forecast the estimated project completion.

Project examples and our observations CPM is the acronym for critical path method. Project examples and our observations 

Earned Schedule and Actual Time Let’s walk through Earned Schedule metrics using this graphic from one of our projects.

Observations Budgeted costs vs. EV (S curves) were very effective illustrations of progress. EV curve for overall project showed overall performance. EV curves for subsets of project revealed more details about performance.

Observations As time progressed, and work fell behind the plan, the S curves became steeper. Progress delay (AT-ES) also increased. Progress delay based on the critical path was sometimes more optimistic than the progress delay (AT-ES). Schedule review and EV analysis used concurrently to predict performance.

Observations Tracked earned vs. planned values based on early, late, and average dates. Used average dates to determine performance Late dates are too late to course correct Early dates don’t consider float

Observations Focused on monitoring work on the critical/near critical paths. Tracked earned vs. planned values separately for: Trades. Installation. Procurement/ Level of Effort. Change orders.

Observations Tracked remaining work effort for trades against remaining time to planned completion Effective in projecting estimate to complete (ETC). Helped contractor re-plan as needed.

Observations Project schedule contained too much float. Contractor’s early completion schedule was unrealistic – confirmed by S curves. The continuing erosion of float month after month resulted in S curves that were progressively less achievable.

Benefits of combined review Let us examine the many benefits that we have observed from our experiences of combined CPM and EVM review Benefits of combined review

Benefits of Combined Review Alerts project team to project risks Facilitates informed decision making Enhances project team collaboration Improves forecasting capabilities.

Benefits of Combined Review Provides historical data for future projects. Provides lessons learned for future projects. Scalable and valuable for many sizes and types of projects.

Given Benefits of Combined Review, We Launched a Broader Study Independent research project by MBP. Are there common factors we can identify in looking at many projects and their schedules? Are there common indications of trouble that can be observed by looking beyond the obvious signs? Our observations of the benefits of combined review on a small number of projects led us to examine a large number of projects to see if the trends exist..

Our research and findings

Our Research Reviewed 128 projects of various types. Reviewed more than 2,500 schedules. Strictly used cost-loaded schedules. Converted all schedules to a common base of percentage time and percentage cost.

Is there a project tipping point? The “crystal ball” of a CPM schedule is often broken. There is no “point of no return” in terms of schedule slippage. But… There is no “out of the woods” point, either! In other words, projects can fail at any point.

Earned Schedule and Actual Time

The First Crack in the Crystal Ball We accept a poor baseline schedule… Late earnings too late. Late performance too steep. How realistic? Research shows many schedules exhibit unrealistic aspects. Large float values

The Second Crack in the Crystal Ball We look at the updates in the wrong way… We ignore EVM metrics in schedule updates. We zero in on projected end date/minimum float value. We should look for the trend of earnings. Our research shows: a “persistent delusion” on projects that finish late.

The Second Crack in the Crystal Ball Look for: Underperformance compared to plan. ES/AT vs. Projected Finish/Planned Finish. These should be similar. AT - ES is “progress delay”. Projected finish vs. Planned finish is “schedule delay”.

The Crystal Ball is Broken in half We fail to consider, "Can it be done?" In baselines or updates, be very skeptical of steep sloping curves. J-curve or S-curve Max slope? Recommend no more than 4

Research – Huge Slope Variations Bad

Challenges of Combined Review Weak work breakdown structure, poor schedule and cost loading pose difficulties. Lack of scheduling and EVM capabilities. Inaccurate specifications. Cost of EVM – scalable. Subjective interpretation of EVM metrics.

Changing the Way we Think The research findings have been borne out on several of our projects. The findings cannot be ignored. Adapt our practice of schedule management to address what we have learned. Transform the way we think about progress.

Contact Niyi Ladipo at nladipo@mbpce.com or 703-641-9088 Thank You!