From the AACE International 2015 Annual Meeting

1. (EVM-1848)
CIS "Utilization of Earned Value
Management for Monitoring Production
Facilities"
Dmitriy Skorobogatov
Elena Rybina

2. BIO of Elena Rybina
• Degree
Specialist Degree (Developing spacecraft and upper stages)
• University
Bauman Moscow Technical State University (Graduate)
• Years of experience
8 years in professional fields listed below
• Professional fields
Project management, software development, cost control
• Something what you do not know about me
I worked in Siberia in winter
2

3. BIO of Dmitriy Skorobogatov
• Degree
Specialist Degree (Theoretical and Experimental Physics of
Nuclear Reactors)
• University
National Research Nuclear University MEPhI, Moscow (Graduate)
Institute of Control Sciences V.A. Trapeznikov , Moscow (Ph.D-student)
• Years of experience
7 years in professional fields listed below
• Professional fields
Project management, consulting
• Something what you do not know about me
My experience in nuclear science and barmen skills help me
to figure out EVM
3

4. SETTING THE OBJECTIVES
4

5. 5
• This presentation identifies major features, which have
significant impact on using Earned Value Management
in these projects:
The major
features
Technology intensive equipment
Plenty of utility networks
Technology intensive nature of a
schedule
Severe constraints on
commissioning dates

6. 6
• The presentation identifies 3 key points:The key points
Measuring project progress in the context of
contractor data manipulation
Calculating EVM indices in technology
intensive projects where major equipment
represents a substantial part of the project
budget
Forecasting project execution dates and
utilizing EMV indices.

7. APPLYING EVM FOR EQUIPMENT
7

8. 8
• Project progress is mainly
determined by progress of the
complete cycle: design – fabrication
– delivery – installation –
commissioning of equipment
• Delivery of equipment to the stock
does not weigh much in terms of the
project overall progress. Installation
and commissioning activities are
much more important for this
equipment.
• Current situation allows the
Contractor to manipulate with earned
value indices. To demonstrate
greater earned value and project
progress the Contractor will try to
deliver equipment as soon as
possible to ensure higher EVM
indicators

9. 9
Activity Name Activity Type in Primavera Step Weight
Procurement request Milestone 0%
Execution of a vendor contract Task dependent activity 10%
Development of equipment drawings Task dependent activity 25%
Approval of equipment drawings Milestone 0%
Equipment fabrication Task dependent activity 45%
Acceptance of equipment by the Customer
at the fabrication company premises
Milestone 0%
Ex-works shipment Task dependent activity 5%
Delivery to the site Task dependent activity 10%
Equipment is delivered Milestone 0%
Spare part delivery Task dependent activity 2%
Documents delivery Task dependent activity 3%
• Planned cost of equipment is split into two parts: 20% of the overall cost of
equipment
is split into activities on design-fabrication-delivery and 80% - into installation
and commissioning activities.
• Cost of design-fabrication-delivery cycle is distributed through
standard series of steps in accordance with their ‘unit weight

10. 10
Before After
Current situation allows the Contractor
to manipulate with earned value indices.
the Customer incurs financial losses,
wastes time
and does not have objective reporting
data on the project progress execution.
A ‘smooth’ S-curve is generated to reflect
the project overall progress and to
demonstrate progress for the whole cycle:
design – fabrication – delivery – installation
– commissioning.
It is no longer possible to manipulate with
EVM indices by the Contractor .

11. EVALUATION OF PROJECT PROGRESS IN
CONTEXT OF MANIPULATION BY THE
CONTRACTOR
11

12. 12
• The main way of manipulation is early implementation of expensive or simple
activities contrary to the previously agreed schedule and work processes.
• The activities with lowest cost values and significant restrictions on the ultimate
intensity of work performance were deferred to the end
• Project financing is affected on an annual basis and can be adjusted quarterly,
thus earned value for the previous periods is one of the major indices taken into
account when determining the scope of finance for the next year

13. 13
High rate of works performance (SPI>1) in
the first half of the project, and from these
data the Customer expected that the
project would be finished on time or earlier
than the planned date, but then there
happened a dramatic drop in earned value
rates, which did not change significantly
later. Finally, this project was executed
with considerable schedule delays though
the Customer could not foresee that and
timely take administrative measures
(including the decision to replace the
Contractor).
CD FD
EV
PV(t)
0

14. 14
EV ≠0
PV=0
mEV is different from traditional earned value since it takes into account
only earned value, which occurred within the planned dates or later

15. 15
if 𝑃𝑉𝑡 = 0
then: 𝑀𝐸𝑉𝑡 = 0
if 𝑃𝑉𝑡 ≠ 0 𝑖=0
𝑡
𝐸𝑉𝑖 = 0
𝑀𝐸𝑉𝑡 = 𝐸𝑉𝑡
if 𝑃𝑉𝑡 ≠ 0 𝑖=0
𝑡
𝐸𝑉𝑖 ≠ 0
𝑀𝐸𝑉𝑡 = 𝑖=0
𝑡
𝐸𝑉𝑖

16. 16
*However, there is a significant condition of using mEVt index and respective derived
indices. If the activity is critical or near critical (i.e. its positive float is =<5 days) then for
such activities: 𝑀𝐸𝑉𝑡 = 𝐸𝑉𝑡

17. 17
Before (classical EVt) After (mEVt)
CD FD
EV
time
PV(t)
0
mEV(t)
Contractor manipulates with
earned value indices.
The project was executed with
considerable schedule delays though
the Customer could not foresee that and
timely take administrative measures
CD FD
EV
PV(t)
0
Minimize the attempts of
changing the previously approved
processes of activities performance.

18. 18
Optimistic: 𝑆𝑃𝐼 = 𝐸𝑉/𝑃𝑉
𝑃𝑒𝑠𝑠𝑖𝑚𝑖𝑠𝑡𝑖𝑐: 𝑝𝑆𝑃𝐼 = 𝑚𝐸𝑉/𝑃𝑉
𝑅𝑒𝑎𝑙𝑖𝑠𝑡𝑖𝑐: 𝑟𝑆𝑃𝐼 = (𝑆𝑃𝐼 + 𝑝𝑆𝑃𝐼)/2

19. 19
Optimistic forecast, which is based on EV index and demonstrates optimistic
situation on earned value rates at earlier stages of the project execution
Pessimistic forecast, which is based on mEV index and demonstrates pessimistic
situation on earned value rates at earlier stages of the project execution
CD pFD time
cost
PV(t)
0
mEV(t)
EV(t)
eFD

20. 20
• Develop real reporting on the project execution progress. This index takes into
account only the activities performed according to the plan or earlier. This allows
avoiding the situations when the Contractor intentionally tries to perform the most
expensive and quickest activities at earlier stages and deferred activities at later stages
of the project and significantly decrease the earned value rates.
• Minimize the attempts of changing the previously approved processes of
activities performance. If changing the processes of activities performance is a coercive
measure then planned earned value indices shall be repeatedly agreed with the
Customer taking into account a new schedule.
• Motivate the Contractor for real instead of falsified reduction of project
execution dates.

21. FORECASTING ESTIMATE COMPLETION
DATES
21

22. 22
SPI can be calculated at any level of aggregation: both for an individual activity
and for work packages combined on the ground of various analytical attributes.
Moreover, this index can be calculated at any required level of details along the timeline,
provided that the interval to determine this index is not less than the frequency of
gathering EV actuals. The next step is proper extrapolation of this index to the remaining
scope of work.
Calculating SPI for each
Contractor
Calculating SPI for main types
of activities

23. 23
Advantages
• Often a Contractor performs a series of
activities (i.e. various types of activities)
in a project for a long period of time, that
is why to calculate SPI index, a vast
scope of data can be used and forecasts
can be built for a long time ahead (for the
whole remaining scope of work of this
Contractor).
• The calculated SPI index allows
evaluation of a Contractor from the
viewpoint of meeting the construction
dates. Then management decisions are
made with respect to certain Contractors,
even replace the Contractor, if required.
• This technique allows maintaining a
Dictionary of involved Contractors and
their respective SPI indices. This
information can be taken into account for
future projects.
Disadvantages
• In practice, the accuracy of
planning and the degree of meeting
the planned dates mainly depends on
the type of activity and project type, not
on the Contractor.
• If a major Contractor needs to be
selected then this technique means
only averaging SPI index for all project
activities, which negatively affects the
accuracy of forecasting.
• Specialties of Business in Russia and
Commonwealth of Independent States
countries requires that many similar
projects are executed in remote areas.
Moreover, large territory of countries
makes it impossible to mobilize a lot of
the Contractor’s full-time staff and
equipment to the site.

24. 24
Advantages
• In practice, the accuracy of planning and
the degree of meeting the planned dates
mainly depends on the type of activity and
project type, not on the Contractor.
Therefore, use of activity-related SPI index
gives more accuracy during forecasting.
• This technique allows maintaining one in-
house dictionary of activity types and apply
it at all project stages for forecasting real
dates of activities performance, which are
not contractor-related. It can be applied at
the earliest project stages when the
Contractor is not selected yet.
• This technique is efficiently applied when
one major Contractor is involved
Disadvantages
• Many efforts need to be invested to
develop and update one dictionary of
activity types with respective SPI
indices.
• Types of activities in a project are very
tightly localized in one time period,
therefore accuracy of forecasting
decreases, since forecast for a specific
type of activities can be built correctly
only before activities of this type are
completed.
• It is more difficult to make management
decisions with respect to certain
Contractors based on activity-related
SPI indices. Additional reports need to
be generated to evaluate performance
of each Contractor.

25. 25
𝑎𝑆𝑃𝐼 𝑥 =
1
𝑐𝑇
∗
𝑡=1
𝑐𝑇
𝑎𝑆𝑃𝐼 𝑥𝑡
𝑎𝑝𝑆𝑃𝐼 𝑥=
1
𝑐𝑇
∗
𝑡=1
𝑐𝑇
𝑎𝑝𝑆𝑃𝐼 𝑥𝑡
arSPI 𝑥=(aSPI 𝑥+apSPI 𝑥)/2
cT – number of time periods from the start of activities performance to the data date
aSPIxt – contractor-averaged SPI for the ‘t’ time period.
apSPIxt - contractor-averaged pSPI for the ‘t’ time period.
arSPI 𝑥 for each ‘x’ Contractor the schedule performance index, averaged for all reporting
time periods from the project start

26. 26
Software package, which includes Oracle® Primavera P6™“.and PM.BI
solutions, is used to forecast the project execution dates.
Oracle® Primavera P6™“.is used to develop the initial project schedule, to enter the
activities planned dates and cost, to update schedules, and to calculate EVM
traditional indices. Oracle Primavera P6® defines the following parameters for each
activity of the schedule
• Planned dates of performance
• Planned cost of activity
• Contractor for activity
performance
• Type of activity (in accordance
with in-house dictionary of
activity types)
• If project activity is critical or
near critical.
• EV value is determined during the
schedule update for all reporting
time periods from the project
start

27. 27
I𝑚𝑝𝑜𝑟𝑡 𝑑𝑎𝑡𝑎 𝑓𝑟𝑜𝑚 𝑂𝑟𝑎𝑐𝑙𝑒 𝑃𝑟𝑖𝑚𝑎𝑣𝑒𝑟𝑎
𝐶𝑎𝑙𝑐𝑢𝑙𝑎𝑡𝑒 𝒎𝑬𝑽, for all activities and for all time periods to the data
date
arSPIx value for each ‘x’ Contractor
If the Contractor for performance of the future activities is either not
selected yet or selected but no actuals were available to calculate its
arSPI index
𝒂𝒓𝑺𝑷𝑰 =
1
𝑋
∗ 𝑥=1
𝑋
𝑎𝑟𝑆𝑃𝐼 𝑥 , arSPI –arSPIx index averaged for all
Contractors
X – overall quantity of project Contractors, for which actuals are
sufficient to calculate arSPIx index.Import data arSPIx values to Oracle Primavera
Calculate eDix=pDix* arSPIx
eDix – forecasted duration of future ‘i’ activity, performed by ‘x’
Contractor, pDix - planned duration of future ‘i’ activity, performed by
‘x’ Contractor

28. 28
PV (t) – planned earned value curve;
EV (t) – actual earned value curve (optimistic);
mEV (t) – actual modernized earned value curve (pessimistic);
ceEV (t) – forecasted earned value curve for current plan, not taking SPI indices into
account
eEV (t) – forecasted modernized earned value curve, taking into account extrapolation of
arSPIx index to the remaining scope of project work.

29. CONCLUSION
29

30. 30
Planning and monitoring of the whole design-fabrication-delivery
cycle of major equipment. ‘Smoothened’ earned value progress S-
curve, which makes it possible to calculate SPI index broken down
into the time periods.
Use of modified earned value index – mEV. This index provides
the manager an objective picture on project progress, excluding
possible attempts of manipulation with traditional EVM indices by
the Contractor. Moreover, this index calculates realistic SPI index.
Forecasting project execution dates taking into account current
dynamics of project execution. Forecasting is based on calculating
SPI index of performed activities with respect to Contractors or
activity types and further extrapolation of this index to the
remaining scope of work.

31. 31
Project stakeholders receive unbiased information on project
progress.
Contractor is motivated to adhere to the agreed approach of
activities performance and to the agreed plans
Contractor is motivated to gain real reduction of project execution
dates instead of reduction falsified at early project stages.

32. QUESTIONS/COMMENTS?
(PLEASE USE MICROPHONE)
32