Humphreys Project Management Using Earned Value

Project Management
Using
Earned Value
Third Edition
Gary C. Humphreys
Earned Value Management Consulting Training

© 2002, 2011, 2014 Gary C. Humphreys
Humphreys & Associates, Inc.
All rights reserved. No part of this book may be reproduced, distributed, or stored in any form or by any
means without the written permission of the author.
First edition published 2002. Second edition published 2011. Third edition 2014
Printed in the United States of America
ISBN 0-9708614-0-0
Humphreys & Associates, Inc.

9910 Research Drive
Irvine, CA 92618 USA
(714) 685-1730
humphreys@humphreys-assoc.com
www.humphreys-assoc.com
iii
Table of Contents
List of Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxiii
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxv
SECTION 1 EARNED VALUE PROJECT MANAGEMENT AND ORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Chapter 1 Project Management Using Earned Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

What is a Project? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Managing Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
The Performance-Oriented Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Summary Implementation Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Factors Affecting System Implementation Detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Earned Value Management System Recognition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
The Earned Value Management Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
The Process Steps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Chapter 1 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Chapter 2 Definition of Scope, Work Breakdown Structure (WBS) and WBS Dictionary . . . . . . 45
Defining Project Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
The Work Breakdown Structure (WBS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Considerations in Developing a WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
WBS Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
WBS Dictionary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Other Considerations in WBS Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
The Contract Work Breakdown Structure (CWBS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Scope Verification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Case Study 2.1 Work Breakdown Structure Part 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Case Study 2.2 Work Breakdown Structure Part 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Case Study 2.3 WBS Element Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Chapter 3 Managing Project Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Introduction to Managing Project Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
The Process Flow Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Relationship of Risk Management to the Earned Value Management System . . . . . . . . . . 85
Development of Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Quantitative Schedule Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Management Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Variance Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Estimates at Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Case Study 3.1 Using the Risk Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
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Chapter 4 Relating Organizations, Responsibility, and Work Scope . . . . . . . . . . . . . . . . . . . . . . 91

Organizational Structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Responsibility Assignment Matrix (RAM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Control Account Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Chapter 4 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Case Study 4.1 Control Account Definition Part 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Case Study 4.2 Control Account Definition Part 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Chapter 5 Work Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

The Work Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Advantages of Work Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
The Work Team Lead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Case Study 5.1 Organization Chart and Responsibility Assignment Matrix . . . . . . . . . . . 121
Case Study Section 1 Quiz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
SECTION 2 SCHEDULING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133
Chapter 6 What is Scheduling? Schedule Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

Project Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
What is a Schedule and Why Use One? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Data Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Data Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
Using Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Schedule Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Gantt Charts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Milestone Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Bar Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Combination Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Modified Gantt/Milestone Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Flow Process Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Set Back Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Line of Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Network Diagrams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Case Study 6.1 Developing a Personal Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Chapter 7 Introduction to Network Logic Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

Precedence Diagramming Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
Activity Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Representations of Logic in Time-Phased Formats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Case Study 7.1 Constructing a Network Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Chapter 8 Critical Path Method Fundamentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

The Critical Path Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
Critical Path Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
Network Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
Table of Contents v
Free Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174

Directed Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
Critical Path Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
Driving Paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
A Final Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178
Case Study 8.1 A More Complex Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
Case Study 8.2 CPM Network Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
Case Study 8.3 Date, Float and Critical Path Calculation . . . . . . . . . . . . . . . . . . . . . . . . 187
Case Study 8.4 Constructing a Bar Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Case Study 8.5 Path Analysis Using Total Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
Chapter 9 Resource Loading and Leveling the Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195

The Resource Loading Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
Priority Rules and Strategies for Resource Leveling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
Additional Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
Leveled Start and Finish . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
Resource Curves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
Other Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
Case Study 9.1 Resource Leveling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
Chapter 10 Considerations for Developing a Useful, Quality Network Schedule . . . . . . . . . . . . 209

Network Development Techniques: Top-Down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
Network Development Techniques: Bottom-Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
Network Development Techniques: IMP/IMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
Concerns in the Schedule Development Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Using Hammocks, Summary Activities and Grouping for Concise Reporting . . . . . . . . . . 215
Templates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
Lags, Leads and Date Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218
Schedule Visibility Tasks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222
Schedule Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222
Schedule Margin Activity Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222
Lag Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
Gap Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
Baseline Finish Variance Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
Resource Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Schedule Approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Schedule Visibility Versus Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
Determining Detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
Creating and Maintaining Quality Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Fourteen Point Schedule Health Check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Fourteen Point Schedule Health Check – Correlation with GASP . . . . . . . . . . . . . . . . . . 233
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
Chapter 10 Review Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236
Case Study 10.1 Build a Network Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 239
Chapter 11 Schedule Acceleration Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243

The “Crashing” Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
vi Table of Contents
An Example of Network Crashing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245

Other Schedule Acceleration Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
Case Study 11. 1 Crashing the Network or “What If” . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255
Chapter 12 Setting a Traceable Schedule Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257

Schedule Traceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
A Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260
Defining the Schedule Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261
Schedule Baseline Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262
Realism and Schedule Detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264
Timing of Schedule Baseline Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265
Schedule Baseline Revisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266
The Baseline Schedule Versus the Current Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . 267
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267
Case Study 12.1 Vertical and Horizontal Schedule Traceability . . . . . . . . . . . . . . . . . . . 271
Chapter 13 Updating the Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275

Successful Schedule Update Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279
Additional Statusing Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280
Methods for Addressing Out-Of-Sequence Logic Status . . . . . . . . . . . . . . . . . . . . . . . . . 280
Retained Logic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 280
Progress Override . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283
Impact on Total Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 286
Case Study 13.1 Analyzing the Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
Chapter 14 Schedule Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291

Duration Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293
Measuring Schedule Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294
Defining Significant Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294
Recording the Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294
Work-Around Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
Baseline Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296
Case Study 14.1 Analyzing Schedule Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299
Chapter 15 Resolving Negative Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303

Float Analysis at Status Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303
Isolating the Cause of Float Deterioration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 306
Impact of the Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308
Resolution Alternatives for Negative Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 308
Float Analysis by Project Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311
Case Study 15. 1 Resolving Negative Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315
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Chapter 16 Special Networking Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317

Directed Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Secondary Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326
Parallel SS/FF Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328
Level of Effort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329
Calendar Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331
Case Study 16.1 A More Complex Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333
Chapter 17 Schedule Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335

Reasons for Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
Risk Definition and Use of a Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 339
The CPM Approach to Schedule Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340
Probabilistic Approach to Schedule Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 340
Example: Building Foundation Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
Example: CPM Path Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342
Risk Analysis of Path Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342
Cumulative Likelihood Curves (S-Curves) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343
Validity of the CPM Completion Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
Highest Risk Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
Schedule Risk at Path Convergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346
Schedule Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346
Merge Bias at Path Convergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347
Directed Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348
Reducing Durations to Fit the Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348
Fast Track Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348
Late Start Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349
Early Start Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349
Risk Analysis Pitfalls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349
Risk Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350
Schedule Risk Analysis Output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351
Cost Risk Analysis Output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351
Other Scheduling Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351
Risk Assessment Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352
PERT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352
Monte Carlo Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355
Cost Effective Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356
Case Study 17.1 Making Activity Duration Distributions . . . . . . . . . . . . . . . . . . . . . . . . . 359
Case Study 17.2 Combining Distributions Along a Path . . . . . . . . . . . . . . . . . . . . . . . . . 361
Case Study 17.3 Schedule EAC and Path Convergence . . . . . . . . . . . . . . . . . . . . . . . . . 367
Chapter 18 Scheduling in a Performance Measurement Environment . . . . . . . . . . . . . . . . . . . . 373

System Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373
Schedule Traceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373
Reconciliation to Time-Phased Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375
Reconciliation of Progress and Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375
Contract Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376
Special Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379
viii Table of Contents
Case Study 18.1 Schedule Traceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381

SECTION 3 ESTIMATING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .395
Chapter 19 The Estimating Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397

Impact of the Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
Impacts of Poor Estimating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
Prerequisites for Estimate Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400
Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400
Work Breakdown Structure (WBS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401
Templates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401
WBS Dictionary and Code of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402
Estimate Formats/Templates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403
Chapter 20 Types of Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405

Conceptual Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407
Preliminary Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407
Detailed Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408
Definitive Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408
Impact of “Fast Track” Projects on Estimating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409
Chapter 21 Estimate Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411

The Estimating Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411
Estimating Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416
Inputs for Estimate Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416
Sources of Estimate Inputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417
The Use of Defaults in Estimate Preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417
Estimating Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418
Level of Estimate Detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420
Calculation of Indirect Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421
Developing a Cost Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 421
Use of Other Escalation Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424
Estimating Operating and Manufacturing Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425
Software Estimating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 427
Case Study 21.1 Developing an Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429
Case Study 21.2 Estimate Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431
Chapter 22 Learning Curves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435

Unit Learning Curve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437
Cumulative Average Learning Curve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437
The Difference between Unit Linear and Cumulative Average Linear . . . . . . . . . . . . . . . 437
Determining the Learning Curve to Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438
Typical Learning Curve Values . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439
Impacts to Learning Curves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 440
Table of Contents ix
Case Study 22.1 Estimating Cost Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443
Chapter 23 Cost Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445

Risk Model Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445
Risk Analysis Sampling Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447
Probability Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447
Risk Assessment Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448
Risk Assessment Output Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449
Conducting a Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452
Implementation Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453
Chapter 24 Estimate Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455

External Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457
Other Factors in Estimate Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458
Team Reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 458
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 459
Case Study 24. 1 Assessing the Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461
Chapter 25 Tracking the Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463

Estimate Traceability: Tracking the Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 469
Case Study 25.1 Estimate History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 471
Chapter 26 Automating the Estimating Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475

Software Evaluation Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 477
Implementation Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479
SECTION 4 EARNED VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .487
Chapter 27 Earned Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489

The Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491
The Earned Value Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494
The Value of Earned Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 495
Case Study 27.1 The Importance of Earned Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 497
Chapter 28 The Brick Wall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499

The Brick Wall Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499
Earned Value Brick Wall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505
Case Study 28.1 The Brick Wall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507
Chapter 29 Measuring Accomplishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509

Work Packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509
x Table of Contents
Typical Work Packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511

Discrete Effort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511
Milestone Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511
Incremental Milestone Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
50/50 Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 515
0/100 Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516
Units Complete Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516
Equivalent Units Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 518
Percent Complete Technique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520
Apportioned Effort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521
Level of Effort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 522
Other Earned Value Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 523
When is Earned Value Credited? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 523
Other Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524
Case Study 29.1 Control Account Plan Exercise 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 527
Chapter 30 Establishing the Performance Measurement Baseline . . . . . . . . . . . . . . . . . . . . . . . 531

Performance Measurement Baseline Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 531
Rolling Wave Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533
Performance Measurement Baseline Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535
Timing of the Baseline Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537
Work Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 538
Control Account Plan and Baseline Traceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 541
Case Study 30.1 Control Account Plan Exercise 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543
Chapter 31 Collecting Actual Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545

Actual Cost Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545
Data Element Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 547
Accounting Interface with Project Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 548
Cash Flow Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550
Material Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 550
Indirect Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551
Late Reporting of Actual Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553
Accuracy of Reported Actual Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554
Estimated ACWP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 555
Reporting Labor Hours versus Labor Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 556
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557
Chapter 32 Performance Measurement Calculations and Estimates at Completion . . . . . . . . . . 559

Performance Measurement Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559
Developing the Estimate at Completion (EAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562
Performance Indices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 564
Cost Performance Index (CPI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 564
Schedule Performance Index (SPI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565
To Complete Performance Index (TCPI) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565
Independent Estimates at Completion (IEAC) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565
Preparing a Range of Estimates at Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 568
Percent Complete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 568
Estimated Completion Date (ECD) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 568
Table of Contents xi
Average Performance Rate Required to Achieve ECD . . . . . . . . . . . . . . . . . . . . . . . . . . . 569

Combining SPI with CPM Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569
Combining SPI with CPI (Labor Only) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570
Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570
Report Formats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 571
Integrated Program Management Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572
Analyzing Material Cost Variances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572
Analyzing Labor Cost Variances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 573
Earned Value and Cost/Schedule Impact Identification . . . . . . . . . . . . . . . . . . . . . . . . . . 573
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 574
Case Study 32.1 Project Performance Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 577
Case Study 32.2 Control Account Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 583
Chapter 33 Variance Analysis and Corrective Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587

Variance Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587
Variance Thresholds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 588
Variance Analysis Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591
Heading Information/Earned Value Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591
Problem Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592
Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593
Corrective Action Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 593
Estimate at Completion Justification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594
Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594
Case Study 33.1 Calculation of Cost and Schedule Variances . . . . . . . . . . . . . . . . . . . . 597
Chapter 34 Baseline Revisions and Change Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 599

Change Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 599
Types and Causes of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 599
Elements of a Change Control Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
How to Control Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601
Change Control and the Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602
Baseline Changes at the Control Account Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603
Incorporating Changes into the PMB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604
Detailed Tracking of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 605
Authorized Unpriced Work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607
Internal Replanning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
Stop Work Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
Rubber Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610
Case Study 34.1 Contract Budget Base Log . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613
Chapter 35 Subcontract Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619

Definition of Subcontracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619
Subcontract Flowdown Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 620
Subcontract Requests for Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621
Subcontract Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622
Subcontractor Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623
Integrating the Subcontractor WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623
Integrating the Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 624
xii Table of Contents
Post Award Baseline Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625

Establishing the Schedule Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625
Establishing the Budget Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625
Prime Contractor Considerations for Subcontracts without EVMSG Requirements . . . . . 628
Cost Reimbursable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 628
Firm Fixed Price (FFP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629
Time and Materials (T&M) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629
Technical Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629
Additional Considerations When Planning Subcontract Budgets . . . . . . . . . . . . . . . . . . . 630
Factoring Subcontract Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 630
Special Organizational Situations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 631
Inter-Divisional Work Authorization (IDWA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 631
Badgeless Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 631
Revisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633
Directed Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633
Internal Replanning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 634
Formal Reprogramming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635
Subcontract Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 636
Subcontract EVMS Reviews and Surveillance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 636
EVMS Guideline Compliance with Validation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 636
EVMS Guideline Compliance without Validation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 637
EV Reporting without EVMS Guideline Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . 637
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 638
SECTION 5 IMPLEMENTATION OF THE PROJECT MANAGEMENT PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .651
Chapter 36 Implementation of the Project Management Process . . . . . . . . . . . . . . . . . . . . . . . . . 653

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 653
System Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 654
System Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 656
The Creation of Storyboards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 658
Identification of Areas Needing Improvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 660
Hardware and Software Selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 660
Development of Procedures and Training Material . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 660
System Start-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 661
Changes to System Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 661
Routine Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 661
Implementation Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 661
Tailoring the System for Project Unique Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . 662
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 663
SECTION 6 CONCLUSION, SOLUTIONS, AND REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .667
Solutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 669
Earned Value Analysis Formulas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 729
Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 733
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 737
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 753
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 755
About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 763
xiii
List of Figures
Chapter 1 Project Management Using Earned Value
Figure 1-1 Shocking Surprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Figure 1-2 Budget Plan vs. Actual Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Figure 1-3 Overrun or Ahead of Schedule? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Figure 1-4 Underrun or Behind Schedule? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Figure 1-5 Significant Overrun or Accelerated Schedule? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Figure 1-6 A Performance Oriented Approach Provides Better Visibility . . . . . . . . . . . . . . . . . . . . 36
Figure 1-7 Cost and Schedule Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Figure 1-8 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Chapter 2 Definition of Scope, Work Breakdown Structure (WBS) and WBS Dictionary
Figure 2-2 600 Megawatt WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Figure 2-3 Boiler Plant Equipment WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Figure 2-4 Coal Handling System WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Figure 2-5 Storage and Preparation WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Figure 2-6 Sewer Treatment Plant WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Figure 2-7 Floor Covering WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Figure 2-8 Consulting WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Figure 2-9 DOE Project Summary WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Figure 2-10 Sample Project WBS Software Development Project . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Figure 2-11 Sample Project WBS Software Development Project details . . . . . . . . . . . . . . . . . . . . 52
Figure 2-12 Sample Project WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Figure 2-13 CWBS Dictionary and Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Figure 2-14 Element of Cost Orientation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Figure 2-15 Phase Orientation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Figure 2-16 Engineering/Design WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Figure 2-17 Engineering/Design WBS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Figure 2-18 Product - User Mapping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Chapter 3 Managing Project Risks

Figure 3-2 Managing Project Risks: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Figure 3-3 Sample Risk Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Figure 3-4 Widget Project Risk Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Chapter 4 Relating Organizations, Responsibility, and Work Scope

Figure 4-2 Functional Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Figure 4-3 Project Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Figure 4-4 Weak Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Figure 4-5 Strong Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Figure 4-6 Balanced Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Figure 4-7 Composite Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Figure 4-8 Responsibility Assignment Matrix (RAM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Figure 4-9 Responsibility Assignment Matrix and Control Account Structure . . . . . . . . . . . . . . . . 97
Figure 4-10 Control Account Example 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
xiv List of Figures
Chapter 5 Work Teams

Figure 5-1 Earned Value Project Management: The Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Figure 5-2 Typical Responsibility Matrix - Functional Alignment . . . . . . . . . . . . . . . . . . . . . . . . . 115
Figure 5-3 Potential Work Team Alignment - 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Figure 5-6 Work Team Application - Example 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Chapter 6 What is Scheduling? Schedule Types

Figure 6-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
Figure 6-3 Gantt Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Figure 6-4 Milestone Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Figure 6-5 Bar Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Figure 6-6 Combination Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Figure 6-7 Modified Bar/Milestone Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Figure 6-8 Process Flowchart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Figure 6-9 Set Back Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
Figure 6-10 Line of Balance Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Figure 6-11 Network Diagrams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Chapter 7 Introduction to Network Logic Development

Figure 7-3 PDM Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Figure 7-4 Finish to Start . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Figure 7-5 Finish to Finish . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Figure 7-6 Start to Start . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Figure 7-7 Start to Finish . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Figure 7-8 Time-Phased Diagrams - Variable Box Length . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Figure 7-9 Time Phased Bar Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Chapter 8 Critical Path Method Fundamentals

Figure 8-3 Critical Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
Figure 8-4 Standard Notation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170
Figure 8-5 Forward Pass (Activity Early Dates) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Figure 8-6 Forward Pass (Activity Relationship Early Dates) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Figure 8-7 Forward Pass (Early Dates - Converging Paths) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Figure 8-8 Forward Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Figure 8-9 Backward Pass (Activity Late Dates) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
Figure 8-10 Backward Pass (Activity Relationship Late Dates) . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
Figure 8-11 Backward Pass (Late Dates - Converging Paths) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
Figure 8-12 Backward Pass . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173
Figure 8-13 Early, Late Dates and Total Float - the Critical Path . . . . . . . . . . . . . . . . . . . . . . . . . . 173
Figure 8-14 Free Float Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
Figure 8-15 Total and Free Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175
Figure 8-16 Impact of Directed Finish Date - Negative Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176
Figure 8-17 Impact of Directed Finish Date - Positive Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
Chapter 9 Resource Loading and Leveling the Schedule

List of Figures xv

Figure 9-3 Resource Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
Figure 9-4 Skyline Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
Figure 9-5 Time and/or Resource Constraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
Figure 9-6 Resource Boundaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
Figure 9-7 Resource Boundaries - Time and Resource Floats . . . . . . . . . . . . . . . . . . . . . . . . . . 201
Figure 9-8 Resource Boundaries - Less and More Critical Curves . . . . . . . . . . . . . . . . . . . . . . . 202
Chapter 10 Considerations for Developing a Useful, Quality Network Schedule

Figure 10-3 Top Level Schedule - Contractual Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
Figure 10-4 “Unit A” Top Level Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
Figure 10-5 “Unit A” Widgets 1 and 2 Engineering Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
Figure 10-6 “Unit A” Widget 1 Engineering Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212
Figure 10-7 Integrated Master Plan for the Widget Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 213
Figure 10-8 Coding Relationship Between WBS, IMP, IMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Figure 10-9 Hammock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Figure 10-10 Summaries Using Code Fields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Figure 10-11 Grouping Facility Showing Total Float by CAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
Figure 10-12 Templates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
Figure 10-13 Legend for the Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Figure 10-14 Finish to Start with Lag . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Figure 10-15 Start to Start with Lag . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Figure 10-16 Finish to Finish with Lag . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219
Figure 10-17 Parallel Start to Start and Finish to Finish Relationships with Lags . . . . . . . . . . . . . . 220
Figure 10-18 CPM Calculations - Start to Start Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
Figure 10-19 CPM Calculations - Finish to Finish Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
Figure 10-20 CPM Calculations - Activity B Date Possibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
Figure 10-21 CPM Calculations - Activity B Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
Figure 10-22 CPM Calculations - Effective Duration for Activity B . . . . . . . . . . . . . . . . . . . . . . . . . . 221
Figure 10-23 Schedule Margin Using Buffer Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
Figure 10-24 Qualitative Selection Criteria for Schedule Detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . 226
Figure 10-25 Missing Logic - Goal: 5% or Less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Figure 10-26 Leads - Goal: 0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228
Figure 10-27 Lags - Goal: 5% or Less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
Figure 10-28 Relationship Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
Figure 10-29 Hard Constraints - Goal: 5% or Less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230
Figure 10-30 High Total Float of 44 Working Days or More - Goal: 5% or less . . . . . . . . . . . . . . . 230
Figure 10-31 Negative Float - Goal: 5% or Less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230
Figure 10-32 Durations Greater than 44 Working Days - Goal: 5% or less . . . . . . . . . . . . . . . . . . 231
Figure 10-33 Invalid Dates - Goal: 0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231
Figure 10-34 Missing Resources on Activities with Durations of 1 Day or More - Goal: 0% . . . . . . 231
Figure 10-35 Missed Activities - Goal: < 5% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232
Figure 10-36 Critical Path Test, Before and After . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232
Figure 10-37 CPLI Graphic Highlighting the .95 Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
Figure 10-38 Baseline Execution Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
Figure 10-39 Health Check/GASP Correlation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
Chapter 11 Schedule Acceleration Techniques

Figure 11-3 Activity “Crashing” Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
Figure 11-4 “Crashing” a Network - An Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
Figure 11-5 Step 1 and Step 2 - “6 Weeks” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
xvi List of Figures
Figure 11-6 Step 3 - Identify Crash Time and Crash Costs for Each Activity . . . . . . . . . . . . . . . . . 247
Figure 11-7 Cost of Crashing Activity “A” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
Figure 11-8 Step 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
Figure 11-9 Step 5 and Step 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
Figure 11-10 Step 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
Figure 11-11 Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
Figure 11-12 9 Weeks Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
Figure 11-14 7 Weeks Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251
Figure 11-16 Project Cost vs. Time Relationship - The Tradeoff Curve . . . . . . . . . . . . . . . . . . . . . . 252
Chapter 12 Setting a Traceable Schedule Baseline

Figure 12-3 Horizontal Traceability Between Same Level of Detail . . . . . . . . . . . . . . . . . . . . . . . . 259
Figure 12-4 Vertical Traceability Between Different Levels of Detail . . . . . . . . . . . . . . . . . . . . . . . 259
Figure 12-5 Milestones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260
Figure 12-6 Vertical Traceability Coding Schema . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261
Figure 12-7 Baseline Change Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262
Chapter 13 Updating the Schedule

Figure 13-3 Calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277
Figure 13-4 Impact of Status on Duration and Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279
Figure 13-5 PDM Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281
Figure 13-6 Schedule Bar Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281
Figure 13-7 Out-of-Sequence Progress - Retained Logic Option (PDM Network) . . . . . . . . . . . . . 282
Figure 13-8 Out-of-Sequence Progress - Retained Logic Option (Bar Chart) . . . . . . . . . . . . . . . . 282
Figure 13-9 Out-of-Sequence Progress - Progress Override Option (PDM Network) . . . . . . . . . . 283
Figure 13-10 Out of Sequence Progress - Progress Override Option (Bar Chart) . . . . . . . . . . . . . . 284
Figure 13-11 Impact on Total Float - Sample Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
Figure 13-12 Impact on Total Float - Retain Logic Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
Figure 13-13 Impact on Total Float - Progress Override Option . . . . . . . . . . . . . . . . . . . . . . . . . . . 286
Chapter 14 Schedule Changes

Chapter 15 Resolving Negative Float

Figure 15-3 Trend in Float by Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
Figure 15-4 Baseline vs. Current - Date and Duration Variances . . . . . . . . . . . . . . . . . . . . . . . . . 306
Figure 15-5 Resolution Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309
Figure 15-6 Analysis - Most Critical Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310
Figure 15-7 Analysis - Number of Critical Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 311
Figure 15-8 Analysis - Number of Activities On or Behind Schedule . . . . . . . . . . . . . . . . . . . . . . . 311
Chapter 16 Special Networking Considerations

Figure 16-3 Start Not Earlier Than Constraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320
Figure 16-4 Delayed Activity Using a Milestone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320
List of Figures xvii
Figure 16-5 Start Not Earlier Than Constraint Bypassed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320

Figure 16-6 Delay Using a Schedule Visibility Task . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 320
Figure 16-7 Small Project Bar Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321
Figure 16-8 Start Not Earlier Than Constraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322
Figure 16-9 Finish Not Later Than Constraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322
Figure 16-10 Must Start On Constraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323
Figure 16-11 Must Finish On Constraint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 323
Figure 16-12 Finish Date Constrained Network - Imposed Date Earlier Than Calculated Date . . . 324
Figure 16-13 Constraint Date Spectrum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325
Figure 16-14 Sample Network - Total Float Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 326
Figure 16-15 Comparing Total and Secondary Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327
Figure 16-16 Total Float vs. Secondary Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327
Figure 16-17 Parallel, SS/FF Relationships 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 328
Figure 16-21 LOE Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330
Figure 16-22 Alternate LOE Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330
Chapter 17 Schedule Risk Assessment

Figure 17-3 Risk Assessment with CPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337
Figure 17-4 Risk Assessment with CPM Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337
Figure 17-5 Risk Analysis of the Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338
Figure 17-6 Building Foundation Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
Figure 17-7 Most Likely and Average Durations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
Figure 17-8 Low and High Possible Durations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342
Figure 17-9 Risk Analysis of Path Duration Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343
Figure 17-10 Constructing the S-Curve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344
Figure 17-11 Likelihood of Slippages and Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 344
Figure 17-12 Cumulative Distribution for Path A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
Figure 17-13 Validity of CPM Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
Figure 17-14 Identifying the Highest Risk Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346
Figure 17-15 Identify the Highest Risk Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346
Figure 17-16 Merge Bias at Convergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347
Figure 17-17 Direct Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348
Figure 17-18 Reducing Durations to Fit the Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 348
Figure 17-19 Two Path Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349
Figure 17-20 Late Starts on Path B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349
Figure 17-21 Early Starts on Path B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349
Figure 17-22 Schedule Risk Histogram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352
Figure 17-23 Cost Risk Histogram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352
Figure 17-24 Standard Deviation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353
Figure 17-25 Six Activity Network Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 354
Figure 17-26 PERT Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 354
Figure 17-27 Distribution Curve for Path U-V-X-Z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355
Figure 17-28 Distribution Curve for Path U-W-Y-Z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355
Chapter 18 Scheduling in a Performance Measurement Environment

Figure 18-3 Schedule Integration - Schedules Must Tier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377
Figure 18-4 WBS Levels vs. Schedule Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377
xviii List of Figures
Chapter 19 The Estimating Process

Figure 19-2 Estimating Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398
Figure 19-3 Levels of Estimate Detail 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403
Figure 19-4 Levels of Estimate Detail 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403
Chapter 20 Types of Estimates

Figure 20-3 Types of Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409
Chapter 21 Estimate Development

Figure 21-3 The Estimating Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413
Figure 21-4 Inputs for Estimate Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 416
Figure 21-5 Estimate Outputs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417
Figure 21-6 Estimate Development Example 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 418
Figure 21-10 Level of Detail Summarization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 420
Chapter 22 Learning Curves

Figure 22-3 Learning Curve - Normal Coordinates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437
Figure 22-4 Learning Curve - Log-Log Coordinates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437
Figure 22-5 Learning Curve Showing End of Production Inefficiencies . . . . . . . . . . . . . . . . . . . . . 440
Chapter 23 Cost Risk Assessment

Figure 23-3 Normal Probability Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448
Figure 23-4 Uniform Probability Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448
Figure 23-5 Triangular Probability Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448
Figure 23-6 Actual Risk Simulation Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448
Figure 23-7 Cumulative Probability Curve 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449
Figure 23-8 Increased Iterations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449
Figure 23-9 Right Skewed Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450
Figure 23-10 Kurtosis Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450
Figure 23-11 Other Considerations Example 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451
Chapter 24 Estimate Review

Chapter 25 Tracking the Estimate

Figure 25-3 Estimate Traceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466
Figure 25-4 Estimate History Form ($ x 1000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466
List of Figures xix
Chapter 26 Automating the Estimating Function

Chapter 27 Earned Value

Figure 27-2 Budget Plan vs. Actuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491
Figure 27-3 Overrun or Ahead of Schedule? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491
Figure 27-4 Planned Accomplishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 492
Figure 27-5 Earned Value of a Task . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 492
Figure 27-6 Planned vs. Actual Accomplishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 492
Figure 27-7 What’s Been Accomplished? What did it Cost? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493
Figure 27-8 Earned Value is a Good Approximation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493
Figure 27-9 Cost Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493
Figure 27-10 Schedule Variance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493
Figure 27-11 Cost and Schedule Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 494
Chapter 28 The Brick Wall

Figure 28-1 Budget vs. Actuals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499
Figure 28-2 Four Days of Bricking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Figure 28-3 Budget vs. Actual Day Five . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Figure 28-4 Planning Using Earned Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501
Figure 28-5 Detailed Planning for Day One Using Earned Value . . . . . . . . . . . . . . . . . . . . . . . . . 501
Figure 28-6 Earned Value after Day One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502
Figure 28-7 Earned Value Status Day One . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502
Figure 28-8 Earned Value Status Day Two . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
Figure 28-9 Earned Value Status Day Three . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
Figure 28-10 Earned Value Status Day Four . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
Figure 28-11 Earned Value Status Day Five . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
Figure 28-12 Earned Value Graphics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
Chapter 29 Measuring Accomplishment

Figure 29-2 Incremental Milestone - Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Figure 29-3 Incremental Milestone - Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Figure 29-4 50% / 50% - Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 515
Figure 29-5 50% / 50% - Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 515
Figure 29-6 0% / 100% - Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516
Figure 29-7 0% / 100% - Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516
Figure 29-8 Units Complete - Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 517
Figure 29-9 Units Complete - Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 517
Figure 29-10 Percent Complete - Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520
Figure 29-11 Percent Complete - Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520
Figure 29-12 Apportioned Effort - Planning and Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 522
Figure 29-13 Level of Effort (LOE) - Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 522
Figure 29-14 Level of Effort (LOE) - Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 522
Chapter 30 Establishing the Performance Measurement Baseline

Figure 30-2 Performance Measurement Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533
Figure 30-3 Rolling Wave Example 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 534
Figure 30-4 Rolling Wave Example 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 534
Figure 30-5 Reporting Structure Data Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 535
Figure 30-6 Total Project Cost Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536
Figure 30-7 Elements of the Base and the Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536
xx List of Figures
Figure 30-8 Management Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536

Figure 30-9 Budget Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 537
Figure 30-10 Work Authorization Document . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539
Chapter 31 Collecting Actual Cost

Figure 31-2 Cost Element Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 546
Figure 31-3 Data Source Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 547
Figure 31-4 Accounting Subsystem Interfaces with Project Management . . . . . . . . . . . . . . . . . . . 548
Figure 31-5 Material Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551
Figure 31-6 Material Measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 551
Figure 31-7 Matrix of Indirect Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 552
Figure 31-8 Indirect Analysis - An Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553
Chapter 32 Performance Measurement Calculations and Estimates at Completion

Figure 32-2 Mixing Variances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 561
Figure 32-3 Graphical Schedule Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 561
Figure 32-4 Trend Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562
Figure 32-5 Trend Analysis with Percentage Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562
Figure 32-6 Estimate at Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563
Figure 32-7 “To Complete” Performance Index (TCPI)EAC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565
Figure 32-8 Performance Indices Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 565
Figure 32-9 Range of Estimates at Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 568
Figure 32-10 Performance Measurement Data Concern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569
Figure 32-11 Combining SPI and TF Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569
Figure 32-12 Combining SPI and CPI (Labor Accounts) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570
Figure 32-13 Performance Report - Work Breakdown Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . 571
Figure 32-14 Performance Report - Project Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 571
Figure 32-15 Material Variance Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 573
Figure 32-16 Labor Cost Variance Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 574
Figure 32-17 Cost and Schedule Impacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 574
Chapter 33 Variance Analysis and Corrective Action

Figure 33-2 Data Traceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 589
Figure 33-3 Variance Analysis Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 592
Figure 33-4 Corrective Action Log . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 594
Chapter 34 Baseline Revisions and Change Control

Figure 34-2 Change Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603
Figure 34-3 Effect of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603
Figure 34-4 Control Account 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603
Figure 34-5 Control Account 1 Closeout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604
Figure 34-6 Control Account 1A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 604
Figure 34-7 Contract Budget Base Log . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 605
Figure 34-8 Baseline Change Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607
Figure 34-9 Internal Replanning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
Figure 34-10 Rubber Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 610
Chapter 35 Subcontract Management

Figure 35-2 Subcontract Risk Factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621
Figure 35-3 Relationship of Risk to Contract Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 621
xxi
Figure 35-4 Subcontract EVM System and Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . 622

Figure 35-5 Prime Contract/Subcontract Integration (1 of 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 624
Figure 35-6 Prime Contract/Subcontract Integration (2 of 2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 624
Figure 35-7 Planning the Definitized Subcontract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 626
Figure 35-8 BCWS Time Phasing for Prime Control Accounts (1 of 2) . . . . . . . . . . . . . . . . . . . . . 626
Figure 35-9 BCWS Time Phasing for Prime Control Accounts (2 of 2) . . . . . . . . . . . . . . . . . . . . . 626
Figure 35-10 Allocation Example . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 627
Figure 35-11 The Subcontractor’s MR and UB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 627
Figure 35-12 Prime Contractor Establishes BCWS Based on Subcontractor Submittals . . . . . . . . 628
Figure 35-13 Factoring Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 630
Figure 35-14 Badgeless Organization RAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 632
Figure 35-15 Class I Change Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633
Figure 35-16 Class II Change Cycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 634
Figure 35-17 Over Target Baseline and Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 635
Chapter 36 Implementation of the Project Management Process

Figure 36-2 Implementation of the Project Management System . . . . . . . . . . . . . . . . . . . . . . . . . 655
Figure 36-3 Baseline Schedule Development Flowchart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 656
Figure 36-4 Performance Measurement Flowchart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 659
Figure 36-5 Implementation Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 662
xxii List of Figures
xxiii
Preface
This book is about project management. It is not about all aspects of project management but it
includes some of the most important aspects. This book is about how the planning, control, and man-
agement of projects can be improved through the use of the concept called Earned Value.
This book is intended for anyone who desires to know more about project planning and control and
how to improve these processes through the use of Earned Value. Intended readers include project
and program managers, project control personnel, project technical personnel, procurement activity
personnel and the stakeholders and owners of projects. While it is intended for a wide range of read-
ers, each is assumed to have a basic familiarity with the requirements and the disciplines of project
management. Readers new to this arena would be well advised to supplement this reading with a
basic but general work on Project Management.
The material in this book has been drawn from the collective experiences of the author and many of the
professional personnel of Humphreys & Associates, Inc., consultants in project and program manage-
ment for over forty years. This material has been presented in seminars, workshops and successfully
used assisting our clients in the United States and around the world. While introductory theory is
explained, time tested samples are provided. Samples are presented from specific industries. Please
do not conclude that a sample does not apply to those of you in the construction, software, or other
industries.
To facilitate the learning experience, the topics covered are linked together in a process flowchart.
This flowchart is displayed at the beginning of each chapter and the elements of the flowchart
addressed in that chapter are highlighted. In addition, the chapters have been grouped into Sections.
Each Section represents a major activity in the planning and control process, Organization, Schedul-
ing, Estimating, and Earned Value. These are supplemented by a Section on Implementation (of proj-
ect planning and control) and by a Conclusion and an Appendix.
To further aid the reader, a series of questions about chapter content are found at the conclusion of
each chapter. The answers are provided in the Appendix. In addition, at the end of each Section there
is a Section Quiz. Again the answers are provided in the Appendix. Finally, the majority of chapters
contain one or more Case Studies. These are practical exercises that have been drawn from our con-
sulting experiences and presented in Humphreys & Associates, Inc. seminars and workshops. The
Case Studies have been found to reinforce the participant’s learning. Suggested solutions to these
Case Studies can be found on our website at: www.humphreys-assoc.com.
xxiv Preface
31
Chapter
PROJECT MANAGEMENT USING EARNED VALUE

Objectives of this Chapter:
1. Define “project” and project management.
2. Describe the performance-oriented approach using an Earned Value Management System and
explain why it is superior to actual versus budget comparisons.
3. Discuss factors affecting the appropriate level of detail for Earned Value implementation.
4. Introduce the process flowchart for the Earned Value Project Management process.
What is a Project? cient information flow for office communication, or

managing a home improvement.
Before delving into the intricacies of the Earned
The Project Management Institute (PMI) defines
Value Management process, projects and Earned
a project as:
Value Management need to be defined first. A
project consists of a defined objective to develop A project is a temporary endeavor under-
or produce a new product, capability, or to taken to create a unique product, service,
expand capacity within a specified time frame or result. The temporary nature of proj-
and budget. Examples of projects include large ects indicates a definite beginning and
capital-intensive efforts such as highway con- end. The end is reached when the proj-
struction, new commercial buildings, power ect’s objectives have been achieved or
plants and petrochemical plants, water treatment when the project is terminated because its
plants, flood control, dams, bridges, hospitals, objectives will not or cannot be met, or the
schools, prisons, and churches. These are the need for the project no longer exists.1
obvious, highly visible projects.
A well conceived project could also be character-
They are not the only types of projects as new ized as any endeavor that has a well-defined
product development is also a project. A new scope of work and optimistic yet achievable
automobile, engine, or communication satellite is schedule and cost objectives.
a project. Other projects include research and
development, definition of new information sys- The words “project” and “program” are some-
tems, design and installation of communication times used interchangeably in industry, resulting
systems, creation of new software programs, and in some confusion. A program is made up of indi-
computer hardware advances. vidual projects to be accomplished. For example,
the inertial guidance system for an aircraft may
Projects are so widespread that it is difficult to get be a separate project on a program. Because
through the day without being involved in some
way with a project, whether it is sitting in traffic 1. Project Management Institute. A Guide to the
while road work continues, finding a more effi- Project Management Body of Knowledge (PMBOK),
Fifth Edition. Newtown Square, PA: Project
Management Institute, 2013, 3.
32 Section 1 Earned Value Project Management and Organization
projects and programs share the same character- project. To achieve these, a separate “project
istics they can be treated in a similar manner. For team” is typically assembled for accomplishing
that reason, throughout this text, the term “proj- the project’s scope of work. This team is orga-
ect” will be used generically to refer to both proj- nized using individuals from various disciplines
ects and programs. such as accounting, purchasing, engineering,
manufacturing, testing, operations, finance, con-
Now that project has been defined, what is
tracts, construction, project controls, and may
Earned Value Management? It is the process of
also include subcontractors. Some people pro-
defining and controlling the project so that
vide part time support to a project. These might
defined objectives are met. The controlling
include any of those mentioned above and others
aspect includes scope control, schedule control,
such as the legal department, record retention,
and budget control. It also includes the process
financial services, and executive management.
of identifying and minimizing risk. There are
many aspects involved in Earned Value Manage- The job of managing all of these organizations
ment, including development of the Earned Value and people is typically assigned to a full time
Management System. An Earned Value Man- senior individual who is designated as the project
agement System is a set of processes and tools manager. A project manager should meet sev-
used to facilitate the management of a project. eral specific qualifications: many years of experi-
ence in the type of project being managed to be
technically qualified; a degree to be academically
Managing Projects qualified; and stamina to be physically qualified.
Many projects result in highly successful comple- In addition, project managers must have good
tions. Successful projects contain many common processes and tools to effectively manage the
characteristics: they were well defined and orga- people and the project.
nized, had a closely monitored work scope, had The project manager must orchestrate the entire
optimistic yet achievable schedule and budget project to achieve the technical, schedule, and
from the time of initiation, and were closely moni- cost objectives. If a project is an internal
tored and managed. Many projects have been endeavor, then a project manager’s role is to
successful for another reason: they benefited manage the internal departmental interfaces and
from mistakes on other projects. The primary contractors, and possibly other owners and cus-
factor observed on successfully managed proj- tomers, in addition to all of the internal staff.
ects is managing performance. The common
thread throughout all of the topics in this textbook Unlike normal functional organizations, a project
is exactly that. has a specific duration. Even as a project is initi-
ated, its purpose is to accomplish defined objec-
The approaches and techniques that will be dis- tives and disband. A project team’s job is to
cussed have a performance measurement orien- quickly accomplish the technical scope of work,
tation, because the better something can be resource as efficiently as possible, and then
measured, the better it can be managed. move on to the next project. The project man-
In a performance measurement system, cost and ager’s job is, therefore, inherently complex and
schedule targets are assigned to each activity challenging. Besides the interfaces that must be
planned in a project and to the project itself; prog- managed on a daily basis, he or she must often
ress (performance) is measured against these be a motivational expert since the many players
targets. Deviations from the activity targets and involved may have different goals. For many rea-
the causes of the deviations are identified and sons, a project manager has a great need for
action is taken to minimize adverse conse- accurate status information. Only with reliable
quences to the project. indication of project status can concerns be sur-
faced early enough to allow corrective action,
Projects require expertise from many disci- preventing potential concerns from becoming real
plines. Close coordination and communication concerns that adversely impact technical, sched-
are essential parts of successful execution of a ule, and cost objectives.
Chapter 1 Project Management Using Earned Value 33
Examples used throughout this text are extracted The human aspects of Earned Value Manage-
from actual experiences. Frequently it is easier ment must not be forgotten either. As mentioned
to illustrate a concept by showing what can or will before, the project manager needs to be a moti-
happen if certain fundamentals are ignored than vational expert. The project manager also needs
what happens if they are followed. If the princi- a strong supporting staff. No single person can
ples in this text are followed, there is a good prob- successfully perform all of the work involved in a
ability of executing a well-managed project. If major project. He or she must rely on the support
they are ignored, unpleasant, career-limiting, of many others. This makes the project a team
unsuccessful experiences can occur. effort. Even the best systems will be less effec-
tive in the hands of individuals who do not coop-
Depending on project risk, project duration, and
erate with each other and do not work towards a
cost, (technical, schedule, and cost), certain
common goal. An underlying assumption is that
aspects may be implemented less stringently.
effective management tools will facilitate better
The principles do not change. It is still necessary
management of a project and minimize the confu-
to define the scope of work, have a plan for
sion that results from a project that is not well
accomplishing the work, and to manage the plan.
defined and planned.
However, the level of detail of the implementation
can vary. Unsuccessful applications of these
principles have also happened when organiza- Background
tions went overboard on the level of detail of
implementation. If common sense is forgotten, it In the past few decades, many large projects in
is possible to create a management system that numerous industries experienced significant
requires so much effort that it requires an exten- schedule delays and cost overruns. Nuclear
sive staff just to provide the production and distri- power projects stretched for years beyond their
bution of data. The cost of the management original schedule and more than tripled in cost.
system is then not worth the additional insight Software development projects in most compa-
received regarding project status. nies required so much lead-time that the intended
users had to find alternative ways of accomplish-
The Earned Value Management tools that are ing their goals. In other cases, competitors beat
recommended in this book have been effectively software development firms to the marketplace
used to improve management on a multitude of and millions of dollars were wasted. Water treat-
projects. By selectively employing tools, the ment and sewer treatment plants soared in cost,
practitioner will improve management on current with immediate impact on the consumer’s water
and future projects and thus, the prospects for bill. Research and development projects and mil-
project success. itary projects were cancelled because of continu-
There are several other topics related to Earned ally escalating schedule and cost projections.
Value Management that are not directly cov- The U.S. auto industry suffered from a perceived
ered. These include contract administration, proj- lack of quality and unit prices increased. Many of
ect administration, and material and subcontract these cases became highly visible to a large
management. These are, however, incorporated number of people.
within the discussions of related subjects gener- For the project managers, the owners, and cus-
ally performed by these functions. tomers of these projects, this was not the objec-
The contract type has an impact on the extent of tive envisioned in the project plan. How did this
Earned Value Management implementation, but happen?
all of the basic information is still necessary to Causes were both internal and external. Scope
ascertain project status regardless of the con- changes occurred without being recognized and
tracting arrangement. Experience shows that too incorporated into a revised plan for accomplish-
much attention is placed on the type of contract ing the work. Customer needs changed, some-
rather than incorporating all of the information, times because of a delay in finishing a product,
but at a different level of detail. thus resulting in obsolescence. Delays in mate-
rial delivery occurred without properly reflecting mize its impact. The result was shocking sur-
the impact to other work activities. Regulations prises.
changed, frequently affecting the time needed to
This scenario occurred often enough that there
acquire permits or authority to proceed. Lack of
was a heightened awareness of the technical,
coordination between contributing groups meant
schedule and cost risk associated with projects.
delays because of missing information, design or
Because of this risk, many organizations reacted
otherwise. When these and other disruptions
by creating better management systems. These
occurred, resulting schedule slippage had large
systems provided the capability of integrating all
cost impacts because of high rates of escala-
of the available data into a cohesive form so that
tion. Every delay was penalized with a significant
better visibility would result. One of the greatest
negative economic consequence.
challenges for these systems was timeliness. If
Typically a domino effect is observed. First, a information were not available until after the fact,
technical problem occurs. This is followed by a all that would be accomplished from its use was a
negative schedule variance and ultimately a neg- well documented history of what went wrong
ative cost variance. Sometimes the dominos fall rather than an effective tool for management
very fast, but problems could evolve over during the life of the project. This improved visi-
months. bility must allow for earlier identification of trends
so that situations like the one pictured in Figure
Regardless of the source of difficulty, the underly-
1-1 can be prevented.
ing problem was that impacts were not recog-
nized quickly enough when conditions changed. Most projects develop a time phased plan to
In some cases, project managers were ignoring accomplish the work. This resembles an S-curve
variances from the plan and failing to take action shape. In the early stages, staffing and progress
because they did not believe the variances were may be slow. In the middle part of the curve, both
real. In others, they were not informed well staffing and progress should be at their peak. At
enough about the variances. The situation was the end of the curve, progress slows while actual
much like that shown in Figure 1-1. staffing may still be at peak or near-peak levels.
The implications are obvious: identify and
address the problems earlier in the project life
and there is a much greater chance of avoiding
schedule slips and large cost overruns. Early in
the project, it takes very few additional resources
%XGJHW to accelerate and resolve variant conditions. At
%DVHOLQH the peak of the project activity, it takes enormous
(VWLPDWH$W resources just to stay even with the progress
&RPSOHWLRQ($& curve, making catch-up very difficult. Even
worse, at the end of a project, even great cost
expenditures may do little to accelerate technical
and schedule progress. Improved early visibility
7,0(
is a primary objective of any project management
Figure 1-1 Shocking Surprises system.
In Figure 1-1, the Estimate at Completion (EAC) The Performance-Oriented

is below budget throughout most of the life of the
project. While challenges were faced daily in the
Approach
management process, there was no way to quan- Every company has some sort of tracking system
titatively assess the impact in a timely manner. to indicate how it is performing. Unfortunately, in
By the time a schedule slip or an overrun was many cases, the tracking may have been no
forecast, it was too late to do anything to mini- more sophisticated than what is shown in Figure
1-2, Budget Plan versus Actual Cost. This was
the traditional approach used for many years in A budget versus actual comparison is shown in
companies and is still used in too many organiza- Figure 1-4. This may appear to indicate that a
tions. cost underrun is occurring. However, there is no
basis for projecting what status will be at project
7LPH1RZ completion. It may be that the project is incurring
a cost underrun, but it may also be that the proj-
7RWDO%XGJHW ect is behind schedule and future expenditures
W will accelerate significantly. This is shown in Fig-
GJH ure 1-5.
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DO 7LPH1RZ
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Figure 1-2 Budget Plan vs. Actual Cost
$FWXDO&RVW
Actual costs are collected and compared with

budgeted costs. This is done in the only common
denominator available for resources - dollars in 7,0(
the U.S., Canada, and Australia, or the corre-
sponding local currency in other countries. Does Figure 1-4 Underrun or Behind Schedule?
this approach provide improved visibility?
A good system must provide status and, there- 7LPH1RZ
fore, the necessary visibility into progress. The $FWXDO
graph shown in Figure 1-2 at least allows com- &RVW
parison of expenditures with what was planned to
be spent. However, there is no assurance that %XGJHW
project status is known. Actual cost to date is
higher than planned, but does that indicate a cost
overrun or is the project ahead of schedule? This
situation is shown in Figure 1-3.
7LPH1RZ
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7RWDO%XGJHW
W Figure 1-5 Significant Overrun or Accelerated
$KHDGRI
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6FKHGXOH" %X Schedule?
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V W Figures 1-4 and 1-5? There is no measure of
O&R
WXD what has actually been accomplished for what
$F has been spent. The fact that money was being
spent slower than planned could mean that there
would be a cost underrun. It could just as easily
7,0( mean that the project is behind schedule, or both,
or neither.
Figure 1-3 Overrun or Ahead of Schedule?
The key to knowing what the true progress and the work scheduled to be accomplished, the
status actually are requires the addition of a third value of the work accomplished, and how much
line to the curve that reflects the dollar value for the accomplished work actually cost. Actual
the work that has been completed. costs to date are still below the budget line, but
the value of work accomplished is even less. In
This third line results from a “performance-ori-
other words, cost is not underrunning, but in fact
ented” approach. This approach shifts the
is overrunning relative to the value of the work
emphasis from expenditures to work accomplish-
accomplished. Similarly, a behind schedule con-
ment. The project objective should be to accom-
dition is apparent. The various methods for mea-
plish all of the work rather than to spend all of the
suring the accomplishment of work will be
money.
presented in later chapters of this text, but the
When using a performance oriented approach, important point is that it can be measured and
work scope and associated responsibilities must compared with an approved plan.
be defined in the initial planning phase of the
With this type of information, it is possible to proj-
project. This is a far better approach than defin-
ect schedule slippage and cost overrun in early
ing responsibility in some form of finger-pointing
stages of the effort. This early warning feature is
exercise of guilt determination after a crisis
one of the most important advantages of includ-
occurs. It allows the person responsible for an
ing a measure of work accomplished. Figure 1-7
emerging variance to take action before it
illustrates how these projections might be repre-
becomes a problem. The entire organization
sented.
benefits from this approach. If action cannot be
taken in time to entirely avoid a problem, at least
the impact can be accurately assessed if there 7LPH1RZ
(VWLPDWHDW
&RPSOHWLRQ
($&
were an objective method of measuring progress.
By setting variance standards or “thresholds”, the 3URMHFWHG&RVW2YHUUXQ
system can be used as a high level Management

by Exception indicator. A result is the ability to %XGJHW
3URMHFWHG6FKHGXOH6OLS
develop improved forecasts of technical perfor- $FWXDOV
mance, scheduled completion, and final cost ear-
lier in the project. The third line that represents $FFRPSOLVKPHQW
work accomplishment has been added to Figure
1- 6.
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7LPH1RZ
Figure 1-7 Cost and Schedule Impacts
%XGJHW
Summary Implementation
$FWXDO&RVW Concerns
$FFRPSOLVKPHQW The Earned Value Management process con-
cepts are appropriate in any single project or
7,0( multi-project environment. On any type of project
in any industry, regardless of how small it is, a
project must be effectively defined to be effec-
Figure 1-6 A Performance Oriented Approach
Provides Better Visibility tively accomplished. A project cannot be com-
pleted if its scope is not understood. Individuals
or organizations must be identified with responsi-
Now there is a completely different picture of the
bility for completing the work, and a time frame
project status. This graphic depicts the value of
must be established for accomplishing that work.
Budgets and other resources that are allocated to Because of the complexity of long duration, high
the project need to be identified. In other words, cost projects, it is not surprising when it takes six
a plan for accomplishing the work is needed. months to develop a detailed plan for accom-
Then progress must be measured against that plishing the project objectives. Smaller projects
plan. When variances are identified, corrective often do not have a total of six months duration.
action should be identified, evaluated, and imple- This does not suggest that the smaller project
mented in the most cost effective manner. These needs no plan, but rather that it will have a less
are standard techniques that apply in any situa- detailed plan featuring the same general require-
tion. ments. Similarly, it will not make sense to set up
an elaborate monthly reporting scheme with vari-
Experience shows small, short duration projects
ance analysis reports and corrective action plans
are often managed far worse than the large proj-
since the project will be completed before such a
ects that have high visibility. Because small proj-
program can even be properly established. Vari-
ects are considered less significant towards the
ances still need to be identified and actions taken
overall profit picture, they are sometimes over-
to correct them, but it will be a far less formal pro-
looked with very unfavorable results. When small
cess, probably involving little documentation.
projects ignore basic management concepts,
they commonly miss their budgets by 100 to 300 Risk is another important consideration and
percent. The accumulation of absolute dollars relates to maturity of the technology involved. If
may be more than a large project that misses its the project were the tenth in a long series of simi-
budget by 10 percent. The point is that the sum- lar products or services, some simple indicators
mation of many poorly managed small projects of progress over time may be all that is required.
could exceed the impact of a large project. But if it were the development of a new technol-
ogy, greater detail will be needed for monitoring
A convenient aspect of the performance oriented
and managing progress against the goal.
approach is that it works in all environments
including research and development, manufac- The project contract environment may impact the
turing, testing, construction, procurement, soft- emphasis of controls. On a firm fixed price con-
ware development, and design. It also works on tract, cost monitoring and evaluation is typically
all types of contracts, regardless of whether they not emphasized by the customer. However, the
are firm fixed price, cost plus, or some other type contractor will be very cost conscious, since it is
between these two extremes. However, these responsible for any overruns when this contract
factors play an important part in deciding on the type is used. From a customer’s perspective,
level of detailed implementation to be used. technical and schedule considerations are also
very important for firm fixed price contracts with
its support contractors, especially on a multiple
Factors Affecting System contractor program as the interfaces between
Implementation Detail contractors and projects must be managed. Pro-
ductivity may still be a concern since it will relate
Among the factors that will impact the selection of to whether the schedule can be met. In a cost
project controls for a particular application, are reimbursable environment, cost controls are a
the following: paramount consideration since the contractor can
• Project size and duration. maximize income by increasing the hours
required to complete the work. The level of detail
• Technical, schedule and cost risk. for cost and schedule control systems will vary in
• Project contract environment. detail accordingly.
• Management involvement level. The level of management involvement is another
contributing factor to decisions regarding imple-
The size and duration of a project are critical con- mentation detail. In many cases, both owner/cus-
siderations when making key decisions on tomer and contractor will have their own systems
desired management system characteristics. for determining project status. The contractor
responsible for accomplishing the work will need stood statement of work and optimistic, yet
a detailed system. However, the owner/customer achievable, schedule and cost targets. An
should need a far less involved reporting system Earned Value Management System is a tool set
and could track progress on a higher level. There used to facilitate management of a project. There
are exceptions to this as well. If the owner/cus- are many considerations in this complex disci-
tomer were hiring the labor for the project and pline. A series of flowcharts are used throughout
operating in a hands-on management situation, the text to exhibit how the various chapters inter-
then detailed controls may be needed in the relate.
owner’s/customer’s organization.
The master flowchart is shown in Figure 1-8,
Common sense and reason must be used when “Earned Value Project Management: The Pro-
developing and implementing Earned Value Man- cess”. This chart is repeated at the beginning of
agement Systems. Implementing systems at too each chapter to show where that chapter fits in
low a level of detail and with unnecessary com- the overall process. Individual blocks will be
plexity has probably caused nearly as many expanded as necessary into lower level, more
problems as having no system at all. While that detailed flowcharts for the more involved topics.
may be a slight exaggeration to make a point, the This will help assure that a proper understanding
objective of improved visibility can be clouded of each concept is achieved.
just as easily by too much data (and not enough
The fundamental concept of this entire book is
information) as it can by lacking enough input.
that the Earned Value Management process
should be logical, well-defined, and integrate all
Earned Value Management of the pertinent information relating to a project’s
status into a comprehensive picture. Every orga-
System Recognition nization implements many of the concepts; few of
The techniques developed and explained them integrate those concepts into a unified sta-
throughout this text were implemented widely tus. That is the primary challenge: to use all of
only after it became apparent that they were nec- the tools in the tool box in a coordinated manner
essary. They have not always been enthusiasti- so that they meet the objective of improved proj-
cally embraced by all project participants for ect visibility, allowing earlier management deci-
various reasons. Some do not want extra visibil- sions based on accurate information. This
ity into the status of their work if that same infor- provides a project manager the best opportunity
mation is in the hands of their boss and/or their to meet project schedule and cost objectives
customer. Typically, managers prefer to attempt while achieving the technical requirements.
resolution of problems before they are discovered The following is an overview of the process steps
by others. While this is understandable from a in Figure 1-8.
human nature standpoint, it is entirely unaccept-
able from a project manager’s viewpoint. If prob-
lems are hidden and not satisfactorily resolved, The Process Steps
they will later have increasingly substantial
impacts to project cost and schedule. It is essen- Step 1 – Project Objectives
tial that the project manager has the information The first step in the process is definition of the
and tools to assess status accurately, allowing project objectives. These objectives include a
more rapid, effective management decisions. general description of the technical requirements
of the project, its budget, and the time frame for
The Earned Value Management the work to be completed. A targeted start date
and a completion date are included in this
Process description. There may even be some guidance
provided as to whether this is a technical, sched-
Successful management of a project involves
ule and/or cost critical project. These can be crit-
many concepts and implementation concerns. A
ical pieces of information: as an example, at one
project is any endeavor that has a well under-
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Figure 1-8 Earned Value Project Management: The Process
of the major auto manufacturers a project to The project plan is the set of documentation and
design a new bumper system was being initiated. directives that formalize the entire management
The time for this product to reach the market was process described in this text, including project
critical, with a goal of eight and a half months. objectives, general scope, project organization,
However, the contractor’s project manager desired schedule/cost goals, and a description of
assumed that the project was more cost critical management systems and procedures to be used
than schedule critical. This resulted in the project in completing the project. The project plan
plan being stretched to 18 months to lower the reflects the project specific internal as well as
peak cost requirements. customer management, reporting, and analysis
requirements. The approach used to code and
When the owners and customers reviewed the
organize the project data is an important up front
contractor’s plan, they realized that the primary
activity to establish a standard approach to inte-
objectives had not been explained clearly
grate the technical, schedule, cost, and risk data
enough. The contractor was sent back to com-
to generate reliable information for effective man-
pletely redo the plan to support the eight and a
agement, reporting, and analysis for the life of the
half-month requirement. If this project had been
project.
managed to the 18-month plan, it would have lost
much of its commercial appeal.
Step 2 – Work Scope Definition, Risk Earned Value Management process must be
Assessment and Management developed. These include the functions of
scheduling, estimating, budgeting, and perfor-
Once the project objectives have been defined,
mance measurement. These elements must all
the next function that must be fulfilled is to delin-
be performed and integrated for the baseline plan
eate, capture, and define the entire scope of the
to be developed.
project. This is the best opportunity to assure
understanding among the various project partici- Step 5 – Planning and Scheduling
pants. It also is the best chance to avoid later
nightmares with numerous scope changes and The scheduling process is defined as what must
possible litigation. The work breakdown structure be done, and when it must be done, to accom-
(WBS) and work breakdown structure dictionary plish the project objectives on time.
are the tools used to segregate the work into
Step 6 – Estimating
manageable components and to define each
component. The estimating process is defined as a forecast of
how much it will cost to perform the work.
A risk assessment of the technical goals is an
important part of this process. Risks are identi- Step 7 – Definition of Earned Value and
fied and mitigation plans are developed. After the Earned Value Techniques
organization is assigned in Step 3, additional
risks may be identified and the risk plans Determining performance measurement is
updated. accomplished through the use of Earned Value
techniques, which is the key concept of the entire
Step 3 – Responsibility Assignment, Work Earned Value Management process. While this
Teams definition has been given earlier, it is important
enough to repeat here. It provides a critical ele-
Once the scope is crisply defined, the next step is
ment of information when project status is
to document who is responsible for the work.
assessed by providing insight into what has actu-
Each component of work defined in the work
ally been accomplished compared to the cost of
breakdown structure will have one individual
performing that work. What has been accom-
assigned who will be responsible for the scope,
plished can also be compared with what was
schedule and budget for that work.
planned to be accomplished to allow an accurate
It takes an entire project team working together to picture of the current cost and schedule position.
make the project a success, but only a single
Earned Value is determined through numerous
individual to cause it to fail. This explains some
techniques. The techniques selected for a project
of the reason for the growing popularity of work
will depend on each application, but objective
teams that help break down the traditional barri-
guidelines are available to help the selection pro-
ers between functional work areas (i.e. depart-
cess.
ments which can also include subcontractors)
and encourage a team spirit. Step 8 – Schedule and Cost Risk Assessment
Work teams are composed of the functional ele- A topic of growing importance is that of risk
ments necessary to develop or produce the end assessment. This Earned Value Management
product. This work team structure has advan- process includes three components: technical
tages in that fewer management accounts are risk, schedule risk, and cost risk. Each of these
needed, there is improved communication and has its own considerations and impacts. Like the
efficiency, and potential risks often are surfaced overall Earned Value Management process,
earlier. these are also interrelated. There has been
some tendency over the years for managers to
Step 4 – Planning
ignore the possibilities of identifying and espe-
Once the work definition and organizational con- cially quantifying risk because the results may be
cerns have been addressed, the particulars of the disconcerting. However, ignoring risk does not
lessen its impact, and will most likely increase its Step 11 – Collecting Actual Costs
effects. As profit margins become slimmer in a
All projects will have a system for collection of
highly competitive environment, the topic of risk
actual costs. Regardless of how unsophisticated
assessment must be addressed.
a system may be this component must be
Step 9 – Integrated Baseline Plan and Work included. The challenge in this area is to define
Authorization Development account structures that can be used for consis-
tently comparing budgets, actuals, and perfor-
Next we come to the center of the flowchart for a mance. This could mean modification to existing
concept that is central to the overall process: per- accounting structures. Actual costs are neces-
formance measurement baseline development. sary so that they can be compared with progress,
The performance measurement baseline is the and this comparison, in turn, provides the cost
official, documented plan that shows in detail how variance.
the project objectives are to be achieved. All of
the activities described thus far and the pro- Step 12 – Performance Measurement
cesses displayed on the Figure 1-8 flowchart are Calculations
needed to achieve a well-planned performance
After progress is measured against the plan and
measurement baseline. At the completion of this
the actual cost is entered, the three points neces-
step, the technical, schedule, and budget base-
sary for data analyses are available. There are
lines have been established and integrated; the
many calculations that aid in assessing the proj-
schedule reflects the time frame where all of the
ect status and assist the manager in targeting
detailed work scope is planned to be performed
problem areas for corrective action. These calcu-
and the budgets are time phased based on the
lations also assist in the Estimate at Completion
schedule requirements. The work is authorized
and Variance Analysis reporting.
to the responsible manager and the technical
work commences. Step 13 – Estimate at Completion and
Subcontract management is a critical element for Schedule Forecasting
many projects. The subcontractor’s technical, Organizations are very concerned with bottom
schedule, and budget baseline must be inte- line performance. One of the essential pieces of
grated with the prime contractor’s baseline. corollary information needed to evaluate an
Since the integrated baseline must include this ongoing project is, “When is it going to finish and
element, a separate chapter on subcontract man- what is it finally going to cost?” This answer will
agement (Chapter 35), is included in this step. be used for many purposes, ranging from reward
of project participants with better positions on
Step 10 – Establishing the Baseline Plan,
new projects to project cancellation. The “Esti-
Measuring Progress
mate at Completion” is so important that it can
At this point, there is a shift from the planning become a highly political number. A well-defined
phase of baseline establishment to the control Earned Value Management System will have
phase of the Earned Value Management process. objective means of determining and evaluating
Once the performance measurement baseline estimates at completion to improve their accuracy
has been established, the main concern from that even in the early stages of a project. This can
point on is the determination of progress. Prog- only be achieved with defined performance fac-
ress is measured using the same earned value tors that provide an accurate picture of what has
techniques that were established as part of the happened to date and what is forecast to happen.
planning process. The techniques used when
the performance measurement baseline (PMB) Step 14 – Variance Analysis and Corrective
was established must be applied consistently Action
when progress is determined. Progress is com- Variance analysis and corrective action are very
pared with the plan, and this comparison, in turn, important to the overall process. Much time and
provides the schedule variance. effort are invested in baseline establishment, and
now the baseline information can be used as a

basis for determining the course of the project.
Conclusion
The tools defined in the previous two Steps A project is any endeavor that has a scope of
directly feed variance analysis and corrective work and optimistic yet achievable schedule and
action. By comparing earned value to budget, cost targets. A project is typically managed by a
schedule variances can be determined. By com- single individual known as a project manager,
paring earned value to actual cost, cost variances who must be able to coordinate a multi-functional
can be determined. The second element, correc- team towards the achievement of all of the proj-
tive action, is a critical part of the control phase. ect objectives. One of the greatest needs of the
At this point in the process, there is a strong basis project manager is accurate, reliable, and timely
for determining the project’s true position versus information to enable effective management deci-
the approved plan so that exceptions can be sions. The information needs to include a valid
addressed. The carefully defined system will pro- assessment of project progress and status. Proj-
vide immediate feedback as to whether the cor- ects were historically monitored by comparing
rective action was successful. planned expenditures against actual expendi-
tures.
Step 15 – Baseline Revisions and Change
Control This approach lacks the most important element
of status: a measure of work accomplished. This
An essential aspect of the Earned Value Manage- shortcoming can be overcome by including a
ment process is managing change. After all of third data element that determines an objective
the effort that goes into developing the baseline value of work completed. This is known as the
plan and determining current status, it is always a performance oriented approach. The perfor-
disruption to change that plan. Nevertheless, mance oriented approach allows early identifica-
changes are a part of every project and must be tion of trends that indicate if a project’s objectives
addressed as to how they will be reviewed, are in jeopardy. This “early warning system”
approved, and incorporated into the plan. Proce- allows a timely response on the part of manage-
dures are required to manage the change control ment to mitigate unfavorable outcomes by mak-
process or, over time, the project’s reports will ing informed decisions.
relate less and less to the current scope, sched-
ule, and budget as well as the true status. One It is important that the tradeoff between adequate
guideline stipulates that as much attention is project status visibility and excessive data collec-
needed for processing baseline changes as was tion be recognized and addressed. This is
used in developing the original baseline plan. accomplished by setting an appropriate level of
detail in the implementation process. Factors
Step 16 – Implementation of the Project that affect level of detail include project size and
Management Process duration, risk (technical, schedule and cost), type
of contract, and desired level of management
Now that the system design is complete, there involvement.
are still some ways to streamline the information
flow. These include topics such as paperless The entire process of managing projects must be
systems and electronic data integration. There a logical one. Each of the steps of the Earned
are also programs available for automating much Value Management process is illustrated by the
of the data reduction and analysis, with built-in flowchart in Figure 1-8 and will be discussed in
sanity checks to catch obvious errors. These top- detail in subsequent chapters.
ics are discussed in the final chapter of this book.
Chapter 1 Review Questions

1-1. Explain the difference between a project and a program.
1-2. What aspects of a project are managed during the controlling phase of Earned Value Man-
agement?
1-3. How is a project organized differently from a functional organization?
1-4. What are some frequent causes of project delays?
1-5. Why is a comparison of actual costs to date versus budgeted costs not adequate from an
Earned Value Management standpoint?
1-6. List at least three factors that will affect the level of detail appropriate for implementation of
earned value on a project.
True or False
1-7. The Earned Value Management process is only applicable for large projects.
1-8. The fact that more money has been spent at a point in time than was planned to be spent
means that an overrun in final cost is indicated.
1-9. A program may be made up of multiple projects.
1-10. Performance measurement can be successfully applied in engineering, construction, manu-
facturing, and software development applications, among others.
1-11. Using a measure of performance allows earlier indication of potential increases in final cost.
1-12. From the customer’s viewpoint, a firm fixed price contract suggests the need for tight cost
controls.
The answers to these questions can be found in Section 6, Solutions.
755
Index reporting, 570

risk, 339, 351, 447
schedule network, 305–306
subcontract, 636
variance, 587
A ANSI/EIA-748, 137, 373, 421, 619
accounting calendar, 549 apportioned effort, 521, 536
activity, 230 arrow diagramming method (ADM), 147, 157
change authorized unpriced work, 605, 607
future duration, 293
in progress duration, 293 B
critical, 310 backward pass, 170–172
duration badgeless organizations, 631
status impact, 278 baseline
example statused, 277 changes, 603
grouping, 216 over target, 266, 537, 635
hammock, 215 rubber, 610
level of cost collection, 550 schedule, 261, 267, 291, 293, 296
level of effort (LOE), 329–330 changes, 266, 296
missed baseline dates, 232 establishment process, 262
out of sequence, 280 establishment timing, 265
relationships, 159 versus current, 306
finish-to-finish (FF), 159 traceability, 540
finish-to-start (FS), 159 baseline change request, 260, 606
lag, 218 baseline execution index (BEI), 233
lead, 218 budget
metrics, 229 See also budgeted cost for work scheduled
parallel finish-to-finish, 328 (BCWS)
parallel start-to-start, 328 values, 550
start-to-finish (SF), 160 versus funds, 550
start-to-start (SS), 160 budget at completion (BAC), 550
summary, 215 budget plan
actual cost (AC) See performance measurement baseline (PMB)
See actual cost of work performed (ACWP) budgeted cost for work performed (BCWP), 487, 491,
actual cost of work performed (ACWP), 487, 545, 550, 550, 560
560 calculating, 509
accuracy, 554 consistent with baseline, 513
data sources, 547 determining when earned, 523
estimated, 555 equipment, 550
labor hours versus labor dollars (reporting), 556 material, 524, 550–551
level of cost collection, 549 purchased services, 550
minimizing incorrect charges, 555 rates, 553
rates, 553 schedule as basis, 375
time lag, 553 budgeted cost for work scheduled (BCWS), 487, 550,
actual finish date, 275 560
actual start date, 275 and work authorization, 540
analysis estimate as basis for, 408
critical path method (CPM), 167 rates, 553
float trends, 303, 310 schedule as basis, 265, 375
formulas, 559–574 See also performance measurement baseline
formulas (list of), 729 (PMB)
funding, 550 budgeted cost of work remaining (BCWR), 566
labor cost variances, 573
material variances, 572
C
performance measurement, 559 cash flow, 550
change control, 599, 601
756 Section 6 Conclusion, Solutions, and References
and the PMB, 602 cost performance index (CPI)

program, 601 combined with SPI, 570
changes efficiency concept, 564
baseline, 603 performance concept, 564
causes of, 599 cost risk assessment, 445–453
directed, 633 cost variance (CV), 493, 560
documenting, 294, 466 critical path, 169, 173
duration characteristics, 176
future activity, 293 length index (CPLI), 232
in progress activity, 293 test, 232
external, 599 critical path length index (CPLI), 232
formal reprogramming, 635 critical path method (CPM), 147, 169
how to control, 601 completion estimate validity, 345
internal replanning, 600, 609, 634 estimate validity, 342
schedule, 291, 294 fundamentals, 167
schedule baseline, 266, 296 risk approach, 340
See also change control schedule traceability, 260
stop work order, 609 current
subcontract, 633 schedule, 267, 291, 293, 296
tracking, 605 versus baseline, 306
tracking original estimate, 463
types of, 599
D
charge number, 535 direct costs, 545, 548
and work authorization, 540 directed changes, 633
commitments, 550 directed date, 175, 223, 229, 317–326
time lag, 550 hard constraint, 319
constraint imposed, 317
See directed date not earlier than, 317
Constructive Cost Model (COCOMO), 426 not later than, 317
contract budget base (CBB), 535–537 risk analysis impact, 348
log, 605 soft constraint, 319
Contract Performance Report (CPR), 552, 571–572, discrete effort, 511, 536
574, 591, 605, 619 0/100 technique, 516
control account, 536 50/50 technique, 515
and planning packages, 509 equivalent units technique, 518
and summary level planning package (SLPP), 534 incremental milestone technique, 514
and work packages, 509 milestones, 511
baseline changes, 603 percent complete technique, 520
dollar value, 99 units complete technique, 516
duration, 99 distributed budget, 536
establishment, 97 E
examples, 97–99 early finish (EF), 170
identification, 96 early start (ES), 170
level of cost collection, 549 earned value (EV)
level of detail, 98 See budgeted cost for work performed (BCWP)
management responsibilities, 98 earned value management
plan, 540 benefits, 495
subcontract, 625, 630 defined, 32
corrective action log, 594 fundamentals, 34, 489–494
corrective action plan, 593 illustrated (the brick wall), 499–505
Cost Accounting Standards (CAS) Disclosure implementation
Statement, 421, 545 concerns, 36
cost baseline level of detail, 33, 37
See performance measurement baseline (PMB) process, 38, 494
cost elements, 402 relationship to risk management, 85
757
schedule applications in, 373 prerequisites, 400

schedule contract requirements, 376–379 process, 397, 411
earned value management system review
continuous improvement, 660 external, 457
defined, 32 other factors, 458
description, 373, 656 team, 458
design, 654 role of WBS, 401–402
dollar values for compliance, 621 software, 426
guidelines, 137, 373, 376, 619, 621 function points, 426
implementation, 653 lines of code, 426
process, 661 templates, 401–402
schedule, 661 traceability, 465
interface with accounting system, 548 tracking, 463–469
procedures, 660 type
storyboard, 658 conceptual, 407
training material, 660 definitive, 408
earned value techniques, 520 detailed, 408
0/100, 516 preliminary, 407
50/50, 515 estimate at completion (EAC), 550
apportioned effort, 521 comprehensive, 563
consistency with baseline, 513 detailed, 563
discrete effort, 511 development, 562
equivalent units, 518 estimate as basis for, 408
functions, 509 independent, 565
incremental milestone, 514 justification, 594
level of effort (LOE), 522 range of, 568
milestone, 511 estimate to complete (ETC), 550, 563
other, 523 estimated ACWP, 555
units complete, 516 estimated completion date (ECD), 568
escalation factors, 421–425
estimate
F
automating, 475–479 fast track, 252, 348, 409
basis for BCWS, 408 finish-to-finish (FF), 159
basis for EAC, 408 finish-to-start (FS), 159
changes, 463 float, 167, 173
compared to actual analysis, 303, 310
variance sources, 463, 465 negative, 230, 303
cost flow development, 421–424 monitoring, 309
cost risk analysis, 450 resolving, 303, 308
defaults, 417 secondary, 326
defined, 399 status impact, 278
development inputs, 416 formal reprogramming, 635
documenting assumptions, 457 forward pass, 170–172
escalation factors, 421–425 fourteen point schedule health check, 228
fast track impact, 409 activities with lags, 229
fundamentals, 397 activities with leads, 228
guidelines, 400, 418–420 baseline execution index (BEI), 233
input sources, 417 correlation with GASP, 233
level of detail, 420 critical path length index (CPLI), 232
manufacturing costs, 425 critical path test, 232
method hard constraints, 229
analogy, 416 high duration, 230
engineering build-up, 416 high float, 230
parametric, 416 invalid dates, 231
operating costs, 425 missed activities, 232
missing logic, 228 slope, 435, 437–438

negative float, 230 unit method, 437
no assigned resources, 231 unit values, 438–439
relationship types, 229 level of effort (LOE), 522, 536
free float (FF), 174 activities, 329–330
freeze period, 534 leveled finish, 200
funding, 537 leveled start, 200
analysis, 550 logic network
profile, 550 See schedule network
funds versus budget, 550 logs, 536, 605
G M
GAO Best Scheduling Practices, 135, 259, 335 management reserve (MR), 535–536
GAO Cost Estimating and Assessment Guide, 416 log, 605
Generally Accepted Scheduling Principles (GASP), subcontract, 627
134, 218, 233, 259, 375 milestone, 157, 259–260, 511–513, 534, 625
examples, 513
H monte carlo, 355, 447
hammock, 215
high duration, 230 N
negative float
I See float
independent estimate at completion (IEAC), 565 nonrecurring costs, 425
indirect costs, 421, 545, 548, 551
indirect pools, 548 O
integrated master plan (IMP), 211, 259 organization breakdown structure (OBS)
accomplishment, 213 and work authorization, 539
coding, 213 chart definition, 91
criteria, 213 intersection with WBS, 91
defined, 212 types, 92
event, 213 out of sequence logic, 280
IMS and WBS cross reference, 213 progress override, 280, 283
integrated master schedule (IMS), 211–212 retained logic, 280
coding, 213, 260, 378 total float impact, 284
IMP and WBS cross reference, 213 over target baseline (OTB), 266, 537, 635
Integrated Master Schedule (IMS) Data Item over target schedule (OTS), 266, 309, 635
Description DI-MGMT-81650, 169, 222, 260, 335, 375,
378, 572
P
integrated product team (IPT) percent complete, 520
See work team earned value technique, 520
Integrated Program Management Report (IPMR), 169, physical, 277–278
222, 260, 335, 375, 378, 552, 571, 574, 591, 605, 619 project, 568
formats, 572 schedule, 277–278
internal replanning, 609, 634 percent spent, 568
International Function Point Users Group (IFPUG), 427 performance indices, 564
performance measurement baseline (PMB), 509, 531,
L 535
lag, 218–222 changes, 599, 602, 604
late finish (LF), 170 development steps, 532
late start (LS), 170 establishment timing, 537
latest revised estimate, 563 structure, 535
latin hypercube, 447 performance measurement calculations
lead, 218–222 See analysis formulas
learning curves period of performance, 539
cumulative average method, 437 planned value (PV)
impacts, 439 See budgeted cost for work scheduled (BCWS)
selecting method to use, 438 Planning and Scheduling Excellence Guide (PASEG),
759
134 path duration, 342

planning package, 510 pitfalls, 349
converted to work packages, 293, 533 sampling techniques, 447
precedence diagramming method (PDM), 147, 157 and variance thresholds, 590
price variance (PV), 573 assessment, 339
Program Evaluation and Review Technique (PERT), benefits, 339
147, 352 conducting, 452
progress override, 280, 283 developing useful mitigation strategies, 339
project implementation, 350, 355
characteristics of successful, 32 outputs, 448–449
defined, 31 reasons for, 450
objectives defined, 45–46 tools, 352
percent complete, 568 attributes, 78
percent spent, 568 classification, 78
scheduling, 139 contract type, 621
versus program, 31 cost, 445
cumulative likelihood curves, 343
R cumulative probabilities, 343
rate variance (RV), 573 defined, 77
recurring costs, 425 identification, 80
remaining duration, 275, 278 latin hypercube, 447
resource management
availability constraint, 198 fundamentals, 77
curves, 200–201 plan, 79–80
defined, 195 process, 79
early start curve, 200 relationship to earned value management, 85
float, 201 strategy, 84
late start curve, 200 model definition, 445
leveled dates, 200 monte carlo, 355, 447
leveled start curve, 200 PERT, 352
plan, 195 probability distributions, 447
profiles, 197 qualitative, 83
reallocation, 295 quantitative, 83
requirements, 197 schedule, 226, 337
time constraint, 198 bias, 346
usage curve, 198 directed dates impact on, 348
resource leveling, 224 fast track impact on, 348
considerations, 199 See also schedule risk assessment (SRA)
process, 198 subcontract, 621
resource loading, 224 threat or opportunity, 77
considerations, 199 rolling wave planning, 266, 293, 296, 510, 533
objective, 197 root cause analysis
process, 197 cost impact assessment, 573
requirement, 231 float deterioration, 306
responsibility assignment matrix (RAM), 91, 95–96, schedule impact assessment, 308, 573
537 See also variance analysis report (VAR)
level of detail, 96
retained logic, 280 S
review question answers schedule
See solutions and earned value management, 373
revisions and work authorization (period of performance),
See changes 539
risk approach
analysis, 339 aggressive, 224
output, 351 conservative, 224
organizational, 225 See also schedule risk assessment (SRA)

project, 225 routine updates, 293, 296
audit, 227 status, 260, 267, 294
baseline, 261, 291, 293, 296 considerations, 280
changes, 266 data, 275
establishment process, 262 float analysis, 303, 310
establishment timing, 265 streamlining, 252
basis for BCWP, 375 traceability, 257, 259
basis for BCWS/PMB, 265, 375 achieving, 260
calendar, 331 historical, 260, 293
changes, 291, 294 horizontal, 259, 375
documenting, 294 vertical, 259, 373
duration, 293 types
current, 267, 291, 293, 296 bar chart, 145
current status, 267, 279 combination chart, 145
definition, 141 flow process chart, 146
development data requirements, 142 gantt charts, 144
driving path, 176 line of balance, 147
earned value contract requirements, 376–379 milestone chart, 144
fast tracking, 252 modified gantt or milestone chart, 146
focused work, 252 network diagrams, 147
fourteen point health check, 228 set back chart, 146
fundamentals, 139 update process, 275, 279
integrating subcontract, 624 visibility task, 320
level of detail, 226, 264 visibility tasks, 222
margin, 222, 309 what if, 293, 295
activity method, 222 work scope crosscheck, 57
baseline finish variance method, 223 schedule finish, 306
gap method, 223 schedule network
lag method, 223 acceleration, 243
over target, 266, 309, 635 other techniques, 252
percent complete, 277–278 activity relationships, 159
physical percent complete, 277–278 analysis, 305–306
purpose, 143 backward pass, 170
quality, 227 calculated dates, 170, 278
reconciliation calculations, 170, 174, 277
progress and performance, 375 coding, 213, 260, 378
time phased budgets, 375 components, 157
reserve, 222 CPM analysis technique, 167
risk, 226, 337 crashing, 243
analysis output, 351 example, 245–252
and cost overrun, 339 process, 245
and early start scheduling, 349 development concerns, 214
and late start scheduling, 349 development technique
at path convergence, 346 bottom-up, 212
bias, 346 IMP/IMS, 212
CPM approach, 340 top-down, 211
directed dates impact on, 348 directed dates, 175
duration validity, 348 display techniques, 161
fast track impact on, 348 forward pass, 170
highest path, 345 out of sequence logic, 280
merge bias at path convergence, 347 resource leveled dates, 200
other issues, 351 resource loading, 197
path duration, 342 resource loading requirement, 231
probabilistic approach, 340 templates, 216–218
761
schedule performance index (SPI), 311, 565 change control, 633

and schedule status, 569 classification, 549
combined with CPI, 570 contract type
schedule risk assessment (SRA), 335–356 cost reimbursable, 628
schedule variance (SV), 311, 493, 560 firm fixed price, 629
converted to time variance, 561 selecting, 622
dollar versus time, 494 technical services, 629
secondary float, 326 time and materials, 629
slack, 167, 173 control accounts
solutions impacts on, 625, 630
chapter 1, 669 data analysis, 636
chapter 10, 681 defined, 619
chapter 11, 684 directed changes, 633
chapter 12, 685 EVMS flowdown requirements, 620
chapter 13, 685 impact on RFP, 621
chapter 14, 687 EVMS reviews, 636
chapter 15, 688 factoring budget and earned value, 630
chapter 16, 689 formal reprogramming, 635
chapter 17, 690 integrating
chapter 18, 692 BCWS/PMB, 625
chapter 19, 698 schedule, 624
chapter 2, 670 WBS, 623
chapter 20, 700 inter-divisional work authorization (IDWA), 631
chapter 21, 700 internal replanning, 634
chapter 22, 702 major versus non-major, 619
chapter 23, 703 management reserve (MR), 627
chapter 24, 704 price versus fee, 626
chapter 25, 705 reporting requirements, 623
chapter 26, 707 risk, 621
chapter 27, 710 schedule milestones, 625
chapter 28, 711 surveillance, 636
chapter 29, 712 time lag (data), 630
chapter 3, 671 undistributed budget (UB), 627
chapter 30, 713 VAR, 636
chapter 31, 714 WBS, 626
chapter 32, 715 summary activity, 215
chapter 33, 718 summary level planning package (SLPP), 534
chapter 34, 720 surveillance, 636
chapter 35, 721
chapter 36, 727
T
chapter 4, 672 thresholds, 588
chapter 5, 673 time now, 275, 277
chapter 6, 676 to complete performance index (TCPI), 565
chapter 7, 678 total allocated budget (TAB), 537
chapter 8, 679 total float (TF), 170, 173
chapter 9, 680 analysis, 303, 305
section 1 quiz, 674 and SPI, 569
section 2 quiz, 693 directed date impact, 320–321
section 3 quiz, 707 out of sequence logic method impact, 284
section 4 quiz, 723 traceability
start-to-finish (SF), 160 baseline, 540
start-to-start (SS), 160 estimate, 463
stop work order, 609 historical, 465
subcontract, 626 vertical, 465
badgeless organization, 631 schedule
achieving, 260 inter-divisional, 631

historical, 260, 293 requirements, 538
horizontal, 259, 375 work breakdown structure (WBS), 626
vertical, 259, 373 and work authorization, 539
work scope, 375 contract, 57
defined, 47
U development considerations, 48, 54
undistributed budget (UB), 536 dictionary, 53, 605
log, 605 dictionary example, 54
subcontract, 627 examples, 48–51
usage variance (UV), 573 IMP/IMS cross reference, 213
V integrating subcontract, 623
variance, 306 intersection with OBS, 91
analysis, 587 level of detail, 48
at completion, 560 role in estimating, 401
cost, 493, 560 work scope crosscheck, 57
duration, 306 work definition
labor cost, 573 process, 45
material, 572 work package, 509–510, 536
price, 573 characteristics, 509
rate, 573 examples, 511
schedule, 311, 493, 560 level of cost collection, 549
schedule converted to time, 561 work scope
schedule start, 306 and schedule development, 142
thresholds, 588 and WBS elements, 47
usage, 573 and work authorization, 539
variance analysis report (VAR), 563, 591 defined, 45
approval, 594 traceability, 375
corrective action plan, 593 verification, 57
describing the problem, 592 work team
EAC justification, 594 advantages, 111, 113
impact, 593 alignment examples, 114
subcontract, 636 application examples, 116
variance at completion (VAC), 560 defined, 111
lead role, 119
W work-around plan
what if schedule, 293, 295 strategies, 295
work authorization, 538
763
About the Author

Mr. Gary C. Humphreys has over 38 years of program management experience in both government
and commercial environments, specializing in earned value management systems (EVMS) design,
development, and implementation. He was the first US Army Review Team Director to conduct an
EVMS Tri-Service Demonstration. As both a Team Member and Review Team Director, he has
assisted, evaluated, and directed review teams leading to over 150 successful system acceptances.
He has developed a successful consulting practice operating out of Irvine, California. As the premier
consultant in this field he has provided assistance in all phases of project management to over 850 cli-
ents from aerospace firms to utility companies, England's Inland Revenue Service (IRS), and Ship-
building companies in North America, Australia, and Europe. Within the industry, no one has
performed more on-site earned value cost/schedule performance work.
He was elected to the Nine Man Committee for Increasing the Cost Effectiveness of earned value and
led the Fifteen Man Industry Committee to modify traditional documentation and interpretation of
earned value to be more compatible with efficient, economical production/manufacturing management
control techniques. As a member of the Integrated Program Management Initiative Joint Team, Mr.
Humphreys received the DoD's highest acquisition award, the 1998 David Packard Excellence in
Acquisition Award. He is also a recipient of the Whitey H. Driessnack Award for Outstanding Contribu-
tions to the Advancement of Performance Management.
He has served as Vice-Chair and Chair of what is now the National Defense Industrial Association
(NDIA) Integrated Program Management Division (IPMD). As a direct result of his tenure as Chair, he
took a fledgling committee and developed it into an influential, policy impacting committee with active
membership growing to over one hundred people attending each meeting. Over 350 organizations are
now participants. He was also instrumental in opening the lines of communication between the DoD's
Performance Measurement Joint Executive Group (PMJEG) and industry by establishing the first dia-
logue interchange meetings between the two groups. It was through the NDIA IPMD that he orches-
trated the first ever survey on EVMS. As a direct result of this survey's findings, the US Government
conducted their own survey. These two independent surveys formed the genesis for subsequent revi-
sions to numerous guides and reference material on EVMS.
Under his leadership, the Performance Management Association (PMA) (now the College of Perfor-
mance Management (CPM)) achieved importance as a policy-influencing group. This also allowed
individuals to enhance their careers in project management with active interchanges with organizations
such as the DoD and NASA, as well as individuals from other companies. He initiated three interna-
tional Chapters in Australia and new US Chapters. He served as leader of the Total Quality Manage-
ment (TQM) Process Action Team (PAT) for streamlining business system descriptions for performance
measurement and management applications. This streamlining effort saved countless wasteful actions
while maintaining the quality of useful performance measurement data for decision makers.
He has been a guest and keynote speaker on a variety of performance measurement related subjects
at the Air Force Institute of Technology (AFIT), Association for the Advancement of Cost Engineering
International (AACE International), Certified Public Accountants (CPA) Government Contracts Confer-
ence, Defense Acquisition University (DAU), National Computer Conference (NCC) of American Fed-
eration of Information Processing Societies (AFIPS), Project Management Institute (PMI), CPM
National and International Chapter meetings, and numerous software user groups.
Mr. Humphreys is a graduate of the University of California at Berkeley, with a Masters Degree in Busi-
ness Administration from the University of Southern California.
He authored the first edition of Project Management Using Earned Value published in 2002. He was a
co-author of Project and Production Scheduling, published in 1987. He has also written numerous arti-
cles on subjects related to project management and earned value.

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What is the purpose of defining project objectives and developing a work breakdown structure?

What is the purpose of defining project objectives and developing a work breakdown structure?

What is included in a WBS dictionary?

What is included in a WBS dictionary?

Project Management

Earned Value Management Consulting Training

Printed in the United States of America

Humphreys & Associates, Inc.

Chapter 1 Project Management Using Earned Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Chapter 3 Managing Project Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

Chapter 4 Relating Organizations, Responsibility, and Work Scope . . . . . . . . . . . . . . . . . . . . . . 91

Chapter 5 Work Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

Chapter 6 What is Scheduling? Schedule Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

Chapter 7 Introduction to Network Logic Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

Chapter 8 Critical Path Method Fundamentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

Free Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174

Chapter 9 Resource Loading and Leveling the Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195

Chapter 10 Considerations for Developing a Useful, Quality Network Schedule . . . . . . . . . . . . 209

Chapter 11 Schedule Acceleration Techniques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243

An Example of Network Crashing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245

Chapter 12 Setting a Traceable Schedule Baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257

Chapter 13 Updating the Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275

Chapter 14 Schedule Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291

Chapter 15 Resolving Negative Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303

Chapter 16 Special Networking Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317

Chapter 17 Schedule Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335

Chapter 18 Scheduling in a Performance Measurement Environment . . . . . . . . . . . . . . . . . . . . 373

Case Study 18.1 Schedule Traceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381

Chapter 19 The Estimating Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397

Chapter 20 Types of Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405

Chapter 21 Estimate Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411

Chapter 22 Learning Curves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435

Case Study 22.1 Estimating Cost Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443

Chapter 23 Cost Risk Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445

Chapter 24 Estimate Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455

Chapter 25 Tracking the Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463

Chapter 26 Automating the Estimating Function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475

Chapter 27 Earned Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489

Chapter 28 The Brick Wall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 499

Chapter 29 Measuring Accomplishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509

Typical Work Packages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511

Chapter 30 Establishing the Performance Measurement Baseline . . . . . . . . . . . . . . . . . . . . . . . 531

Chapter 31 Collecting Actual Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545

Chapter 32 Performance Measurement Calculations and Estimates at Completion . . . . . . . . . . 559

Average Performance Rate Required to Achieve ECD . . . . . . . . . . . . . . . . . . . . . . . . . . . 569

Chapter 33 Variance Analysis and Corrective Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587

Chapter 34 Baseline Revisions and Change Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 599

Chapter 35 Subcontract Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619

Post Award Baseline Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 625

Chapter 36 Implementation of the Project Management Process . . . . . . . . . . . . . . . . . . . . . . . . . 653

Chapter 3 Managing Project Risks

Chapter 4 Relating Organizations, Responsibility, and Work Scope

Chapter 5 Work Teams

Chapter 6 What is Scheduling? Schedule Types

Chapter 7 Introduction to Network Logic Development

Chapter 8 Critical Path Method Fundamentals

Chapter 9 Resource Loading and Leveling the Schedule

Figure 9-2 Planning and Scheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196

Chapter 10 Considerations for Developing a Useful, Quality Network Schedule

Chapter 11 Schedule Acceleration Techniques

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