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Dear all,
I would like to get some guidelines from more experienced colleagues in the situation of using Earned Value in the following scenario:
Before the start of the project I have created project schedule and based on this schedule the project cost got calculated. Based on this cost the price has been created to the customer and a fixed price contract has been signed
Now I execute this project. During execution of the project we find, that some of the tasks got forgotten to be included in the cost calculation at a presale phase. The nature of these tasks is that they are not critical and can be done at the very end of the project, once most of the originally planned (not forgotten) activities are completed. Still they have to be all completed to close the project.
In this case CPI of my project (measured based on the performed so far tasks) cannot be used as a good indication to calculate the EAC using the formula EAC=BAC/CPI, just because the CPI only shows how good the cost prediction was for not forgotten activities and does not take into account forgotten ones. The situation would be different if forgotten activity would be equally spread across the project duration, then CPI at the beginning of the project would be a good indication to show the EAC, based on the CPI measured so far and BAC.
I can think of several solutions for this, but I just wondering whether there are some standard guidelines for this situation?
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Rafael,
as always, you came with very interesting links. Thank you!
I will study them, and come back, if I have any questions.
Evgeny
The DOD, the father of the creature, suggest five alternatives on how to handle variances. The following article although specific for Over Target and Over Budget Baselines shall apply as well for variance adjustment of within contract conditions.
http://www.acq.osd.mil/evm/docs/OTB-OTS%20Guide%20121205.pdf
3.5.6.2 Adjusting Variances: A key consideration in implementing an OTB is to determine what to do with the variances against the pre-OTB baseline. There are essentially five basic options. This is a far more detailed effort than these simpledescriptions imply, as these adjustments have to be made at the detail level (control account or work package). (See Appendix B for examples.)I only recognize 3.5.6.2.1 Eliminate all Variances as valid, the only option that does not require some agreement between contractor and client, the only option that do not require some artificial manipulation of the schedule. Just imagine this under multiple prime contract. I would never agree to the four options that require agreement.
I consider EVM CPM flawed as it is blind to float and consider baseline activities to be fixed as if none have float, perhaps another way to steal away float form contractor and call him not on schedule because he used some float while the job is on track. This is obvious in simple jobs but when the delays are multiple it is not that obvious. The application of EVM under federal contracts is so cumbersome that even the DOD advocate for holding baseline updates.
Under multiple prime contracts, not updating the baselines as soon as needed can create serious issues. An example of such serious issues is the infamous Big Dig where baseline was rarely updated and delays form one contractor impacted another.
http://warnercon.com/wp-content/uploads/2012/08/AContinuouslyChanging1.pdf
Still if there are pending issues relating delays some due to owner other to unforeseen conditions such as excessive rain then reluctance to update baseline I would call it to represent constructive acceleration.
Email: PPadmin@planningplanet.com
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