30 Section 3
Not all control accounts need to have EV applied, because the use of EVM does not need to be an all-or-nothing
decision at the project level. A low-risk CA or set of CAs, which might be outsourced under a fixed-price procurement
effort, could be excluded from the PMB. During planning, the team needs to decide the extent to which EVM will be
applied given the CA for the project.
3.2 DEVELOPING THE PROJECT MANAGEMENT PLAN
Develop Project Management Plan is the process of defining, preparing, and coordinating all plan components and
consolidating them into an integrated project management plan (see Section 4.2 of the PMBOK
®
Guide). Planning
for EVM follows the same process while following the EVM principles outlined in Section 1. Those principles drive
one important requirement, which is the use of EVM techniques (see Section 3.2.2.2) for implementing performance
management and oversight by enabling discipline and integration.
The PMBOK
®
Guide (See Section 4.2.3.1) notes that the project management plan integrates and consolidates
all of the subsidiary plans and baselines, and other essential information for managing the project. When using EVM
methodology, an integrated project management plan should address the specific needs of EVM within each of the
19 project management plan components described in PMBOK
®
Guide and shown in the list below. These include:
Subsidiary plans. The 10 subsidiary plans also need to address, as appropriate, the EVM methodology as it
applies to the project. The subsidiary plans are:
Scope management plan,
Requirements management plan,
Schedule management plan,
Cost management plan,
Quality management plan,
Resource management plan,
Communications management plan,
Risk management plan,
Procurement management plan, and
Stakeholder engagement plan.
31
Baselines. The three baselines need to be addressed as they are integrated into the PMB. The baselines are:
Scope baseline (see Section 5.4.3.1 of the PMBOK
®
Guide),
Schedule baseline (see Section 6.5.3.1 of the PMBOK
®
Guide), and
Cost baseline (see Section 7.3.3.1 of the PMBOK
®
Guide).
Additional components. These five components also need to address, as appropriate, the PMB when
implementing EVM. The components are:
Change management plan,
Configuration management plan,
Project life cycle description,
Development approach, and
Management reviews.
Note that there may also be agreements with other parts of the performing or sponsoring organization outside of
the project to define the required information flow for EVM when they are not covered in existing OPAs that define the
organization’s implementation of EVM.
3.2.1 SCOPE PLANNING
Specific needs to be considered when planning for EVM:
General. All PMBOK
®
Guide Project Scope Management processes are used within EVM.
Work breakdown structure (WBS). The WBS is key. The WBS is used as the single structure that integrates
the scope, schedule, and cost baselines together at a common level. The WBS decomposes the scope of work
to be carried out by the project team, and a WBS dictionary defines the scope of work for each WBS component.
Control account (CA). A management control point where scope, budget, actual cost, and schedule are
integrated and compared to EV for performance measurement. A CA has work and planning packages.
Work package (WP). The work defined at the lowest level of the WBS for which cost and duration are estimated
and managed. Work packages usually have an identifier. These identifiers provide a structure for hierarchical
summation of cost, schedule, and resource information and form a code of accounts. Each WP is part of a
control account.
Planning package. The work defined at a WBS component below the CA for which cost and duration are
estimated, but has not been broken out for measurement.
32 Section 3
3.2.2 SCHEDULE PLANNING
All PMBOK
®
Guide Project Schedule Management processes are used within EVM with the addition of adopting
rules for performance management. The rules noted are included in Section 3.2.2.2.
3.2.2.1 CONSIDERATIONS FOR SCHEDULE PLANNING
Additional considerations for schedule planning are:
Set a performance measurement baseline by planning the total effort needed. Detailed planning does not
need to be accomplished for the whole project at the start of the project. Place future efforts in the control
account and plan the details at some future point in time using rolling wave planning. When using a rolling
wave planning approach, develop a rolling wave plan to align the rolling waves with project milestones. Then
by using planning packages initially, use summary-level schedule activities that align with CAs to plan for work
between project milestones in the future. Plan work in detail prior to execution within the applicable rolling
wave period.
Rolling wave planning is an interactive planning technique in which the work to be accomplished in the near
term is planned in detail, while future work is planned at a higher level. The project team usually waits until the
project component or subcomponent is defined and its requirements are approved. Once this is accomplished,
the project team begins the detail planning for WBS/CA for this part of the project. The rolling wave approach
allows for the enhanced level of integration to be accomplished at manageable intervals. Note that future
parts of CAs that are not detail planned in WPs are included in planning packages. Planning packages do not
need to include EV techniques, but need to be further broken out into WPs before the work is started. This is
often accomplished by the project team during detail planning for the next rolling wave, but only needs to
be accomplished before the work begins to allow a planning package to be converted into work packages.
The project team may also follow established procedures (organizational process assets).
Define project-specific rules, such as level of accuracy, units of measure (hours, days, and weeks), control
thresholds, reporting format, and so on, to support EVM implementations.
Specify rules of performance measurement that are consistent with scope and cost planning (see Sections 3.2.2.1
and 3.2.3).
Develop the rules for estimating the duration and establishing schedule, including the level of detail (basis of
estimate) and how risk and uncertainty will be incorporated and/or characterized in the schedule.
Address the integration of the scheduling software within the overall project management information system (PMIS).
33
3.2.2.2 RULES OF PERFORMANCE MEASUREMENT CRITERIA
Determine the measurement method, technique, or criteria to be used for progress evaluation of the activity types
within a WP. During the planning process, the project manager and those managing the CAs determine an approach
for measuring the scope accomplishment for each CA. The scope is typically measured at the work package level, but
can be measured at the activity level.
EV is a measure of the work performed based on a formula, taking into account the budgeted and actual cost or
other unit of measure of that work at a given point in time. The method for measuring work performed is selected
during project planning prior to commencing the work, and is the basis for performance measurement during project
execution. In this standard, all costs are provided in U.S. dollars.
Organizations may have explicit guidelines or processes for selecting measurement methods. The guidelines
should include method selection, measurement accuracy, measurement period, measurement unit, data collection,
and reporting. Choosing an inappropriate performance measurement method may result in misleading status, and
subsequently result in nonconstructive or ineffective management action.
The primary goal in choosing a performance measurement method is to have the most objective, accurate, and
timely assessment that is appropriate for the project work, schedule, and cost status. Each work package has its own
unique characteristics; therefore, there is not one single best way to measure progress. To accommodate the different
types of work, there are several accepted methods to measure work performance. The EV methods are generally
assigned and applied to activities within a work package.
There are three classes of work: (a) discrete effort (e.g., measurable work), (b) apportioned effort (e.g., work that is
factored to measurable work), and (c) level of effort (LOE) (e.g., nonmeasurable work). Each of these classes has one
or more measurement methods available, and each method has its own specific characteristics that determine how
it is applied to the work. The major drivers to determine the method are duration and tangibility of the deliverables.
Table 3-1 includes guidelines for selecting appropriate types of measurement methods. Table 3-2 provides key points
to consider when determining the measurement method.
The example in Appendix X4 expands upon the examples in this section.
Duration
Characteristics
Type of Work/
Tasks
Tangible
(Measurable)
Fixed Formula
Apportioned Effort
Weighted Milestone
Percent Complete
Physical Measurement
Short
(1-2 Periods)
Longer
(Exceeds 2 Periods)
Intangible
(Nonmeasurable)
Level of Effort
Table 3-1. Guidelines for Selecting Measurement Method
34 Section 3
Measurement Methods Key Points to Consider When Determining the Method
Discrete
Effort
Fixed Formula
Weighted Milestone
Percent Complete
Physical Measurement
Apportioned Effort
Level of Effort
50/50, 25/75, 0/40/60, etc.—Using this method, work is credited for
EV as soon as it starts with a specific percent. (25/75 starts with 25%
being taken in the first period in which the method is used with 75%
taken when work is completed). Note that the real progress is invisible,
and this method can give a false sense of accomplishment. This
measurement method should only be used for work that spans two or
three reporting periods.
0/100—The 0/100 method does not incrementally credit EV for partial
work; therefore, the start of the work is not explicitly reported. This
measurement method should only be used for work that is scheduled to
start and complete within one reporting period.
The weighted milestone method has one or more milestones in the
measurement period. Each milestone has an objective, verifiable
accomplishment that is associated with it. The milestones are weighted
to reflect the relative accomplishment of the milestones against the
whole.
The percent complete method entails an estimate of the percent
complete of the BAC at each measurement point. There should be
measurable criteria associated with the percent complete
measurements, or they can be subjective and inaccurate.
The evaluation of work progress in the project work packages is related
to the physical nature. Whereas testing, measurement procedures,
and/or specifications should be explicit and be agreed upon in advance.
To use apportioned effort, the project manager should have pragmatic
knowledge and validated performance records to create the percentage
of apportioned effort pertaining to the discrete work package.
Level of effort (LOE) can be misused and distort the real progress of the
project, because the PV of the LOE determines EV for each reporting
period (there is never a schedule variance) no matter how much of the
work is actually performed.
Table 3-2. Key Points When Determining Measurement Methods
Discrete effort. Discrete effort is a tangible, measurable activity that is planned, measured, and yields a specific
output. Discrete effort is directly related to specific end products or services with distinct and measurable
points. Examples include pouring concrete for a bridge abutment or writing a user’s manual.
Four principal measurement methods are available for WPs classified as discrete effort. Measurement methods
used for discrete effort enable accurate measurement of work accomplished. The key is to measure the output
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