35
with reasonable accuracy. Other methods of measure could be possible given the nature of the work; however,
the four principal discrete effort measurement methods are:
Fixed formula,
Weighted milestone,
Percent complete, and
Physical measurement.
Apportioned effort. Apportioned effort is used for work with a direct, supportive relationship to discrete work.
The value for the support task is determined based on the EV of the referenced base activity. Apportioned
effort can include such work as quality assurance, inspection, and testing activities. An apportioned work effort
is estimated as a percentage of the referenced discrete work effort. The percent allocation to discrete effort
is used when there are sufficient performance records and knowledge of the interrelationship between the
apportioned effort and the discrete effort. In Figure 3-2, the discrete effort at the second measurement point
is $5,200. The apportioned effort is 10% of the discrete effort. Therefore, the apportioned value at the second
measurement point is 10% of $5,200 or $520. The actual discrete effort accomplished at the end of the second
period was $7,800; therefore, the apportioned EV at the second measurement point is 10% of $7,800 or $780.
Apportioned
Earned Value Planned Value
1st 2nd 3rd
Measurement
Points
Work Package (Apportioned)
Relevant
Discrete Effort
Apportioned
Effort 10%
Relevant
Discrete Effort
Apportioned
Effort 10%
$5,200
$520
$5,200
$520
$7,800
$780
$5,200
$520
$3,120
$312
Star
tFinish
Uncompleted MilestoneCompleted Milestone
Figure 3-2. Example of Apportioned Effort
36 Section 3
Level of effort (LOE). Level-of-effort (LOE) activities should be kept to a minimum because the method does
not provide an indication of schedule performance. In many cases, the traditional use of LOE on activities
could be better measured through apportioned methods. When LOE is used, it should only be used on efforts
that do not directly produce definitive end products that can be delivered or measured objectively. The use of
LOE means that EV is based on the passage of time and consumed project resources. LOE is not necessarily
characterized by a uniform rate of work over a period of time. A planned value (PV) is assigned to each LOE
work package for each measurement period. This PV is credited as EV at the end of the measurement period.
EV is accrued in line with PV, which means LOE activities do not have a schedule variance. Cost variance
(CV) can be incurred, however, because the actual cost (AC) is often not exactly the same as the EV. It is also
important to note that LOE activities can accrue EV in the absence of AC. This can happen when work was
planned, EV is earned, but no work—therefore no costs—are actually incurred. It is this scenario where LOE
is not the preferred method and should be limited or not used at all.
Using the same work package as in Figure 3-2, Figure 3-3 shows where EV is equal to PV at all measurement
points. This limits the performance measurement insight from this measurement method for the activity in question.
Level of
Effort
Earned Value Planned Value
1st 2nd 3rd
Measurement
Points
Work Package (Level of Effort)
Weekly
Values
Weekly
Values
$520$520
$520
$520
$520
Star
tFinish
Uncompleted MilestoneCompleted Milestone
Figure 3-3. Example of Level of Effort (LOE)
37
3.2.3 COST PLANNING
In the cost planning stage:
All PMBOK
®
Guide Project Cost Management planning processes are used within EVM.
During planning, the project team defines which performance measurement methods are used, including the
value, in some unit of measure, typically cost, that will be monitored. Traditionally this has been a time-phased
budget expressed in units of some currency (e.g., dollars, euros, yen), but any value measure can be used,
such as hours.
The project team adopts rules for estimating costs, including the level of detail. This determines how much
detail is captured in the basis of estimate. This is important depending on the measurement method being
used. The detail developed and captured in the cost estimate should support the proposed measurement
design. The cost estimates and the rationale for them are often captured in a document called the basis of
estimate.
The project management plan and procedures provide criteria regarding how risk/uncertainty is incorporated
into the estimate and then characterized in the reserves (whether management or contingency). Frequently,
EEFs and OPAs provide specific guidance on how risks are incorporated into both the schedule and cost
baselines.
Additionally, the project team should time phase the cost in the same manner as the scheduled work is time
phased.
3.2.4 RESOURCE PLANNING
In the resource planning phase, it is essential to identify and plan for the appropriate required resources. It is also
important for these resources to be available during execution to ensure both timeliness and quality of the data to be
collected.
All PMBOK
®
Guide Project Resource Management planning processes are used within EVM.
The project team determines the criteria for the management control points, which are the CAs.
The project team develops a responsibility assignment matrix (RAM) that tracks WBS (scope) to the responsible
organization (OBS) in which all work scope and resources or cost under the EVM approach are mapped to
38 Section 3
control accounts (see also Section 3.3.1). Prior to setting up the RAM, the following structures should be
developed:
Breakdown of the WBS should be to the lowest level at which work will be managed. For some WBS
components, such as a subsystem which is being purchased or outsourced, the need for further breakdown
is not necessary. Other WBS at the subsystems level may need to be designed and the WBS further
decomposed so the design can be managed.
Level of breakdown for the OBS structure (organizational units, cross-functional teams, or other structure),
is the lowest level at which work is managed.
3.2.4.1 CONSIDERATIONS FOR RESOURCE PLANNING
To integrate the scope, schedule, and various baselines, several considerations need to be made before a common
integrated structure is established. Such a structure needs to include:
Responsibility assignment matrix (RAM). A grid that shows the project resources assigned to each work
package. The RAM shows the integration of the work in the WBS and the resources in the OBS for the purpose
of assigning project scope to a person or a team. The RAM delineates levels of control and responsibility and
indicates the authority and responsibility levels for the project. The intersection points of the OBS and the WBS
are typically the control account. The individual responsible and accountable for the successful delivery of the
scope, schedule, and budget in a CA is usually referred to as the manager of the control account or the control
account manager. The RAM is further described in Section 3.3.1.
CA structure. A CA is associated with one hierarchical path within the WBS structure and typically one OBS
element. It is permissible for multiple organizations (frequently called performing organizations) to work within
a team on the scope within a control account, but management responsibility and accountability usually belong
to only one organization (the responsible organization).
Level of detail. The project manager should consider the appropriate level of detail for the project. The project
manager should recognize the dangers of keeping the level of scope decomposition too high or too low. At
too high a level, the size of the CAs (in budget, schedule, and/or scope) may overwhelm the manager of the
CAs. At too low a level of the WBS, the sheer number of CAs will be distracting, but more likely detrimental
to the successful accomplishment of the work within the parameters of the control account. Additionally,
driving the level of the CA down increases the amount of management oversight, the intervention required by
stakeholders, and also the cost of the monitoring and control processes and practices. The level of detail also
should be managerially consistent with the capability and span of control of the control account manager. The
project needs to be staffed with control account managers with the right level of knowledge and experience,
39
otherwise there will be limited value to creating the control account management structure. The control
account managers need to receive training and coaching in order to manage the CAs that are appropriate
for the project. Ultimately, there needs to be a balance between the needs of the project for performance
measurement and the capabilities of the project team and organization.
3.2.5 RISK PLANNING
Important risk planning considerations are:
All PMBOK
®
Guide Project Risk Management planning processes should be used within EVM.
The project team establishes the process for determining how the work for risk responses is included in the
baselines.
The project team, often with sponsors, determines the extent to which the contingency reserve and/or
management reserve are going to be used and to what extent the baselines are going to be risk based. Data
analysis, as described in Sections 6.5.2., 6.6.2.6, 7.2.2.6, 7.4.2.2, and 9.6.2.1 of the PMBOK
®
Guide should
be used.
The project team integrates risk management into the development of the risk-based cost and schedule
estimates, including quantitative cost and schedule risk analysis.
Risk planning should also address the EEFs around the use of contingency reserve and management reserve.
This standard follows the PMBOK
®
Guide, which may not be the environment in which the project will handle risk
management and the resulting reserves. It is critical to project success to have realistic expectations about risks that
need to be addressed within the project budget. The project team, including those managing at the CA level, can best
manage effort with some reserve(s). How that reserve is documented and measured needs to be clear to the project
team and the stakeholders. Note, management reserve is often created for management control purposes and is
reserved for unforeseen work that is within scope of the project.
3.2.6 OTHER PLANNING (QUALITY, COMMUNICATIONS, PROCUREMENT, AND STAKEHOLDER)
Other considerations regarding planning are as follows:
All PMBOK
®
Guide processes within the Quality, Communications, Procurement, and Stakeholder Management
Knowledge Areas are needed to implement EVM. It is essential for a sustainable EVM implementation to be
sponsored continuously by project governance.
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