The Association of Project Management (APM) has produced a guide for integrating Risk and Earned Value.
I sit on a NDIA Committee in the Program Management Steering Committee (PMSC) that is addressing the same issue - how can risk and opportunity be integrated with Earned Value.
The core issue here is what does it mean to be managing a program using earned value if the risk of completing on time or on budget is not considered in the Performance Measurement Baseline?
The establishment of the Performance Measurement Baseline is described in a anchor diagram.
- Establish the project context
- Develop the Statement of Work and initial WBS
- Develop the top down budget and schedule
- Identify the strategic level risks
- Perform the initial risk analysis
- Revise the top down budget and schedule
- Integrated the WBS and OBS
- Create control accounts and perform risk analysis
- Update the initial Performance Measurement Baseline
- Update and baseline the project risk register
- Approve the PMB and the Management Reserve (MR)
The second must read document is the new - Version 2 - Practice Standard for Earned Value Management. I started working on the agile and EVM appendix, but discovered the PMI Practice Guide is not based on ANSI-748B. Fortunately the Practice Guide dropped that appendix, so it was a moot point.
What is important is that the Earned Schedule Appendix made it thanks to the work of many, but especially Kym Henderson.
What's interesting though is ANSI-748B is mentioned 3 times.
- Page 8 - contingency
- Pages 46 and 47 - contingency reservers
- Page 52 - contingency
This contingency paradigm is common in construction and the Department of Energy.
No where else in the Practice Guide is 748B mentioned. I find this a big gap, since 748B desribes 32 criteria for a successful EVM System.
The chapters of the Practice Guide address many of the criteria found in 748B
- Organize the project
- Assign responsibility
- Develop schedule
- Establish budget
- Determine measurement methods
- Establish Performance Measurement Baseline (PMB)
- Analyze project performance
- Maintain PMB
These activities can be found in the 32 criteria shown below. The colored items are the 11 mandatory criteria needed for the success of any project independent of Earned Value.
1. Define the WBS - Chapter 3.4.3
2. Identify the organizaiton - Chapter 4
5. Integrate the WBS and OBS - Chapter 4.3.2
6. Schedule the work - Chapter 5
7. Identify the products and milestones - Chapter 2.4 (basics), Chapter 3.2.1 (Charter)
8. Set the time phased budget - Chapter 6
16. Record the direct costs - Chapter 9.2.2
23. Determine variances - Chapter 9
25. Sum data and variances - Chapter 9
26. Manage action plans - Chapter 10
28. Incorporate changes Chapter 10
