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EARNED VALUE HAS A FATAL FLAW!

*Brought to You by Dave Litten*

**EARNED SCHEDULE - The New Kid On THE BLOCK**

Welcome to my Earned Schedule article and you and I are going to look at the **Earned Schedule** metrics, analysis and control plus their application in the real world. You will learn how regular earned value should NEVER be used to predict Schedule Variance and Schedule Performance Index ...

So let's make a start right away. So the solution to the problems with earned value is to use earned schedule, you see you will be using **Earned Schedule** with your critical path method where you'll be applying the earned schedule calculations with your network diagram and Gantt chart and so on, as you track actual work completed on each task.

You see, being ahead or behind schedule often depends on where each task was placed on the baseline, so critical path assessment complements the true schedule position.

As schedule variance analysis and critical path schedule analysis needs to be performed to complement the result of the earned value management schedule variance and performance metrics.

As I've said you can still use earned value for your cost base data whereas you will use earned schedule for all your time based, or schedule data

Let's look at the way ahead. There are several methods that you can apply to improve the accuracy and reliability of your traditional earned value management scheduling metrics.

You'll want to continue to use earned value management for your cost base data.

You'll still want to use critical path management to manage your schedule both in terms of status and forecast, and to use your critical chain management in the use of the buffers and to manage the resources to keep on track and now, you’ll be able to use your own schedule management for all of your time based calculations.

As I've shared with you, earned schedule is a new concept developed by Walter Lipke back in 2003 and it's now an extension used within the project management Institute's of America practice standard for earned value management.

All of you folks that are preparing for your project management professional exam, will also want to get up to speed with earned schedule.

Now, as you've learned thus far our schedule is analogous to earned value, but instead of using costs in some monetary units – dollars, pound sterling, yen, euros, - for measuring scheduled performance, you'll be using time-based data.

Rather than just looking at scheduled performance using a dollar value of work accomplished against the plan, earned schedule looks at when the work was supposed to be completed - and this is its power.

Let's go back to our diagram we’ve already used. In this case showing a timeframe, let's imagine in weeks, where today’s time is at the end of week 12

Up to this point you've been plotting your regular earned value amounts let’s imagine at the end of each week and here is your current value of earned value.

Here’s the planned value graph shown you up to the end of your project:

What you’d want to do is to throw your earned value amount back to the point where it hits the planned value curve, and drop it down. And in this example I'm showing, although you're at week 12, what you’ve earned in terms of schedule is only up to week 9.

In other words, in order to measure earned schedule you need to determine when the work was supposed to be earned, just as I've shown on the above graphic.

So, at what point in time using the current earned value - when should it have actually occurred?

Well, we just shown this diagrammatically, what we need to do is to be able to do it using a calculation.

You know that you've got to calculate this by crossing the horizontal line from the current cumulative amount of earned value to the planned value curve.

It's the intersection of this line with the PV curve, which gives you your earned schedule.

As you can see from this diagram, in this particular example, the earned schedule is when it equals planned value at the nine-month time-frame. Therefore, earned schedule is the point in time when the current earned value was planned to be accomplished,

Because of course, earned schedule is the point at which the project planned value was supposed to be equal to the current earned value. That's all we're saying here.

Let's now start to look at some of our new metrics starting off with actual time or AT.

In this example, the total number of periods executed from the beginning of the project, is twelve months.

The actual time in this example, would be twelve months.

Okay, let's look at the planned duration, PD, another metric which we’ll need for earned schedule.

This is the original duration of the project, in this case sixteen months.

Here are your new earned schedule metrics in time units just in the same way as earned value needed earned value, planned value, and actual cost, here we're needing:

Earned Schedule (ES) (9 months)

Actual Time (AT) (9 months)

Planned Duration (PD) (16 months

In a similar way to the traditional earned value management metrics, new formulas can be generated for schedule performance, so here’s the first.

Looking at scheduled variants don't get confused we've got a lowercase “t” here showing you that it’s earned scheduled metric equals in this case the earned schedule minus the actual time

SV(t) = ES – AT

SPI(t) = ES / AT

The **Earned Schedule** in this case is 9, so we would calculate this in this case by looking at 9 minus 12, which as you would rightly expect, to show you a negative number - showing you that you're behind schedule.

So in order to distinguish between traditional metrics and earned scheduled metrics, we use the lowercase “t” representing time.

Using my example here, the schedule variance and scheduled performance indexes are:

Scheduled Variance in terms of time, equals ES minus AT.

Let's plug them in. ES is 9, and actual time is 12, 9 minus 12 gives you negative three months, showing that you are currently three months behind schedule.

So we can answer already the question as to whether SPI will be betting better or worse.

Let’s look at SPI in the time domain. This is calculated by taking ES and dividing by AT.

ES in this case, earned schedule, is 9 divided by AT which is 12, giving you 0.75

Just as before, when using traditional earned value metrics when you've got a ratio of SPI less than one - it means you're behind schedule - just as we've calculated already.

The difference in this case however, you are measuring the schedule variance in units in time instead of translating them from money units as before. The schedule variance in earned value is always shown as a dollar amount, which is not only confusing, once the project gets beyond 2/3 through, will actually start giving you false values:

In this example you are three months behind schedule as shown above, and the schedule performance index shows that for every hour worked we were only 0.75 of an hour productive in accomplishing the work planned.

In other words, we only got 45 minutes work out of every hour of the work planned.

Referring to the problems with earned value management, the SPI dollar amount in the old world, and the Schedule Variance (SV) dollar values at the end of the project, such problems will have been fixed or resolved - by instead using Scheduled Performance Index in the time domain, and Schedule Variance (SV) in the time domain of earned schedule.

Keeping on the same example here, let’s assume just for the moment, that this project completes in month 20, and that your total approved budget is $100,000 at the time of project completion.

Let's plug those numbers in and see what they look like:

At the end of the project, the earned value is a hundred percent complete times the budget which is a hundred K. The planned value at the end of the project equals your budget which is the budget at completion of a hundred K

Whereas your earned schedule equals your planned duration, which equals sixteen months, and your actual time at the end of the project - I've said assume it completes in month twenty, equals twenty months.

So, using traditional earned value metrics we know it gets full so as you go towards the end of the project where your schedule variance in dollars or some other monetary value will equal zero at the end using traditional EVM metrics.

Your SPI will equal one by the same token. Whereas using earned schedule and plugging these numbers in, we can see that the schedule variance in the time domain equals ES minus AT

That is 16-20, giving you four months behind schedule.

At this juncture, assuming that your project is due to finish in month 20, you know you ought to come in four months late and your SPI in the time domain, equals ES divided by 80 giving you 0.8, showing you since it's less than one, that yes indeed, you're going to come in late.

Four months to be precise.

Whereas SPI(t) and SV(t) in the time domain, provided good indicators of project status while your traditional money-based SPI and SV ended up at 1 and 0 respectively - regardless of the project coming in 4 months late.

If proof were needed, this simple monetary example I’ve given you here, shows that using Earned Schedule, will get you the right information - and that information will tie in exactly with your critical path analysis and your network diagrams that you’re using in conjunction with earned schedule.

Discover what makes Earned Schedule different and how it accurately tracks your project's real schedule performance, so you too, deliver speedy on-time completion.

Project Managers now have a schedule analysis tool connected directly to Earned Schedule data providing you with true time-based indicators!

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