Time-Centric Earned Value


Time-Centric Earned Value

What we have discussed to this point is the traditional and most robust form of earned value. Whenever the resources are available to apply the method, it should be done because it focuses on the accomplishments that lead to project value being delivered as promised. However, the collection and reporting of actual cost is often impractical, thereby rendering the quantitative measures unobtainable. In that event, there is an alternative, though less robust, earned value method named "time-centric earned value," [12] first described to the industry in the author's presentation [13] with James R. Sumara to the PMIŽ National Symposium in 1997.

Time-Centric Principles

The main idea behind the time-centric earned value system is to set a PMB based on planned work package starts and finishes over the course of the project. Time-centric earned value is very close to the concept of "work units" or "standard units of work" as a measure of accomplishment rather than a specific dollarized WBS cost account. Instead of a standard unit of work, however, time-centric earned value focuses on a completed task, with unknown actual cost, as the unit of value in the project.

Although a dollar value is not assigned to each work package start or finish, the total collection of starts and finishes, if executed completely, does represent the total scope (and value) of the project. The total scope of the project does have a dollar planned value (budget).

The historical reporting for purposes of determining variances remains a component of the time-centric system. Instead of earning a dollar value, what is earned is a start or a finish. The PMB is a set of planned starts and planned finishes. Therefore, there is a variance that can be defined thus:

Variance (start)

=

Earned starts - Planned starts

Variance (finish)

=

Earned finishes - Planned finishes

All the rules we have discussed about what constitutes a claim of credit apply. The definitions of start and finish used in the traditional method to gate the expenses for purposes of calculating the variances to the earned and planned value still apply, but apply to whether a task start can be claimed and not whether actual cost is to be applied. So too do the ideas of rebaselining, calculating the ETC, and the EAC still apply, but apply to the idea of finishing the project on a time basis and not a cost basis.

Time-centric indexes can also be defined and calculated:

Task start performance index (TSPI)

=

(Earned starts)/(Planned starts)

Task finish performance index (TFPI)

=

(Earned finishes)/(Planned finishes)

Figure 6-5 provides an illustration of a project wherein the PMB has 20 starts in the first three periods. We see in this figure that the project team has indeed started 20 tasks, but the starts are at a different pace than planned. We can calculate a variance for each period:

Start variance1

=

3 - 5 = -2 starts

Start variance2

=

9 - 10 = -1 start

Start variance3

=

6 - 5 = 1 start

Start variance4

=

2 - 0 = 2 starts

Σ (All variances)

=

0 start

click to expand
Figure 6-5: Time-Centric Project Start Example.

At the end of four periods, the project is caught up on starts. The project manager can also forecast how soon the project will attain all the starts planned in the PMB using the performance indexes. Table 6-6 provides the start performance metrics. Similarly, we see in Figure 6-6 the finish performance for the example project. Variances similar to the start variances can be calculated; indexes can also be calculated as was done for the project starts. Table 6-7 provides those calculations.

Table 6-6: Start Performance Project Example

Planned Starts by Month [*]

Actual Starts by Month

Monthly Index

Cumulative Index

Forecasted Finish

Month 1: 5 starts

Month 1: 3 starts

TSPI1 = 3/5 = 0.6

Cum Starts = 3

Remaining = 17

Cum = 3/5 = 0.6

Adjusted remaining starts = 17/0.6 = 28

Forecast schedule remaining = 2 months * 28/17 = 3.3 months

Month 2: 10 starts

Month 2: 9 starts

TSPI2 = 9/10 = 0.9

Cum Starts = 12

Remaining = 8

Cum = 12/15 = 0.8

Adjusted remaining starts = 8/0.8 = 10

Forecast schedule remaining = 1 month * 10/8 = 1.25 months

Month 3: 5 starts

Month 3: 6 starts

TSPI3 = 6/5 = 1.2

Cum Starts = 18

Remaining = 2

Cum = 18/20 = 0.9

Adjusted remaining starts = 2/0.9 = 2.2

Forecast schedule remaining = 0 months * 2.2/2 = 0 months (no remaining schedule available)

Month 4: 0 starts

Month 4: 2 starts

TSPI4 = 2/0 = indefinite

Cum Starts = 20

Remaining = 0

Cum = 20/20 = 1.0

Adjusted remaining starts = 0/1 = 0

Forecast schedule remaining = 0/0 = indefinite

[*]See related figure for a graphical presentation of this example.

Table 6-7: Finish Performance Project Example

Planned Finishes by Month [*]

Actual Finishes by Month

Monthly Index

Cumulative Index

Forecasted Finish

Month 4: 3 finishes

Month 1: 3 finishes

TFPI1 = 3/3 = 1

Cum Finishes = 3

Remaining = 17

Cum = 3/3 = 1.0

Adjusted remaining finishes = 17/1 = 17

Forecast schedule remaining = 2 months * 17/17 = 2 months

Month 5: 10 finishes

Month 2: 7 finishes

TFPI2 = 7/10 = 0.7

Cum Finishes = 10

Remaining = 10

Cum = 10/13 = 0.77

Adjusted remaining finishes = 10/0.77 = 10.4

Forecast schedule remaining = 1 month * 10.4/10 = 1.04 months

Month 6: 7 finishes

Month 3: 6 finishes

TFPI3 = 6/7 = 0.86

Cum Finishes = 16

Remaining = 4

Cum = 16/20 = 0.8

Adjusted remaining finishes = 4/0.8 = 5

Forecast schedule remaining = 0 months * 5/4 = 0 months (no remaining schedule available)

Month 7: 0 finishes

Month 4: 4 finishes

TFPI4 = 4/0 = indefinite

Cum Finishes = 20

Remaining = 0

Cum = 20/20 = 1.0

Adjusted remaining finishes = 0/1 = 0

Forecast schedule remaining = 0/0 = indefinite

[*]See related figure for a graphical presentation of this example.

click to expand
Figure 6-6: Time-Centric Project Finish Example.

Forecasting with the Time-Centric System

Just like in the traditional earned value system, forecasts can be made using the same formula as we developed for the forecast in that system:

  • Forecast = Actual performance + Remaining performance/Index

For example, in the first period the actual starts are 3, the remaining performance for the project is 17, and the index is 0.6. The forecast is therefore:

First period index

=

3/5 = 0.6

Actual starts

=

3

Forecast

=

3 + 17/0.6 = 3 + 28.3 = 31.3 starts

where 31.3 = "equivalent" starts.

How should the project manager interpret the forecast given above? The equivalent starts represent the length of the project as though the PMB were 31.3 starts rather than 20. In other words, based on the performance in the first period, the project is forecasted to be 11.3/20 = 56.5% longer in schedule than the PMB. Fortunately, by the second period the trend line turns more favorable:

Cumulative index

=

12/15 = 0.8

Cumulative starts

=

12

Forecast

=

12 + 8/0.8 = 22 starts

where 22 = "equivalent" starts.

As with the traditional earned value system, the most valuable contribution of the calculations is to stimulate the project team to take action necessary to deliver the value to the project sponsor as defined on the project balance sheet and specified in the project charter. Whether or not the time-centric or traditional system is used, the calculations should have the same effect and provide the requisite catalyst to correct whatever is not working well in the project.

[12]The original work on "time-centric earned value" was done by the author and colleague James Sumara while working with the Lanier Worldwide business unit of Harris Corporation in the mid-1990s. Although the traditional earned value system was well known and practiced at Harris, the Lanier Worldwide business unit did not have the mechanisms for complete collection of the actual cost of the labor employed for internal projects. Time-centric earned value was developed for the Lanier Worldwide project office to fill the need for an earned value reporting tool.

[13]Goodpasture, John C. and Sumara, James R., Earned Value — The Next Generation — A Practical Application for Commercial Projects, PMI '97 Seminars and Symposium Proceedings, Project Management Institute, Newtown Square, PA, 1997.