The benefits of using earned value management event
This was a very popular event with 80 attendees at Airbus Pegasus House, 2 July 2019, to learn about how and why Airbus use Earned Value Management and the benefits it gives them.
Earned value Management is often used as a project control system for large complex projects, but can be difficult to implement successfully. Our speakers tonight, Simon Tomlinson and Richard Allison have years of experience of implementing Airbus EVM systems. Simon is Lead PMO for Airbus Single Aisle Chief Engineers Team and Richard is Head of PMO for A350 wing and landing gear developments.
Simon opened the presentation with an introduction to Airbus, who are celebrating their 50th Anniversary. It is a global business with 134,000 staff, 90% of which are in Europe, with over 11000 aircraft delivered. Airbus Filton are responsible for the Engineering and Procurement for all wings, fuel systems, and landing gear. There is a Project and Programme Management Centre of Excellence, which covers process, methods, tools, learning, strategic planning and operational support. The latter has PM Business Partners, which include Simon and Richard, who link the CoE with business areas to improve their PM capability.
Simon defined EVM as integrating scope, schedule and cost simultaneously, and providing a baseline. It provides shared transparency of the project performance, measures physical progress and cost performance, and through trend analysis helps forecast performance and identify potential issues. It is not a financial tool; it is good PM practice. It is not a reporting tool; it provides the basis for robust business discussions.
There are three prerequisites:
1. A robust project structure, (statement of work, clear responsibility of cost and delivery, dedicated cost collection and excellent change management); 2. Robust schedule management, (aligned with scope, with targets and baseline); 3. Robust cost management, (aligned with scope, with targets and baseline).
At Airbus EVM is used throughout the work break down structure, not just at work package level. It includes project and programme levels. Simon described the EVM terms of CPi, SPi, CV and SV in detail. It is essential to be able to accurately measure the value of deliverables.
Airbus have several Golden Rules for applying EVM, which include only using deliverables which can have the value calculated, deliverables must have a similar value, and there needs to be the same granularity for spend and delivery. Selecting the milestones is key, and there is a list of rules which are followed, including a minimum value of £100K, at least one per month and enough on the critical path.
The performance metrics of CPI, SPI, CV and SV are used to track trends showing good or poor performance, which enables robust discussions and decisions to be taken to keep the project on track against the agreed baseline.
There are pitfalls which need to be managed. Deliverables are not claimed until they are 100% complete, so there is always a lag. This can be smoothed by selecting larger work packages, to have a lot of shorter duration activities, and to split work packages up if necessary. Be aware of precision vs accuracy, EVM is not an exact science. CPi and SPi are never quoted to more than 2 decimal points, the emphasis is on trends and not on absolute figures as accuracy is never certain. Data should always be checked against instinct; does it feel right? Backlogs in claiming deliverables are minimised to reduce the effect of lag. The Golden Rules provide a robust foundation and have been developed over a number of years.
The Golden Rules are explained to staff with an explanation of the rationale and hints of what to look out for. The guidance aims to tell a story about why a Golden Rule is important. Richard took over to explain what Airbus actually do. The key benefit is to clearly show the financial impact of cost overruns and schedule delays. Airbus aircraft are assembled from modules which are manufactured in UK, France, Germany and Spain. Therefore, EVM has to be applied consistently for all of the modules across the 4 countries.
The majority of cost used in the context of EVM is resource, people based, therefore the resource profile drives the cost in Euros. Capital expenditure and supplier spend is not used for EVM. Richard worked through a number of examples which highlighted the key attributes of the EVM system and the information it is able to provide.
He concluded with a summary of what worked and what does not work. What works includes strong governance, good stakeholder engagement, and good analysis of the data, to understand what it really means. What does not work is cheating the figures – you will always get caught out!
In summary, at lot can be learned from Airbus’s experience about how they have implemented EVM, and how they have made it work for their specific business needs. The Golden Rules and lessons learned should provide useful guidance in thinking about how to implement and adapt EVM systems to meet your specific business needs.
SWWE Branch Chairman