CHAPTER 7

Tracking Project

Objectives

On completion of this chapter, you should be able to

1. Understand how to set a baseline
2. Understand how to set the status date and the current date
3. Understand how to record progress of various tasks during project execution
4. Understand what is meant by earned value (EV)
5. Understand how MS-Project can be used to compute the EV metrics

In previous chapters, we discussed the use of Microsoft Project Professional, for project planning. Many a professional and organization limit the use of the software just for that. However, MS-Project can also be used to update the progress made. This is very important, considering that this will help us use MS-Project throughout the project life cycle. After updating the tasks with the progress made, we can do earned value analysis (EVA), to compute important parameter indices like Schedule Variance, Cost Variance, Cost Performance Index, and Schedule Performance Index. In this chapter, we shall discuss how Microsoft Project Professional can be used for tracking projects and doing EVA, to analyze project performance. We will also study about various formulas related to EVA, with simple examples.

Establishing a Baseline and Updating the Schedule

We can update the tasks with percentage completion information, and actual start and end dates, to reflect the actual status of projects. We need a file to do this and we use the file enhancement-start.mpp. Copy the file from the Practice-Files/Ch07 folder to your working directory and rename it as enhancement.mpp.

1. Double click the file and have a look at the tasks, in the Gantt Chart view (Figure 7.1).

   To start with project tracking, we need to prepare the file and the following are a few steps to be followed for the same.

Figure 7.1 Gantt chart of the software enhancement project

2. In the View tab, select Tracking Gantt from the pull-down menu on the left-hand side. Tracking Gantt view will be shown. You will now have thin bars representing tasks as shown in Figure 7.2. The bars also turn red as the Critical Path gets highlighted in red. All bars become red in this case, as all tasks are on the Critical Path.

Figure 7.2 Tracking Gantt chart of the project

3. The next step is setting a baseline. Baseline is like a snapshot and provides a basis for comparison. To set a baseline, select the Project tab. From the Schedule group, click set baseline and select set baseline.

   Set Baseline dialog will appear, as shown in Figure 7.3. Accept all default values and set the baseline for the Entire Project. You can set 11 baselines in MS-Project. The baseline bars will be shown in gray, along with bars showing planned values.

   Next we define the status date using Project Information Dialog. In the Project tab, Properties group, click on Project Information button. The Project Information dialog box appears, as shown in Figure 7.4. As you all know, in any project, it takes time to get progress information to us, as data may have to be gathered from a remote project site. The Status Date setting allows us to enter the date/time when the data are valid. Let us say that we have the status of the tasks that were completed as effective at 17:00 on Friday, May 20th, 2016. We need to set this up through the Project Information dialog. Select using the calendar pick or enter using the keyboard, the Status Date. The Status Date assumes a default point in time of 17:00.

Figure 7.3 Set baseline dialog box

Figure 7.4 Use project information dialog box to define status date, current date and so on.

4. Now we are ready to feed the actual task or project information. Let us say, in this case information has come in that task Requirements was delayed by a day. We need to feed that into our schedule. Select the task Requirements in the Gantt Chart view.
5. In the Task tab, in the Schedule group, click the arrow next to Mark on Track and select Update Tasks (Figure 7.5). Update Tasks ­Dialog appears. Mention the actual start date in the appropriate format or use the calendar pick list to select the start date. The task bar of the first task shifts now, along with dependent tasks. Baseline schedule will also be juxtaposed, making the comparison easier.

   Next we shall update tasks with percentage completion. For this, click on the task that you want to update in the Gantt Chart. To start with, select the task Requirements and from Task tab and the Schedule group, click 100 percent. The bars will get filled and 100 percent will be displayed near the task bar, in the Gantt Chart view. Like this, update 75 percent completion, for the task Create Detailed Functional Specs. (Note that you can easily segregate incomplete tasks as the indicator column gets ticked as tasks are updated to 100 ­percent completion as shown in Figure 7.6)

Figure 7.5 Select “Update Tasks from Mark on Track,” to update the actual start date, and so on.

Figure 7.6 Use percentage completion buttons from task tab and schedule group to update the progress

With this we complete updating the tasks in the Tracking Gantt view. Observing the same will give one the idea about the project progress. Save the file and close the session.

Earned Value Analysis

Earned value management (EVM) is a commonly used method of performance measurement and is applied to all projects, across all industry sectors. It gives a three-dimensional view of the project progress as it integrates project scope, cost, and schedule measures and can be used to monitor the progress for the entire duration of the project. EVM can be used to manage schedule performance bonus of contractors, and also to drive invoicing in projects.

Understanding Key Terms and EV Metrics

Some key definitions that would help you go ahead with EV computations are presented in Table 7.1.

Table 7.1 Key terms for EV computations

Term	Abbreviation	Definition
Planned value	PV	It is the approved budget assigned to the work that has to be accomplished (also known as performance measurement baseline)
Earned value	EV	It is the value of the work performed
Actual cost	AC	It is the cost actually incurred in performing the work (for which EV is measured)

Based on these three values, we compute four important metrics that enable us to measure the performance of the project. Those four are explained in Table 7.2.

Table 7.2 EV Four important metrics

Term	Abbreviation	Definition
Schedule variance	SV	It is a measure of schedule performance of the project. It can indicate whether a project is behind or ahead of schedule. It is the difference between EV and planned value. It is computed using the formula SV = EV − PV.
Cost variance	CV	It is a measure of cost performance of the project. It can indicate whether a project is under the budget or over the budget. It is the difference between EV and actual cost. It is computed using the formula CV = EV − AC.
Schedule Performance Index	SPI	It is a ratio of progress achieved to progress planned and is computed by the formula SPI = EV/PV. If it is more than 1, then it means more work is completed than was planned.
Cost Performance Index	CPI	It is a ratio of the value of the work completed to the actual cost and is computed by formula CPI = EV/AC. If it is more than 1, then it means that project has cost under run.

A Simple Example of EV

To understand this better let us take a simple example of doing an enhancement. Let us say, you have to build 4 modules in four days (at the rate 1 module/day), as shown in Figure 7.7. Let us say the cost of building the same is estimated to be U.S. $100 per module.

Figure 7.7 Planned work that is worth U.S. $400

After four days, you monitor the work done and find that only 3 Modules has been built instead of 4 modules. That means PV was $400. EV is only $300 (Figure 7.8). As far as the schedule is concerned, you are lagging. However, you find that only $200 was spent for the work done. This means that the cost variance is $100, which is positive and good, as it ascertains that you have spent less.

Figure 7.8 Completed work worth of $300 (after four days)

Similarly, we can also compute CPI and SPI.

CPI = EV/AC = 300/200 = 1.5

This means that for every $1 you spend, you are getting 1.5 times worth of work done.

SPI = EV/PV = 300/400 = 0.75

This means that the work is getting done at 75 percent of the planned rate.

Forecasting

Forecasting is a technique of making predictions based on the available information. As the project progresses, the project management team can develop a forecast for estimate at completion (EAC) based on the past performance. Table 7.3 gives a quick look at the terms.

Table 7.3 Forecasting: four important terms

Term	Abbreviation	What it means?
Estimate at completion	EAC	How much do we expect the total project to cost (based on the current information)?
Estimate to complete	ETC	How much more do we expect it to cost to finish the project?
Budget at completion	BAC	What is the amount that we had budgeted for the project effort in to?
Variance at completion	VAC	By how much we will exceed (either positive or negative) the budget when we finish the project?

There are three common methods to arrive at EAC. These are based on various scenarios.

1. Assuming that all the future ETC work will be accomplished at the budgeted rate:

   EAC = AC + BAC – EV

2. Assuming that the remaining work will be performed at the same CPI:

   EAC = BAC/(Cumulative CPI)

3. Assuming that the work will be done with same CPI and SPI

   EAC = AC+ (BAC – EV)/(Cumulative CPI × Cumulative SPI)

The To Complete Performance Index (TCPI) is the calculated projection of cost performance that must be achieved on the remaining work to meet a specific management goal (this may be either BAC or EAC). Let us say that as a Project Manager, you have prepared a new EAC and it is approved, then the TCPI based on the new EAC is computed using formula

TCPI = (BAC − EV)/ (EAC − AC)

EVA Using MS-Project

Now that we know the definition or meaning of various indices like SPI (Schedule Performance Index), let us see how MS-Project can be used for EVM, variance analysis, and so on. For this purpose, we shall do an exercise, hands-on, using MS-Project.

1. Copy the file web-site-improvement-start.mpp from Practice-Files/Ch07 to your working directory and rename as web-site-improvement.mpp.
2. Double click on the file web-site-improvement.mpp from the files folder. By looking at the Gantt Chart, you will observe that it is a simple project with only two tasks (Figure 7.9). Both tasks will start on August 23rd, 2016

Figure 7.9 Gantt chart of the project plan with two tasks

3. Go to the Resource Sheet view and observe the existing resources of the project. Two Resources, Dave and Sunny are working on the project (Figure 7.10). Dave has a standard rate of 12 Euros/hour and Sunny has a standard rate of 8 Euros/ hr.

   Dave and Sunny will work a maximum of 8 hour a day.

   As we are ready with tasks and Resource Sheet, we can assign different resources to different tasks. In this case, please do note that the estimated total duration to complete the project is 10 days and the estimated work for each task (UI improvement and Performance Tuning) is 80 hr. Let us assign Dave to UI Improvement and Sunny to Performance Tuning. (Click on Resource Tab and in the Assignments Group, select Assign Resources to start doing the same.) With this the project plan is ready.

Figure 7.10 Resource sheet of the project with just two resources

4. On Project tab and Schedule group, click Set Baseline button and select Set Baseline. Set Baseline dialog box appears. Check that the name of the baseline is Baseline in the (set baseline) the dialog box. Press OK to save the Baseline. (Note: You can verify the baseline information on the Project Statistics window. Select Project tab and then Project Information from Properties group. In the dialog box that appears click Statistics.)
5. The next step is tracking and updating the project plan. Let us say Dave and Sunny have started working on the project and you get reports on the weekends about the work done. Now you have to track the progress by feeding the data of the actual work in the Resource Usage Sheet and set the status date to enable EV-related computations. Let us say you have got the actual work-related information as in Table 7.4.

   Although there are different methods, we are choosing Resource Usage view to update with (insert) the actual hours in the project plan.

   On the Resource tab, in the Resource Views group, click on Resource Usage view. You get the Resource-Usage view with information of about the usage of resources on different tasks different days. Now check whether Actual work is listed below the work under each user’s name. If it is not, then right click in the Details column. You get a Detail-Styles pop-up window, in which you can select Actual-work check-box and also Enter the Actual hours against the task. Click on the File tab and Save the project.

Table 7.4 Actual work information of the example

Resource	Work done between November 23rd, 2009 and Novemeber 27th, 2009 (hour/day)	Total actual work done (hour)
Dave	6	30
Sunny	8	40

6. Status date has to be set for EV computation. Status date is the date when you last updated the project progress. It may be the current date, a date in the past, or a date in the future. To set the status date, click on the Project tab and Project Information from Properties group. In the dialog box that appears, change the Status Date to 11/27/09.
7. EV calculations are also based on the following settings in ­MS-­Project.
   • Baseline Number
   • EV Calculation Method

   Baseline Number: If you have multiple baselines saved for your project, you have an option to specify which baseline you want to consider for EV calculations. In this example, we are using the very first baseline Baseline (the date on which it was saved is mentioned beside it) for calculations.

   EV Calculation Method: To get the accurate EV numbers, you need to specify the EV calculation methods in MS-Project Plan. EV calculations are always based on percent Complete or Physical percent Complete.

   Now you have to set the aforementioned parameters using MS-­Project options. For that, click File, select Options, and go to Advanced. In EV Options for this project (select the project name web-site-improvement), choose Default task EV method as % complete and Baseline for EV calculations from the drop-down menu as Baseline (Figure 7.11) click OK to close the Project Options dialog box. Save the project.

Figure 7.11 Set suitable Earned Value options for the project

8. For EV-related computations, we have to apply EV Table to Tracking-Gantt. Select the View tab and from Task Views group Tracking Gantt. Right click on the left-hand side top corner of the table (below the Ribbon) and from the context/shortcut menu select More Tables and from the dialog box that appears, select Earned Value and then click Apply. In the right-most column in the table, click on the Add new column title type TCPI.

   You will be viewing Tracking-Gantt with bars showing the actual progress beside the baseline schedule. EV analysis values will also be displayed (Figure 7.12).

Figure 7.12 Apply EV table to the project to compute the EVA metrics

Verifying the Computations

We can analyze the EV computed by MS-Project using the formulas discussed in earlier sections. We can verify whatever values we obtained using MS-Project match with the values we compute using the formulas.¹ The following steps elaborate the same.

Percentage Complete

1. Percentage complete : 44.4 percent

   Percentage complete is always related to duration. UI Improvement task was originally scheduled to be completed in 10 days. Due to less actual hours done for this task by Dave, now this task requires 11.25 days to complete. Out of the 11.25 days, the task had been completed in 5 days’ duration. It means 44.4 percent of the task had been completed till now. That is 5 × 100/11.25 = 44.4 percent

2. Percent complete of Performance Tuning task: 50 percent

   Performance tuning task was originally scheduled to be completed in 10 days. Out of the 10 days’ duration, the task had been completed at 5 days’ duration. It means 50 percent of the task has been completed till now.

Percentage Work Complete

1. Percent work complete of UI Improvement task: 37.5 percent

   Original estimation is 80 hour of work. Out of 80 hour of planned work, 30 hour of task is actually completed. That is 100 × 30/80 = 37.5 percent.

2. Percent work complete of Performance Tuning task: 50 percent

   Original estimation is 80 hour of work. Out of the 80 hour of planned work, 40 hour of task is actually completed. That is 50 percent.

Baseline Cost or BAC

The Baseline Cost fields show the total planned cost for a task, a resource for all assigned tasks, or for work to be performed by a resource on a task. Baseline cost is also referred to as budget at completion (BAC), an EV field.

BAC for UI Improvement task is €960 (i.e., total 80 hour of the task was planned at the rate of €12)

BAC for Performance Tuning task is €640 (i.e., total 80 hour of the task was planned at the rate of €8)

BAC for the project plan is the total cost of UI Improvement and Performance Tuning tasks: €1,600

Planned Value

PV is also known as BCWS (budgeted cost of work scheduled). PV fields contain the cumulative time-phased baseline costs up to the status date or today’s date.

PV for UI Improvement task:

Status date of the project: 11/27/2009

Planned hours (budgeted hours) for UI Improvement task till 11/27//2009: 40 hour resource assigned to UI Improvement task: Dave

Dave’s hourly rate: €12

Planned cost (budgeted cost) for UI Improvement task till 11/27/2009: 40 × 12 = €480

PV for Performance Tuning task:

Status date of the project: 11/27/2009

Planned hours (budgeted hours) for Performance Tuning task till 11/27/2009: 40 hour resource assigned to Performance Tuning task: Sunny

Sunny hourly rate: €8

Planned cost (budgeted cost) for Performance Tuning task till 11/27/2009: 40 × 8 = €320

BCWS for the project is €800 (i.e., €480 + €320)

Actual Cost

On similar lines (i.e., similar to PV), the actual cost for the project can be computed as (30 × 12 + 40 × 8) = €680

Earned Value

On similar lines, EV can be computed

EV of UI Improvement = €960 × Percentage complete of UI Improvement = €960 × 44.444/100 = 426.6

EV of Performance Tuning = €640 × Percentage complete of Performance Tuning = €640 × 50/100 = €320

EV for the project = €426.6 + €320 = €746.6

Using various formulas discussed in earlier sections and using the values of PV, EV, and AC we can compute CPI, SPI, CV, SV and so on, and verify the values (computed by MS-Project software) displayed in EV tables.

Save the file and close the session (using File tab).

To summarize in this chapter, we studied how MS-Project can be used to track a project and also to do an Earned Value Analysis (EVA). We also verified the computations done using

Note

1 Samant (2010).