Wednesday, March 21, 2012

Progress Measurement in Activities with Zero Cost

How much is the cost of waiting? Sometimes there is a financial cost because of the frozen assets, at other times there is an indirect cost related with waiting human resources. Nevertheless, this indirect cost is commonly modeled as a general separated work package. In the most common case, there are activities without cost; at least, there are activities without “direct cost”. This is the reason why you can find the field called “delay” in the majority of the project planning tools. See the following example of the second coat of painting.

The Planned Value, as we commonly know it, doesn’t change during the waiting time. This is because the PV is measured in the dimension of cost and the “delay activity” doesn’t have cost. As a consequence, EV1 and EV2 have the same value at t2. Seeing Earned Value, it looks like the project is equally good in both situations. Unfortunately, the project is delayed by time “d” in the second case.

Somebody could say that the solution is to observe earned schedule (ES), because ES is measured in time. Well, my answer is no, according with the most common way to define ES, earned schedule fails too. Let’s take a look, ES is commonly defined as “the time at which the amount of earned value (EV) accrued should have been earned”. Then, when t=t2, ES1 = ES2. It doesn’t help.

My recommendation is to use a measured ES instead of a calculated ES. What does this mean? Well, divide the Schedule Progress Value in units of time to each measurement period. The Schedule Progress will be automatically accredited at the end of the period if the “waiting time” already started, otherwise, if the delay didn’t start, then no progress will be accredited. It’s impossible to have a Schedule Variance in the cost dimension with this method but it is possible to have a Schedule Variance in the time dimension if the delay didn’t start on time. Doing this, when t=t2, ES1 = t2 and ES2 will be t1.

It is important to warn you about people trying to sell “earned schedule calculators”. This problem continues if you use an “earned schedule calculator”. This problem is only solved using “earned schedule measuring”.