Demystifying Earned Schedule

Project management is a delicate line between staying on schedule and within budget. Earned Schedule (ES) emerges as a valuable tool within this framework, offering a time-based perspective that complements the cost-centric approach of Earned Value Management (EVM). ES is a new concept developed by Walt Lipke in 2003. It is included as an appendix in PMI practice standard for earned value management in 2011 and is considered as an extension to EVM practice.

This article delves further into the idea of Earned Schedule, outlining its goals, methods, and practical applications that provide project managers with valuable information.

Understanding Earned Schedule

Definition and purpose of Earned Schedule (ES)

Earned Schedule is a project management technique that measures the progress of a project based on the value of completed work, translated into the time it should have taken. In simpler terms, it tells you: “If the completed work reflects the budget spent, at what point in the original schedule should we have been?” This is how project managers can find out where the project is in its timeline.

EVM is a widely used project management methodology that tracks project performance through three key metrics: Planned Value (PV), Earned Value (EV), and Actual Cost (AC). While EVM excels in cost control, it doesn’t directly address schedule performance. Earned Schedule bridges this gap by translating Earned Value (work accomplished) into the equivalent time it should have taken based on the project schedule. It means that, instead of merely looking at schedule performance using the value of work accomplished as compared with the plan, the earned schedule looks at when the work was supposed to be completed (time).

To measure earned schedule, we need to determine when the work was supposed to be earned. In another words, at what point in time the current earned value should have been occurred. This is determined by crossing a horizontal line from the current cumulative EV to the planned value curve and intersection with the planned value curve projects that to the timeline, which is earned schedule. Actual (AT) is the duration from the beginning of the project to status date (time now). Planned duration (PD) is the original duration of the project.

Overview of how Earned Schedule complements Earned Value Management (EVM)

Conventional techniques frequently depend on percent complete estimations, which are prone to bias and subjectivity. Conversely, Earned Schedule uses objective data—the value of finished work—to give a more realistic view of schedule performance.

EV/EVM explained

EVM provides a framework for assessing project performance by comparing budgeted costs, earned value, and actual costs. It calculates key performance indicators (KPIs) like Schedule Performance Index (SPI) and Cost Performance Index (CPI):

• Schedule Performance Index (SPI): Earned Value (EV) divided by Planned Value (PV). When the SPI is 1, it means the project is running on time. A score of more than one indicates advancement ahead of plan, whereas a value of less than one denotes delays.
• Cost Performance Index (CPI): Earned Value (EV) divided by Actual Cost (AC). A CPI of 1 signifies the project is within budget. Values greater than 1 suggest cost savings, while values less than 1 indicate cost overruns.
• Schedule Variance is the difference of Earned value and planned value. SV = EV – PV.

As the project progresses and reaches its planned completion point (SAC), the Schedule Variance (SV) will gradually decrease to zero, indicating the project is on track for cost and schedule.  Similarly, the Schedule Performance Index (SPI) will approach 1.  Since both SV and SPI reflect performance relative to the original plan, using them to forecast future schedule after reaching SAC wouldn’t be accurate.

Explanation of key concepts/metrics/parameters in ES: + calculations

• Earned Schedule (ES): This represents the amount of scheduled time that should have been used to complete the work reflected by the Earned Value (EV). There are various methods to calculate ES, one common approach being: ES = (EV / Total Project Budget) * Total Project Duration. It can also be calculated by dividing Earned value by PAR. ES = EV ÷ PAR
• Planned Accomplishment Rate (PAR): We can find the average amount of work achieved (PV) during a specific period by dividing the Budget at Completion (BAC) by the Schedule At Completion (SAC). This value can be called the Planned Accomplishment Rate (PAR) or PV Rate. PAR = BAC ÷ SAC
• Time variance (TV): We can convert the Schedule Value (SV) into a time-based measurement by dividing it by the Planned Accomplishment Rate (PAR). This calculation, called Time Variance (TV), expresses project schedule performance in terms of time units instead of cost units. TV = SV ÷ PAR. TV can alternatively be calculated by subtracting AT from estimated start. TV = ES – AT. Time Variance % can be calculated as TV% = TV ÷ AT
• Earned Schedule Performance Index (ESPI): This metric compares the Earned Schedule (ES) to the actual time elapsed (AT). An ESPI of 1 indicates the project is on schedule in terms of time. Values greater than 1 suggest progress ahead of schedule, while values less than 1 indicate delays. ESPI = ES / AT. This is sometimes called as time performance index (TPI).
• Schedule Variance (SV) and Schedule Performance Index (SPI) in ES: While these terms are traditionally used within the context of comparing actual progress to the baseline schedule, they can also be adapted within the Earned Schedule framework.
  • Schedule Variance (SV): ES – AT. A positive SV indicates progress ahead of schedule, while a negative SV suggests delays.
  • Schedule Performance Index (SPI) in ES: ES / Baseline Schedule at this point in time. An SPI of 1 signifies the project is on track to meet the baseline schedule based on Earned Value. Values greater than 1 suggest the project could potentially finish earlier, while values less than 1 indicate potential schedule slippage.
• Schedule at Completion (SAC): This date represents the project’s baseline completion date according to the initial plan.
• Time estimate at completion (TEAC): The predicted time to finish a project is called the Time Estimate at Completion (TEAC). TEAC = SAC + TV or TEAC = SAC ÷ TPI or TEAC = SAC ÷ SPI. Alternatively, TEAC = AT + (BAC-EV) ÷ EAR. The Earned Accomplishment Rate (EAR) equals the average rate of work actually accomplished (Actual Accomplishment Rate, or AAR) per time period up to this point if the project’s progress thus far is a credible predictor of how it will perform in the future. The Earned Value (EV) divided by the Actual Time (AT) invested in the project yields this AAR. Time Variance at Completion (TVAC): TVAC tells you how much earlier or later the project is expected to finish compared to the original schedule. TVAC = SAC – TEAC

Interpreting Earned Schedule Results:

Earned Schedule utilizes several key metrics to analyze project progress and predict future performance. Let’s explore these metrics with their corresponding calculations:

Consider a construction project with a planned duration of 40 weeks and a total budget at completion of $10,00,000. The baseline indicates that by end of week 20, the project is planned to be 50% complete. At the end of week 20, it is reported that 40% of the project work has been completed at a cost of $6,00,000.

Calculations:

Using EVM method:

• BAC = $10,00,000
• SAC = 40 weeks
• Actual time (AT) = 20 weeks
• Actual Cost (AC) = $6,00,000
• Planned Value (PV) = 50% x $10,00,000 = $5,00,000
• Earned Value (EV) = 40% x $10,00,000 = $4,00,000

Verifying:

• % Complete = EV ÷ BAC = $4,00,000 ÷ $10,00,000 = 40%
• % Spent = AC ÷ BAC = $6,00,000 ÷ $10,00,000 = 60%

Cost and Schedule Variances

• CV = EV – AC = -$2,00,000
• SV = EV – PV = -$1,00,000

Performance Indices

• CPI = EV ÷ AC = $4,00,000 ÷ $6,00,000 = 0.67%
• SPI = EV ÷ PV = $4,00,000 ÷ $5,00,000 = 0.80%

Estimate at completion and variance at completion

• EAC = BAC ÷ CPI = $10,00,000 ÷ 0.67 = $14,92,537
• VAC = BAC – EAC = $-4,92,537

Using Earned Schedule

• PAR = BAC ÷ SAC = $10,00,000 ÷ 40 = $25,000 per week
• TV = SV ÷ PAR = -$1,00,000 ÷ $25,000 = -4 weeks
• Earned Schedule
  • ES = (EV ÷ Total project budget) x total project duration = ($4,00,000 ÷ $10,00,000) x 40 = 16 weeks
  • Alternatively, ES = EV ÷ PAR = $4,00,000 ÷ $25,000 = 16 weeks.
• SV_(t) = ES – AT = 16 – 20 = -4 weeks
• SPI_(t) or TPI or ESPI = ES ÷ AT = 16 ÷ 20 = 0.8
• Time estimate at Completion
  • TEAC = SAC ÷ TPI = 40 ÷ 0.8 = 50 weeks
  • Alternatively, TEAC = AT + (BAC-EV) ÷ EAR = 20 + (10,00,000-4,00,000) ÷ (4,00,000 ÷ 20) = 50 weeks
• TVAC = SAC – TEAC = 40 – 50 = -10 weeks

From the above, we can clearly see that the project is not in a good shape and has issues regarding cost and schedule performance. It is important that corrective actions be taken. Here the schedule variance is -4, which means we are 4 weeks behind schedule at this time of the project. We could have schedule slippage if the schedule performance index is less than 1, and our productivity is only 0.8 times higher for each order we complete on the task.

Using the Earned Schedule (ES) method, the project is forecast to finish in 50 weeks, with a 10-week delay. Using Earned value management, a 4-week delay (10% of the original 40-week duration) might be acceptable for some organizations, a 10-week delay (25%) likely wouldn’t be. This significant difference heavily impacts resource allocation and management decisions.

By understanding the assumptions behind Critical Path Method (CPM) and Earned Schedule, (ES), project managers can make informed choices to achieve project goals. Combining forecasts from both methods can provide a broader view of potential future outcomes.

Utilizing software tools for analyzing EV project parameters

There are a couple of steps that need to be followed for setting up Primavera P6 for obtaining Earned Value Management. The project is a sample schedule which is live and running.

1. Resource Assignment: Assign resources to your project tasks. Note that these resources should not automatically calculate actual costs incurred. For this, go to the Enterprise > Select Resources > select the required project resource and untick ‘Auto Compute Actuals’, while using the resources for determining Earned Value.

2. Baseline Establishment: Create a project baseline. This baseline integrates your project schedule and budget, serving as a reference point to measure progress later.

Setting a baseline to the project enables tracking the project and helps in comparing the current schedule with the baseline schedule. To create a baseline, select Project > Maintain Baseline. To utilize your created baseline for Earned Value calculations, you’ll need to assign it to the project. Within the “Projects” table, locate the desired project. Utilize the “Settings” tab and navigate to the Earned Value baseline selection option. Typically, the default setting is “Project Baseline,” but you can also choose the “User’s Primary Baseline” if available. While both options work, ensure you assign the newly created baseline to whichever option you ultimately select.

Next, assign the newly created baseline by navigating to Project > Assign Baselines

3. Setting Up EVM Fields: Ensure your project management tool has the necessary columns for Earned Value calculations. These may include columns for Planned Value (PV), Actual Cost (AC), and Earned Value (EV), etc. as below:
4. Standardizing Activity Types: Set all activity types to “Physical Percent Complete” within your Work Breakdown Structure (WBS). This ensures consistent measurement of progress based on the physical completion of tasks. Earned Value Management relies on measuring progress based on the amount of work actually completed, separate from the time spent on it. Therefore, it’s crucial to set all activities you’ll be tracking with EVM to the “Physical” type.
5. Defining Performance Measurement: Determine the method for calculating “Performance Percent Complete” at each WBS level. This defines how you’ll measure progress as a percentage for different project elements. This may be from the site data or the running account bills submitted by the vendor and certified by the billing department.
6. Updating Project Status: Update activity statuses with actual costs incurred and reschedule the project timeline if needed. This reflects real-world progress and potential delays. This can be done by either pressing F9 or tools > Schedule:

From the current project update, with the available data, Primavera calculates the overall values. From the above image, the overall cost performance index (CPI) is less than 1, in our sample project, it is 0.96 indicating it is over budget. With reference to the schedule performance index (SPI), the value is 0.56 which means that the project is currently behind schedule.

Earned Value Management in ScheduleReader

With ScheduleReader, users can view project data transferred between different project stakeholders as XER and XML schedules, exported from Primavera. ScheduleReader is a standalone program that provides fast and dynamic overview of project data, allowing users to analyze data including the key EVM schedule and cost parameters.

The software is perfect for anyone that needs to review and analyze schedules and is widely used as an alternative to viewing project data in static PDF printouts or Excel files.

ScheduleReader is available for download in a 15-day fully featured free trial version for testing and evaluation purposes.

Importance of ES in project performance measurement and control

Unlike traditional methods that track progress based solely on time spent (schedule percentage complete), Earned Schedule focuses on the physical completion of work. This provides a more accurate picture of project progress, independent of schedule delays or accelerations.

Key Benefits and Applications of Earned Schedule:

• Improved Schedule Performance Measurement: ES offers a clearer understanding of how much work has truly been accomplished, revealing potential schedule deviations earlier.
• Enhanced Risk Management: By identifying schedule variances, ES allows proactive mitigation strategies to be implemented before delays become critical.
• Better Resource Allocation: Knowing the actual work completed helps project managers optimize resource allocation based on real progress, not just planned timelines.
• Improved Communication and Stakeholder Management: Clearer progress insights from ES facilitate more transparent communication with stakeholders and project teams.

Integration of ES with EVM for Comprehensive Project Performance Analysis:

Earned Schedule integrates seamlessly with Earned Value to provide a holistic view of project performance:

• EV: Evaluates cost performance (Cost Performance Index – CPI) by comparing budgeted cost of work performed (Earned Value) to actual costs incurred.
• ES: Assesses schedule performance (Schedule Performance Index – SPI) by comparing planned work completed (Earned Schedule) to the budgeted schedule (Planned Value Schedule).

By combining these metrics, project managers gain valuable insights into:

• Overall Project Health: Aligning CPI and SPI provides a comprehensive picture of progress in terms of both cost and schedule.
• Identifying Bottlenecks: Deviations in either CPI or SPI highlight areas where corrective actions may be needed.

Utilizing ES for Early Warning Signs and Proactive Project Management: Deviations from the Earned Schedule baseline can serve as early warning signs of potential schedule risks. This allows for:

• Early Intervention: Proactive modifications to prevent snowballing delays are made possible by early identification of schedule anomalies.
• Risk Mitigation techniques: Project managers can reduce schedule risks by creating backup plans or resource reallocation techniques if they have ample advance time.
• Better Decision-Making: Project managers are better equipped to make well-informed decisions that may result in time and resource savings thanks to early insights from ES.

Forecasting Project Completion: By analyzing trends in Earned Schedule data, project managers can forecast project completion dates with greater accuracy. This provides valuable information for:

• Resource Planning: Knowing the revised project timeline helps with resource allocation and scheduling for future work.
• Stakeholder Communication: Updated project forecasts keep stakeholders informed and manage expectations.
• Project Reprioritization: When significant schedule deviations arise, ES data can support informed decisions about project re-prioritization if necessary.

In conclusion, Earned Schedule provides a valuable tool for project performance measurement and control. By integrating ES with Earned Value, project managers gain a comprehensive understanding of project progress, enabling proactive management and improved decision-making throughout the project lifecycle.