10/23/2018 (10) Earn Value Method wrong productivity calculation... and how to get it right!

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Herve Baron Following

Author, The Oil & Gas Engineering 207 38 19 Write an
Guide (Editions Technip)
49 articles

Earn Value Method wrong

productivity calculation...
and how to get it right!
Published on October 20, 2018

Ready to test if you can calculate Engineering progress and productivity?

Here is our sample project: only 2 deliverables: PFDs and P&IDs.

The PFDs weigh 120 hours, the P&IDs weigh 450 hours.

Progress is earned as follows:

PFD: 5% upon Start, 75% at 1st issue (IFR), 100% at Messaging

2nd issue (IFD).

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P&IDs: 5% upon Start, 25% at 1st issue (IFR), 60% at 2nd issue
Angela from Lin…
(IFD), 100% at last issue (IFC). LinkedIn Offer • Than…
1

Vijay Mohan
The table below shows the planned and actual dates of issue ofYou: Congrats on your wo…
deliverables as of Nov 30th (the cut-off date). Sriram Nammi
You: Welcome

Vinay Edarada
You: Congrats on your wo…

Lata Verma
Lata: Hi Raj, Delight to be…

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Questions:

a) What is the planned progress as of Nov 30th?

b) What is the actual progress as of Nov 30th?

c) What are the earned manhours as of Nov 30th?

d) 200 Engineering manhours were spent as of Nov 30th. What is

Engineering productivity?

Good luck! A word of caution. It is not straight forward. Don't be upset if

you fail, in particular question d). Everyone think they know how
Engineering progress and productivity are calculated. They might have to
think again...

Solutions

a) (120 + 450*0,25)/570*100 = 41%

b) (120 + 450*0,05)/570*100 = 25%

c) 120 + 450*0,05 = 143 hours

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d) (120 + 99) / 200 = 1,1.

Explanations:

Progress is only recognized once the work is done, i.e., the deliverable is
issued, it is always lagging behind the manhours spent. In the example
above, the progress as of 30/11/2018 is 25%. It would be inappropriate to

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compare the amount of spent manhours as of 30/11/201810with the earned Reactivate

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manhours (0,25*570 = 143).

Indeed some hours have been spent, for the preparation of the IFR
P&IDs, but have not yet been recognized in the progress. Therefore the
spent manhours must be compared to the accrued manhours and not the
earned manhours.

The accrued hours for the work on the P&IDs, as of 30/11/2018, are 99 as
depicted below.

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To assess the Engineering productivity up to 30/11/2018, the spent

manhours must be compared with the 219 accrued hours (120 for the
PFDs + 99 for the P&IDs) and not with the 143 earned manhours.

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38 Comments

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Luis-Humberto Fajardo-Sandoval • 2nd 13h

Management System Manager, CIG - EMI/CIG at Air Liquide G
Good approach to indicate a different view of the EV, but how I can interpreted that: good
productivity, schedule variance, slip on progress. All together give me a different interpretation
and what is the impact for being late, mitigation action to recover progress and time, what will
be final cost??

Like Reply

Alberto Bustos Montes, PMP • 3rd 2h

Project Engineer, Turnover at TechnipFMC
Good discussion. Let’s say that Unit 13 has 50 PIDs. Then,
progress can be measured by the number of PIDs completed divided by the total
number of PIDs. This eliminates the need for rules of credit and accruals.
The right unit of measurement makes the calculation of
progress simple. Also, it depicts a more accurate picture of the activity in …see more
Like Reply

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Herve Baron
Author, The Oil & Gas Engineering Guide (Editions Technip)

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