Earned value and the measurement of progress are fundamental parts of project management. Both are closely linked key concepts for following up on project performance and performing project analysis. Earned value is often referred to as the Budgeted Cost of Work Performed (BCWP). IFS Applications has advanced functionality for measuring key factors used to manage projects, which includes tracking progress, calculating earned value and providing data needed for analyzing project performance.
This document describes how earned value and progress works in IFS/Project Management and is divided into the following sections:
Earned Value and Progress Parameters in IFS/Project Management
Earned Value and Progress on different levels in IFS/Project Management
Duration, Template, Manual, Consumption Based, Tasks, Connected Objects - Earned value and progress per object
It is possible to configure how earned value and progress is reported in IFS/Project Management based on three parameters: Earned Value Method, Planned Cost Driver and the Progress Method. The values of these parameters should be selected with care, so that the earned value and progress reflect the work achieved in the best possible way. All progress methods can be used in combination with all the planned cost drivers and earned value methods.
The earned value method determines if the earned value is calculated based on baseline values or planned values. This parameter is set for each project as:
All projects have the earned value method as Planned until a baseline is created, after which it can be changed each time a baseline is created for the project. Taking a new baseline will result in the re-calculation of earned value throughout the project.
The Planned Cost Driver determines from where the planned cost and hours values are retrieved. The parameter is selected per activity as one of the following:
Since earned value is calculated based on the planned cost, the value of the planned cost driver will affect the earned value and progress values.
Example: An activity has a document package connected with 20 planned hours. In order to complete the work of the document package, a resource has been allocated with 25 planned hours. When determining the planned cost and hours it may not be correct to use the planned values from both the document package and the resource. By selecting the appropriate planned cost driver, you can decide whether the planned cost is driven by the resources or by the connected objects. If you select resources, the planned cost will be 25 hours, while selecting connected objects, will result with a planned cost of 45 hours. In this case it is better to select the planned cost driver as Activity Resources. If the planned cost driver is set to Estimated Cost, then the planned values are retrieved from values entered on the Project Navigator/Activity/Estimate tab.
In IFS/Project Management you can select one progress method for each activity. The progress method determines how progress is calculated, which gives you the possibility to select a progress method that best reflects the work done in each activity.
There are two types of progress methods, which are referred to as Top-Down and Bottom-Up in this document. Top-Down means that the progress is calculated or assigned on the activity level and then applied to the individual project cost element lines of the activity. Bottom-Up means that the progress is calculated or assigned on the project cost element level of the object or of the activity, and then used in the calculation of the activity progress.
The parameter is selected per activity as one of the following:
The different methods are explained in detail in the Progress Methods section below.
Example: If you have a list of tasks where you report
progress manually when certain things have been completed in your activity, e.g.
if the arrival of purchased material is a task, it will be incorrect to have progress
reported from both the task and the connected purchase order. Therefore it is
more suitable to select Tasks as the progress method.
This section is a general description of how progress is calculated and displayed for different levels in the application; e.g. per object, cost element, activity, sub project and project.
Connected objects, such as shop orders, purchase orders, tasks etc., reports planned values per cost element to the activity (when the planned cost driver is Connected Objects). When the object is executed according to its business flow (receiving the ordered material, reporting time on operations etc), it will gain progress.
When the progress method is selected as Connected Objects or Tasks:
For other progress methods, the progress of the objects is not taken into consideration when deriving the activity progress, and the object progress is not displayed in the Connections tab.
Released activities have different ways of receiving progress values, depending on the type of the selected progress method. For more details on the individual progress methods, refer the Progress Methods section below.
If the progress method is Duration, Template Progress, Tasks or Manual (of type Top-Down):
If the progress method is Consumption Based, Connected Objects or Manual (of type Bottom-Up):
Note: It is possible to manually exclude activities from the progress calculation, by selecting the Exclude from WAD check box on the activity.
Cost element progress (cost progress and hours progress) values and project progress (weighted average cost development and weighted average hours development) values are derived in exactly the same way as on the sub project level for all activities in the whole project.
Note: It is possible to manually exclude sub projects or individual activities
from
the progress calculation, by selecting the Exclude from WAD check box on
the sub project or activity.
A detailed description of the progress methods that can be selected on activity level is given below.
Note: It is possible to close activities without reaching 100% progress.
The values for the Calculated Cost Progress and the Calculated Hours Progress fields on activity level are calculated by dividing the Elapsed Work Days by the Total Work Days of the activity and taking the percentage value of the result. If the system date is after the early finish the progress is 100%, and if the system date is before the early start the progress is 0%. The duration progress will be updated only after the activity is released. Progress from the connected objects is not taken into account. The activity progress is then applied to the cost element line level of the activity (Top-Down) and used in the calculation of earned value for each project cost element.
A Progress Template can be selected for the activity on the Project Navigator/Activity/Details tab. Then the progress of the activity is reported by manually selecting the relevant progress template step. This progress is directly copied to both the Calculated Cost Progress and Calculated Hours Progress fields of the activity. Progress from the connected objects is not taken into account. The activity progress is then applied to the cost element line level of the activity (Top-Down) and used in the calculation of earned value for each project cost element line.
The values in the Calculated Cost Progress and Calculated Hours Progress fields are based on manually entered progress values. Progress from the connected objects is not taken into account.
Manual Progress can be entered in four levels. The required fields are enabled (on the Project Navigator/Activity/Details tab or on the project cost element line) depending on the value selected for the Level of Entry field. Values for Level of Entry are as follows:
When the Level of Entry is set to Activity, it is possible to manually enter a value in the Activity Progress field. This value is directly copied to both the Calculated Cost Progress and Calculated Hours Progress fields for the activity. The activity progress is then applied to the cost element line level of the activity (Top-Down) and used in the calculation of earned value for each project cost element line.
When the Level of Entry is set to Activity - Cost and Hours, it is possible to manually enter different values for the cost progress and hours progress in the Activity Cost Progress and the Activity Hours Progress fields. These values are directly copied to the Calculated Cost Progress field respectively the Calculated Hours Progress field for the activity. The activity cost and hours progress values are then applied to the cost element line level separately for cost and hours of the activity (Top-Down) and used in the calculation of earned value for each project cost element line.
When the Level of Entry is set to Project Cost Element, it is possible to manually enter one progress value per cost element line which will be used for both cost and hours progress. Progress values entered on one tab will be automatically copied to the corresponding cost element line on the other tab. The progress entered is used to calculate the earned value for the cost element line. The calculated cost progress and calculated hours progress values for the activity are calculated (Bottom-Up) by taking the total earned value for all the cost elements and dividing it by total Planned or Baseline values.
When the Level of Entry is set to Project Cost Element - Cost and Hours, it is possible to manually enter different values for cost and hours progress for the individual cost elements. The entered progress is used to calculate the earned value for the cost element line. The calculated cost progress and calculated hours progress values for the activity are calculated (Bottom-Up) by taking the total earned value for all the cost elements and dividing it by total planned or baseline values.
The consumption based progress is calculated on the activity level for each cost element. The values in the Calculated Cost Progress and Calculated Hours Progress fields are based on the Used Cost and Used/Actual Hours reported from the connected objects. Progress from the connected objects is not taken into account. For information on when different objects report used cost and used/actual hours, refer the About Cost, Hours and Revenue reported to Activity.
Cost Progress per cost element is equal to the Used Cost divided by the Planned (or Baseline) Cost for a cost element. This progress value is used to calculated the earned value per cost element, as Earned Value = Progress * Planned (or Baseline). Hours progress and earned value per cost element is calculated in the same way.
Activity calculated cost/ hours progress is calculated as the sum of earned value divided by the sum of planned (or baseline) cost/hours for the activity (Bottom-Up).
The values in the Calculated Cost Progress and Calculated Hours Progress fields are based on the planned and progress values of the connected tasks which have been manually entered. Progress from any other type of connected object is not taken into account.
When all tasks have planned values, the activity cost progress is derived from the progress of all the tasks weighted according to their planned cost/hours:
When none of the tasks have planned values, the activity cost progress is calculated as follows:
Note: In a situation where some tasks have a negative value for planned cost, due to adjustments made to the plan, the total planned cost of all the tasks can result with zero or a negative value. In these cases the activity cost progress will be calculated using the above formula.
If only some tasks do not have planned values, the maximum contribution to progress from each task is equal to 100% divided by the total number of tasks. The tasks with planned values share the remaining portion and are weighted according to their planned cost/hours:
A = 100%/ Number of tasks
B = (Number of tasks-Number of
tasks without Planned Cost) / Number of tasks *100%
Calculated hours progress is derived in the same way.
This progress is then applied to all cost element lines (Top-Down), to calculated the earned value per cost element, as Earned Value = Progress * Planned (or Baseline).
Here is an example to illustrate how activity progress is calculated when all tasks do not have planned values:
| Task | PCE | Planned Cost | Planned Hours | Task Progress | Cost Weight | Calculated Cost Progress | Hours Weight | Calculated Hours Progress |
| A | L01 | 1000 | 10 | 100 | (5 - 2) / 5 * 1000 / (1000 + 100 + 50) * 100 % = 0.5217 | 52.17 % | (5 - 1) / 5 * 10 / (10+5+3+2) * 100 % = 0.4 | 40 % |
| B | P01 | 5 | 10 | 100 % / 5 * 10 % = 0.02 | 2 % | (5 - 1) / 5 * 5 / (10+5+3+2) * 10 % = 0.02 | 2 % | |
| C | P01 | 100 | 3 | 0 | (5 - 2) / 5 * 100 / (1000+100 + 50) * 0 % = 0 | 0 | (5 - 1) / 5 * 3 / (10+5+3+2) * 0 % = 0 | 0 |
| D | L02 | 2 | 20 | 100 % / 5 * 20 % = 0.04 | 4 % | (5 - 1) / 5 * 2 / (10+5+3+2) * 20 % = 0.016 | 1.6 % | |
| E | L03 | 50 | 30 | (5 - 2) / 5 * 50 / (1000 + 100 + 50) * 30 % = 0.007826 | 0,78 % | 100 % / 5 * 30 % | 6 % | |
| 58.95 % | 49.6 % |
So, in this example the calculated cost progress is 58.95% and calculated hours progress is 49.6%. These progress values are then applied to each cost element line on the Cost and Hours tab respectively (Top-Down).
The values in the Calculated Cost Progress and Calculated Hours Progress fields are based on the progress and earned value of the connected objects. As the objects progress (receiving ordered material, reporting operations, entering manual progress etc), they contribute to the activity progress. Planned cost/hours are retrieved according to the planned cost driver. Earned value is calculated as Progress * Planned (or Baseline) values.
Activity calculated cost/hours progress is calculated as the sum of earned value divided by the sum of planned (or baseline) cost/hours for the activity (Bottom-Up). Using planned or baseline values when calculating the earned value is defined by the earned value method set on the project.
For this progress method, the following cost reporting object types report their progress or earned value to the activity:
The following cost reporting object types do not have any impact on activity progress or earned value:
Note: Revenue reporting objects does not report progress or earned value.
When using the connected objects progress method in combination with the
different planned cost drivers, the planned values and earned value are
retrieved as:
| Planned Cost Driver | Planned Cost is retrieved from | Earned Value is retrieved from |
| Activity Resources | Activity/Resource Planning tab | Object Connections |
| Connected Objects | Object Connections | Object Connections |
| Estimated Cost | Activity/Estimate tab | Object Connections |
Activity Progress is calculated as Earned Value/Planned Value.
When the progress method is Connected Objects, the calculation of earned value and progress per progress reporting object is done as follows:
Progress is entered manually for each task.
- If a progress template is connected to the task, report progress by selecting the relevant progress template step. The Progress field is automatically updated with the progress value that was defined for this progress template step.
- You can also select the Completed check box to set the task to 100 % completed directly. It will override the progress associated with the selected Progress Template Step, if any.
Earned value and progress from a work order is reported from operations, tools and facilities, material requisitions and the purchase flow (purchase requisition created from a WO). For the purchase flow the planned values are saved on the purchase requisition line and inherited to the purchase order line.
- Progress is calculated:
For operations as reported hours/planned hours.
For Tools and Facilities as reported hours/planned hours.
For Material Requisitions as issued qty/planned qty.
For purchase flow as Received quantity/Required quantity.
Earned Value is calculated as progress * Planned or Baseline cost or hours per line and summed up per project cost element.- Reports earned value to the activity.
Note: If the work order derives from a compatible unit, then the work order object will not report any planned values, progress or earned value.
- Progress is taken from the Work Progress (%) field in the work order connected to the compatible unit execution item. Earned value is calculated as Progress * Planned/Baseline cost/hours per Cost Element.
(The work order object does not report any planned values, progress or earned value to the activity).- For the purchase flow, progress and earned value is reported from the purchase order.
- Progress is saved on the document package line. The progress is taken from Milestone Template/Milestone Number. Earned value is calculated as Progress * Planned/Baseline cost/hours per line and summed up per project cost element.
- Progress is saved on design object manually. Earned value is calculated as Progress * Planned/Baseline cost/hours per project cost element.
- Progress is saved on each change order action line. Earned value is calculated as Progress * Planned/Baseline cost/hours per line and summed up on each project cost element.
- Progress is calculated as Received quantity/Required quantity or by using milestones on the purchase order line.
- Progress is reported from Purchase Orders to the Misc Demand object which reports it to the activity.
- For direct issue from inventory, progress is calculated as issued quantity/required quantity.
- Progress for rental parts is calculated as the number of actual/planned item days (chargeable days * quantity). The chargeable days and quantity of any rental transactions generated for the line (actual value) will be compared to the planned chargeable days and quantity of the line.
- Progress is calculated for each operation and material line. For operations it is calculated as reported hours/planned hours or quantity complete. For material it is calculated as issued quantity/planned quantity.
- Earned value is reported from the shop orders to the misc. demand object which reports it to the activity.
- Progress or earned value is calculated for each connected object (SO/PO). Earned value will be calculated for each object and summed up on each DOP header and saved on the misc. demand line.
- Earned value is reported from the DOP header to the misc. demand object which reports it to the activity.
- For SO, PO, DOP supply option: Earned value is calculated for each connected object (SO/PO/DOP) and summed up at requirement activity level. Progress will be calculated based on the earned value and they are mapped to the relevant project cost elements.
Requirement Activity progress = sum Earned Value/sum Planned or Baseline value.
- For supply option PMRP: progress is calculated for each connected object (SO/PO/MTR). Since there is no direct connection between the PMRP demands and the connected objects, each object will report earned value. The earned value will be summed up on activity level and the progress will be calculated there.
Earned value for Project Delivery PMRP demands behave in the same way as purchase orders and shop orders created from miscellaneous demands with the PMRP supply option.
- Progress is calculated for each connected object (through the selected supply option) as delivered quantity divided by planned quantity. Earned value will be calculated as Progress * Planned or Baseline values for each object and summed up per project cost elements. Sales overheads will be reported when the CO-line is delivered.
- Progress is retrieved either from the Progress field on the activity resource line or calculated based on the Reported Hours field (hours reported from Project Transactions). Earned value will be calculated for each line as Progress * Planned or Baseline values.
- The Exclude Activity Resource Progress check box can be selected to disregard the progress reported on activity resource line from the overall progress calculation.
- Earned value is the same as the used cost on the transaction. It is possible to select if the inventory transaction should report earned value to the activity or not.
- Earned value is reported from each supply object (SO/PO/MTR). Since there is no direct connection between the PMRP demands and the supply objects, the supply objects will report earned value. The earned value will be summed up on activity level to calculate the activity progress.
- Earned value is reported from each supply object (SO/PO/MTR). Since there is no direct connection between the forecast demands and the supply objects each supply object will report earned value. The earned value will be summed up on activity level to calculate the activity progress.
Progress of a sub contract which is calculated per activity and per currency is done as follows:
Sub Contract Progress = Sum of application total value per activity per currency/ sum of planned value per activity per currency
or,
Sub Contract Progress = Sum of certified total value per activity per currency / sum of planned value per activity pre currency
This calculated progress is saved on each sub contract connection per activity and per currency. Earned value is calculated as follows and summed up for each project cost element.
Earned Value = Progress * Planned or Baseline cost per line
Valuation 1 - Change the status to Application received:
Item
Currency
Activity
Contract Value
Application total value
Item 1
USD
A1
1000
100
Item 2
USD
A1
1000
500
Item 3
USD
A2
1000
400
Item 4
GBP
A1
1000
100
Contract summary by activity and currency:
Contract
Activity
Currency
Planned cost
Earned Value (Received or certified in item currency)
Calculated Progress (Earned Value / Planned Cost)
C1
A1
USD
2000
600
30.00%
C1
A1
GBP
1000
100
10.00%
C1
A2
USD
1000
400
40.00%
Project connection details after receiving application on valuation 1:
Project Connection for Activity A1 & Currency USD
Object
Planned cost
Earned Value (Progress * Planned cost)
Progress
Sub contract
2000
600
30%
Project Connection for Activity A1 & Currency GBP
Object
Planned cost
Earned Value (Progress * Planned cost)
Progress
Sub contract
1000 x R1
100 x R1
10%
Project Connection for Activity A2 & Currency USD
Object
Planned cost
Earned Value (Progress * Planned cost)
Progress
Sub contract
1000
400
40%
Valuation 1 - Change the status to Certified:
Item
Currency
Activity
Contract Value
Application total value
Certified total value
Item 1
USD
A1
1000
100
80
Item 2
USD
A1
1000
500
400
Item 3
USD
A2
1000
400
300
Item 4
GBP
A1
1000
100
100
Contract summary by activity and currency:
Contract
Activity
Currency
Planned cost
Earned Value (Received or certified in item currency)
Calculated Progress (Earned Value / Planned Cost)
C1
A1
USD
2000
480
24.00%
C1
A1
GBP
1000
100
10.00%
C1
A2
USD
1000
300
30.00%
Project connection details after certifying valuation 1:
Project Connection for Activity A1 & Currency USD
Object
Planned cost
Earned Value (Progress * Planned cost)
Progress
Sub contract
2000
480
24%
Project Connection for Activity A1 & Currency GBP
Object
Planned cost
Earned Value (Progress * Planned cost)
Progress
Sub contract
1000 x R1
100 x R1
10%
Project Connection for Activity A2 & Currency USD
Object
Planned cost
Earned Value (Progress * Planned cost)
Progress
Sub contract
1000
300
30%