The Benefits of using Earned Value Management presentation, by Simon Tomlinson and Richard Allison, 2 July 2019, at Airbus in Bristol

1. The Benefits of using Earned Value Management
at Airbus
Context and the Theory of EVM in Airbus
Simon Tomlinson and Richard Allison
02 July 2019

2. •Introduction and welcome
•How EVM is deployed at Airbus
•How EVM is used at Airbus
•Questions
02 July, 2019 The Benefits of using Earned Value Management at Airbus2
Agenda

3. 134,000
Total workforce
€ 997 billion
Order book
€67 billion
Annual revenue
We make it fly.
02 July, 2019 The Benefits of using Earned Value Management at Airbus3

4. Global Company
02 July, 2019 The Benefits of using Earned Value Management at Airbus4
China
1,150
Spain
13,177 (10%)
USA
2,707 (2%)
UK
11,304 (9%)
Germany
44,214 (34%)
France
47,865 (37%)
133,700employees
from 135 nationalities
Located across 35 countries
on more than 180 sites
International Sales
31% Europe
69% Non-Europe
Other
countries
10,178 (8%)

5. 02 July, 2019
An Airbus takes off
or lands every 1.4
seconds.
18,191
Aircraft sold
60
Produced monthly
25,000+
Daily flights
10,926
Delivered
Our aircraft are a familiar
sight around the world.
Data to end
December 2017The Benefits of using Earned Value Management at Airbus5

6. Airbus’ impact in the UK
14,000
Workforce
The UK is one of
Airbus's 4 home nations
(along with France, Germany and Spain)
Trained more than
4,000
apprentices
in the last 10
years
R&D spend is
approximately
£500mmillion annually
More than
8,000
patents
since 2000
More than
4,500
companies in
our supply chain
Indirectly
support over
110,000
Jobs
£7.8bnEstimated value
added to the
economy per year Working with
20
universities
02 July, 2019 Source: Oxford Economic ReportThe Benefits of using Earned Value Management at Airbus
Page
6

7. Project Management Office at Airbus
Processes,
Methods
and Tools
Operational
Support
Learning
Strategic
Planning
Central
Project and
Programme
Management
Function

8. Airbus
Project
Management
Office
The Project Management
Business Partner (PMBP)
• Navigates the Project Leader /
Programme Manager
• Receives delegation from the
Project Leader / Programme
Manager
• Implements and ensures the
daily application of the AIRBUS
Project Management processes
• Carries out Project Control
activities
CoC P&PM
Home Function
Project Members
Project Leader/
Programme Manager
Supported Manager
PMBP
Functional Manager
02 July, 2019 The Benefits of using Earned Value Management at Airbus8

9. How EVM is deployed at Airbus
02 July, 2019 The Benefits of using Earned Value Management at Airbus9
Simon Tomlinson
02 July 2019

10. Airbus
Project
Management
Office
EVM Deployment
CoC P&PM
Home Function
Project Members
Project Leader/
Programme Manager
Supported Manager
PMBP
Functional Manager
02 July, 2019 The Benefits of using Earned Value Management at Airbus10

11. What is Earned Value Management?
02 July, 2019 The Benefits of using Earned Value Management at Airbus11
Earned Value Management (EVM) is a methodology for integrating scope, schedule and costs of
a Project, in order to objectively take the right decisions.
EVM integrates Schedule and Costs simultaneously to display the project performance
• Differentiate financial impact
of over-cost & delay
(= avoid over-cost being
covered by delay)
• Challenge & secure yearly
outlooks and Remain-to-do
exercises
• Enhance quality of schedule
and cost references
EVM Benefits
• A financial tool, EVM is Project
Management good practice
• A reporting tool but a basis for
business discussion based on
trends
• Standalone tool: it goes together
with other project indicators
(critical path monitoring, actuals
analysis,…)
EVM is not…

12. EVM process needs 3 main prerequisites
02 July, 2019 The Benefits of using Earned Value Management at Airbus12
EVM brings all 3 elements together into 1 Integrated KPI
A robust Project Structure
Statements of Work,
Clear cost and deliverable
responsibility
Dedicated Cost Collection,
Clear Reporting level
Change Management
etc…
Robust Schedule
Management
Aligned with Scope
Mature
Clear Targets
Realistic Planning
Baseline
Up to date
Robust Cost Management
Aligned with Scope
Mature
Baseline
Agreed with all contributors
Monitored and updated
Cascaded

13. Airbus uses EVM throughout the WBS
02 July, 2019 The Benefits of using Earned Value Management at Airbus13

14. • CV: Cost Variance:
− This shows the absolute delta between the value delivered and the value that was planned to be delivered
− It is calculated as: Value Delivered – Actual Value
• SV: Scheduled Variance:
− This shows the absolute delta between the value delivered and the value that was planned to be delivered
− It is calculated as: Value Delivered – Planned Value
A Quick Recap on the EVM KPIs
• CPi: Cost Performance Indicator
− This shows the ratio between the value delivered against the cost of achieving what has been delivered
− It is calculated as:
02 July, 2019 The Benefits of using Earned Value Management at Airbus14
Value Delivered
Cost of Delivery
• SPi: Schedule Performance Indicator
− This shows the ratio between the value delivered against the value that was planned to be delivered
− It is calculated as: Value Delivered
Planned Value
Airbus Golden Rules:
• Only use deliverables we can calculate the value of for EVM
• Ensure those deliverables have a similar value
• Have the same granularity for spend and delivery
• Don’t attempt to match spend to specific deliverables
Key is to be able to
accurately measure the
value of what has been
delivered

15. How Airbus Calculates Earned Value from the Planned Cost of the Deliverables
Achieved
02 July, 2019 The Benefits of using Earned Value Management at Airbus15
This number of
deliverables
Generates this amount
of earned value
Milestone Selection is key:
• Only use a selection of milestones that are appropriate
• The spend and delivery profiles must be similar
• All deliverables used for EVM must have a similar value
• Must be deliverables from all work packages and contributors
• A sufficient number of deliverables must be on the critical path
• At least one deliverable to fall within each measured time period

16. 02 July, 2019 The Benefits of using Earned Value Management at Airbus16
Airbus Calculates Earned Value from Actual number of Deliverables Achieved

17. 02 July, 2019 The Benefits of using Earned Value Management at Airbus17
Airbus Calculates Earned Value from Actual number of Deliverables Achieved

18. 02 July, 2019 The Benefits of using Earned Value Management at Airbus18
Airbus matches Earned Value to Planned and Actual Cost to determine CPi & SPi

19. 02 July, 2019 The Benefits of using Earned Value Management at Airbus19
Airbus matches Earned Value to Planned and Actual Cost to determine CPi & SPi

20. 02 July, 2019 The Benefits of using Earned Value Management at Airbus20
Airbus matches Earned Value to Planned and Actual Cost to determine CPi & SPi
Earned Value
Planned Spend
SPi =
Earned Value
Actual Spend
CPi =
By having quantitative
performance trends Airbus is able to:
• Measure the project performance & progress
• Track over cost and delay
• Support arbitration and decision-making
• Challenge the re-forecasting budget
• Set-up an action plan to meet the forecasts
A set of Pre-Requisites is
required and Golden Rules
must be respected to do
EVM robustly

21. Airbus also shows the simpler cost and schedule variance
02 July, 2019 The Benefits of using Earned Value Management at Airbus21
End of Year
By showing deviations
Airbus can:
• Easily see bridge from achievement to baseline
• Can show for both schedule and cost
• Can show both current and EOY forecast
To Date

22. Pitfalls to watch out for:
EVM tends to under estimate the project performance
02 July, 2019 The Benefits of using Earned Value Management at Airbus22
To address this Airbus:
• Only uses EVM on larger work packages
• Only selects a subset of milestones for EVM
• Uses a lot of activities with short durations, but not so
many there is too much work to measure them
• Splits activities to better align with the spend profile
• E.g. Report Generation vs Report Authorisation
Deliverables aren’t claimed
until they are 100%
complete even though
spend is being measured
continuously

23. Pitfalls to watch out for:
Precision vs accuracy
Month EV PV AC CPi SPi CV SV
2 253,187 250,000 226,9231.11574 1.01275 26,264 3,187
3 511,587 500,000 499,3251.02456 1.02317 12,262 11,587
4 700,425 750,000 741,6970.94435 0.93390 -41,272 -49,575
02 July, 2019 The Benefits of using Earned Value Management at Airbus23
Just because CPi and SPi
can be calculated to many
decimal places doesn’t
mean they are that accurate
to that level
Month EV PV AC CPi SPi CV SV
2 253,187 250,000 226,9231.12 1.01 26,000 3,000
3 511,587 500,000 499,3251.02 1.02 12,000 12,000
4 700,425 750,000 741,6970.94 0.93 -41,000 -50,000
At Airbus we will:
• Never quote CPi and CPi to more than
2 decimal places
• Place the emphasis on trends rather
than individual vales
• Use EVM to ask, rather than answer,
questions

24. Pitfalls to watch out for:
EVM is not an exact science – It only provides a trend of Schedule & Cost performance
02 July, 2019 The Benefits of using Earned Value Management at Airbus24
CPi and SPi are only
as good as the data
used to calculate them
At Airbus we:
• Always check that the numbers align with our instincts
• Minimise the backlog in claiming deliverables
• Make sure that all costs are either logged or commitments are recorded
• Have “Golden Rules” to ensure there is a robust foundation and
consistency in application of EVM across all projects and programmes

25. An example of an Airbus Golden Rule
Schedule Robustness
Golden Rule:
The schedule baseline shall consist principally of milestones of the following types
• Business relevant
• Deliverables described in project Statement of Work (SoW)
• Coverage of all work packages and contributors
• ~30% on the Project Critical path (if possible)
Rationale:
• Earned value is calculated based on physical progress measurement (0 or 100% rule). The schedule needs to describe
the actual delivery/outputs of the team.
Impact / effect of deviation:
• Physical progress measured is not representative, e.g. too low if no deliverable or intermediate product has been
delivered. Consequently EV is biased.
• Avoid selecting EVM milestone with a baseline date at end of the month
• If a milestone is nearly achieved i.e. @ 95%, it will still be considered as not achieved and pushed to the next month.
This has a direct impact on EV.
02 July, 2019 The Benefits of using Earned Value Management at Airbus25

26. Airbus
Project
Management
Office
EVM Deployment
CoC P&PM
Home Function
Project Members
Project Leader/
Programme Manager
Supported Manager
PMBP
Functional Manager
02 July, 2019 The Benefits of using Earned Value Management at Airbus26

27. Airbus
Project
Management
Office
EVM Application
CoC P&PM
Home Function
Project Members
Project Leader/
Programme Manager
Supported Manager
PMBP
Functional Manager
02 July, 2019 The Benefits of using Earned Value Management at Airbus27

28. The Benefits of using Earned Value Management
at Airbus
Application of EVM in Airbus
Richard Allison
02 July 2019

29. DD Month, YEAR Presentation title runs here (go to Header and Footer to edit this text)29

30. Work
Breakdown
Clear WBS needed
Airbus industrial responsibilities
January 2018
France
Germany
UK
Spain

31. What do you need? – Planning, Resources & Cost
DD Month, YEAR Presentation title runs here (go to Header and Footer to edit this text)31
• Integrating our KPI
− Planning
− Phasing
− Spend

32. Golden Rules
• General:
− Used on development Projects-
− Yearly window
− Only contributors that have specific deliverables
− Average value of milestones
• Content of the work must be delivered by the contributor
• Ideally would like milestones every month of spend
• All contributors to use an approximate similar value.
• The milestones should be phased in line with the budget spend.
• Statement of work
• Definition of the deliverable.
32

33. Schedule
33
1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 6 6 6 6 7 7 7 7 8 8 8 8 9 9 9 9 # # # # # # # # # # # #
1 2 3 4 5 6 7 8 9 # # #
# # # # # # # # # # # #
BASELINE 4 # # # # # # # # # # #
ACHIEVED 4 # # # # # # # # # # #
FORECAST 4 # # # # # # # # # # #
BASELINE % # # # # # # # # # # # #
INITIAL BASELINE % # # # # # # # # # # # #
ACHIEVED % # # # # # # # # # # # #
FORECAST % # # # # # # # # # # # #
FORECAST 4 # # # # # # # # # # #
BASELINE 0 0 0 0 0 0 0 1 1 1 1 1
INITIAL BASELINE % (CONSO)# # # # # # # # # # # #
INITIAL BASELINE % - - - - - - - - - - - -
# # # # # # # # # # # #
ACHIEVED 0 0 # # # # # # # # # #
FORECAST 0 0 0 0 0 0 0 1 1 1 1 1
FORECAST 0 0 0 0 0 0 0 1 1 1 1 1
%
Nb.
%
Nb.
54% 64% 76% 87%
270 309 357
64% 76%
229 270 309 357
ACHIEVED /
FORECAST
1% 4% 11% 20% 28% 100%
4 14 39 72 99 133 172 195 229
37% 48%
39 72 99 133 172 195
28% 37% 48% 54%
2018
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
BASELINE
1% 4% 11% 20% 87% 100%
4 14
SCHEDULING DATA - CURRENT YEAR
ACHIEVED MILESTONES100%
TO DATEKPI - CURRENT YEAR
BACKLOG
ACHIEVED VS
PREV.
FORECAST
0% 200%
SCHEDULING
PERFORMANCE100%
ADVANCE / DELAY IN
MONTH
0,0
COST PERFORMANCE
INDEX72%
VS CURRENT
BASELINE%
? ?
1% 4%
11%
20%
28%
37%
48%
54%
64%
76%
87%
100%
1% 4%
11%
20%
28%
37%
48%
54%
64%
76%
87%
100%
1% 4%0%
20%
40%
60%
80%
100%
120%
MilestonesCount
BASELINE
FORECAST ACHIEVED
Start of the year
• Baseline established:
− Planning
− Cost phasing

34. Finance
34
COST BASELINE # # # # # # # # # # # #
# # # # # # # # # # # # INVISIBLEEFFORT DRIVENMILESTONEBASESPREAD TOTAL INITIAL
# # # # # # # # # # # # COST BASELINE 0,5 1,5 2,0 #
# # # # # # # # # # # # ADVANCE 2,0 0,0
INITIAL COST BASELINE # # # # # # # # # # # # EV 0,5 1,5 2,0
OVERCOST 2,0 0,8
ACTUALS 0,3 2,5 2,8
COST BASELINE 3,3 39,0 42,3 #
ADVANCE 42,3 0,0
EV 3,3 39,0 42,3
UNDERCOST 42,3 0,0
1 2 3 4 5 6 7 8 9 # # # OP. REF. 3,3 39,0 42,3
# # # # # # # # # # # #
COST BASELINE # # # # # # # # # # # #
INITIAL COST BASELINE # # # # # # # # # # # #
# # # # # # # # # # # #
EARN VALUE(FORECAST)# # # # # # # # # # # #
EARN VALUE(ACTUAL) # # # # # # # # # # # #
EARN VALUEVS INTIAL BASELINE(ACTUAL)# # # # # # # # # # # #
ACTUALS # # # # # # # # # # # #
COST PROGRESS FORECAST# # # # # # # # # # # #
%
M€
%
M€
%
M€
-
1 3 - - - - - - -
- - - - - -
- - -
ACTUALS
3% 7% - - -
19 23 28
EARNED
VALUE
2% 5% 11% 19% 27% 37% 100%
33 37 42
33 37 421 2 5 8 12 16
23 28
37% 46% 55% 67% 77% 87%
46% 54% 67% 77% 87%
BASELINE
2% 5% 12% 19% 28%
MAR APR MAY
1 2 5 8 12
YTD
EOY
2018
JAN FEB SEP OCT NOV DECJUN JUL AUG
100%
16 20
ACTIVITY BASED BUDGET (EARNED VALUE) - CURRENT YEAR YEAR TO DATE & CURRENT YEAR END SITUATION? ?
MILESTONE BASED EFFORT DRIVEN
3,3 3,3 3,3
39,0 39,0 39,0
0,0 0,042,3 42,3 42,3
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
45,0
COSTBASELINE
ADVANCE
EV
UNDERCOST
OP.REF.
EOY
0,5 0,5
0,3
1,5 1,5
2,5
0,0
0,8
2,0 2,0
2,8
0,0
0,5
1,0
1,5
2,0
2,5
3,0
COSTBASELINE
ADVANCE
EV
OVERCOST
ACTUALS
YTD
0,7
2,0
4,9
8,2
11,7
15,6
19,5
23,4
28,1
32,6
36,9
42,3
0,7 2,0
4,8
8,1
11,6
15,6
19,4
22,8
28,1
32,6
36,9
42,3
0,7 2,01,2
2,8
0
5
10
15
20
25
30
35
40
45
€uromillions
COST BASELINE
EARN VALUE (FORECAST) EARN VALUE (ACTUAL)
ACTUALS

35. PDT – iD2020 EVM – physical progress
BKDA Actuals Nov 18
Schedule: 93% achieved milestones : -24 EVM : - 28 late / +4 in advance
-1 xxxx: New XXX - closed mid dec
-11/+1 yyy: -1000 TL.: all closed mid dec except 5 shift in 2019
-12/+3 ZZZ: Mat A delay snowball effect on Mat B activities
Strong recovery up to Dec – 9 achieved mid dec
-4 cccc Int: Mat A shift and Cap N- all closed mid dec
EoY forecast: -11EVM shift for next year with NO cost impact.
• XXXX: Shift of 7 EVM linked to loads
• YYY: Shift 3 EVM linked to loads and IP validation
• A/C int: Shift of 1 EVM ESI.
346
1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 6 6 6 6 7 7 7 7 8 8 8 8 9 9 9 9 # # # # # # # # # # # #
1 2 3 4 5 6 7 8 9 # # #
# # # # # # # # # # # #
BASELINE 4 # # # # # # # # # # #
ACHIEVED 4 # # # # # # # # # # #
FORECAST 4 # # # # # # # # # # #
BASELINE % # # # # # # # # # # # #
INITIAL BASELINE % # # # # # # # # # # # #
ACHIEVED % # # # # # # # # # # # #
FORECAST % # # # # # # # # # # # #
FORECAST 4 # # # # # # # # # # #
BASELINE 0 0 0 0 0 0 0 0 1 1 1 1
INITIAL BASELINE % (CONSO)# # # # # # # # # # # #
INITIAL BASELINE % - - - - - - - - - - - -
# # # # # # # # # # # #
ACHIEVED 0 0 0 0 0 0 0 0 1 1 1 #
FORECAST 0 0 0 0 0 0 0 0 1 1 1 1
FORECAST 0 0 0 0 0 0 0 0 1 1 1 1
%
Nb.
%
Nb.
2018
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
BASELINE
1% 4% 9% 18% 88% 100%
4 14 33 63 96 126 153 178
27% 35% 43% 50% 61% 76%
220 270 315 357
ACHIEVED /
FORECAST
1% 4% 9% 17% 24% 96%
4 14 32 59 84 115 134 156 197
32% 37% 43% 55% 66% 81%
237 291 344
SCHEDULING DATA - CURRENT YEAR
ACHIEVED MILESTONES93%
TO DATEKPI - CURRENT YEAR
BACKLOG
ACHIEVED VS
PREV.
FORECAST
1% 75%
SCHEDULING
PERFORMANCE96%
ADVANCE / DELAY IN
MONTH
0,5
COST PERFORMANCE
INDEX100%
VS CURRENT
BASELINE%
? ?
1% 4%
9%
18%
27%
35%
43%
50%
61%
76%
88%
100%
1% 4% 9%
17%
24%
32%
37%
43%
55%
66%
81%
96%
1% 4% 9%
17%
24%
32%
37%
43%
55%
66%
81%
0%
20%
40%
60%
80%
100%
120%
MilestonesCount
BASELINE
FORECAST ACHIEVED

36. BKDA Actuals Nov 18
EVM – cost progress
End of Nov Overcost: 0,2M€
XXXX: +0,1M€ actuals in line with activities
EoY: confirmed at Op ref
+0,5M€ mainly due to YYYY agreed post FC3
EoY: Confirmed at Op ref but due to new assumptions
Ex Loss value 0,5k€ EVM shift and overconsumption
Dx Loss value 0,3k€ EVM shift and overconsumption
YYYY: -0,8M€
Underspend due to EC commitment (S/C activities)
XXX: +0,3 M€
EoY -0,4M€ confirmed
End of year forecast: 40,1M€
COST BASELINE # # # # # # # # # # # #
# # # # # # # # # # # # INVISIBLEEFFORT DRIVENMILESTONEBASESPREAD TOTAL INITIAL
# # # # # # # # # # # # COST BASELINE 4,4 32,1 36,5 #
# # # # # # # # # # # # DELAY 35,0 1,5
INITIAL COST BASELINE # # # # # # # # # # # # EV 4,4 30,6 35,0
OVERCOST 35,0 0,2
ACTUALS 3,5 31,7 35,2
COST BASELINE 5,1 36,5 41,6 #
DELAY 40,2 1,4
EV 5,1 35,1 40,2
OVERCOST 40,2 0,3
1 2 3 4 5 6 7 8 9 # # # OP. REF. 4,6 35,9 40,5
# # # # # # # # # # # #
COST BASELINE # # # # # # # # # # # #
INITIAL COST BASELINE # # # # # # # # # # # #
# # # # # # # # # # # #
EARN VALUE(FORECAST)# # # # # # # # # # # #
EARN VALUE(ACTUAL) # # # # # # # # # # # #
EARN VALUEVS INTIAL BASELINE(ACTUAL)# # # # # # # # # # # #
ACTUALS # # # # # # # # # # # #
COST PROGRESS FORECAST# # # # # # # # # # # #
%
M€
%
M€
%
M€
YTD
EOY
2018
JAN FEB SEP OCT NOV DECJUN JUL AUG
100%
15 19
BASELINE
2% 5% 12% 20% 28%
MAR APR MAY
1 2 5 8 12
37% 45% 55% 67% 78% 88%
39% 47% 60% 72% 84% 97%
32 36 42
30 35 401 2 5 8 10 14
23 28
ACTUALS
3% 7% 12% 19% 25%
16 19 25
EARNED
VALUE
2% 5% 11% 19% 25% 33%
-
1 3 5 8 11 15 18 21 25
36% 43% 50% 59% 71% 85%
30 35 -
ACTIVITY BASED BUDGET (EARNED VALUE) - CURRENT YEAR YEAR TO DATE & CURRENT YEAR END SITUATION? ?
MILESTONE BASED EFFORT DRIVEN
5,1 5,1 4,6
36,5 35,1 35,9
1,4
0,3
41,6
40,2 40,5
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
45,0
COSTBASELINE
DELAY
EV
OVERCOST
OP.REF.
EOY
4,4 4,4 3,5
32,1 30,6 31,7
1,5
0,2
36,5
35,0 35,2
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
COSTBASELINE
DELAY
EV
OVERCOST
ACTUALS
YTD
0,7
2,0
4,9
8,2
11,7
15,3
18,9
22,7
27,7
32,3
36,5
41,6
0,7 2,0
4,7
7,8
10,3
13,6
16,4
19,5
25,2
29,9
35,0
40,2
0,7 2,0
4,7
7,8
10,3
13,6
16,4
19,5
25,2
29,9
35,0
1,2
2,8
5,1
8,0
10,6
14,9
17,9
20,9
24,7
29,6
35,2
0
5
10
15
20
25
30
35
40
45
€uromillions
COST BASELINE
EARN VALUE (FORECAST) EARN VALUE (ACTUAL)
ACTUALS

37. Planning
• What works
37
• What doesn't work
− Strong governance
− Engaged stakeholders
− Good analysis
− Only the right sort of contributors being
tracked by the tool
− Not understanding what it means!
− Cheating

38. Thank you