This document discusses an presentation about integrating earned value management (EVM) and risk management. It provides an overview of EVM and risk management standards like ANSI 748-B and ISO 31000. It then discusses how EVM and risk management can be integrated, including using EVM to monitor risk mitigation plans. The presentation describes deploying an integrated EVM and risk management system on a gas distribution project, including planning with multiple baselines and joint monitoring of schedule and risk. It also discusses how planning rules had to change to integrate EVM and risk management for a liquefied natural gas carrier repair schedule.

1. http://ogp.vc.pmi.org
Scheduling and Deployment of an EVM
System Integrated with Risk Management
in a Gas Distribution Project
by José Moro Melón - Industrial Engineer and PMP®
Introduction By: Nain Aquado Quintero, P.E., PMP
Community Member, EOGP
March 18, 2013

2. Welcome Everyone!
• PMI Energy, Oil, Gas and Petrochemical CoP Event:
Virtual Community Global Webinar;
• Hello to Worldwide Webinar Recipients;
• Brief Overview of EOGP CoP;
• Introduction of Guest Speaker:
José Moro Melón (Industrial Engineer and PMP®)
Founder of GEDPRO --project management experts -- a global
company consulting of Project Management providing
consultancy services, technology, training and outsourcing --
2

3. What is a Virtual Community
at PMI?
Within PMI, a VC is also known as
a Community of Practice: An
interactive place for you to meet
online, discuss ideas and build the
profession’s body of knowledge
through blogs, wikis, and
discussion groups .
3

4. Sample Discussion Threads
We want your input on these and other topics:
• 1. UPSTREAM OIL & GAS – OFFSHORE & ONSHORE
• 2. MIDSTREAM OIL & GAS – OFFSHORE & ONSHORE
• 3. DOWNSTREAM OIL & GAS
• 4. CHEMICALS
• 5. UNCONVENTIONAL ENERGY
• 6. RESEARCH & DEVELOPMENT in EOGP SECTORS
More Details at PMI EOGP CoP homepage: http://ogp.vc.pmi.org
4

5. Your EOGP CoP Council
Service Delivery Lead Knowledge Management Lead:
(Open)
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Asia Pacific Region
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(Open)
USA Region
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PMP PMP South America Region
5

6. Visit Our Website
http://ogp.vc.pmi.org
Access to Practitioners with shared PM interest in:
 Energy;
 Oil;
 Gas;
 Petrochemical;
 and related Process Industries.
6

7. Today’s PMI EOGP CoP Presentation
Scheduling and Deployment of an EVM
System Integrated with Risk Management in a
Gas Distribution Project
José Moro Melón (Industrial Engineer and PMP®)
José has experience in several projects of different areas
(ICT, Aeronautical, Information Society and Industrial) in large
companies like Accenture, Ineco, etc leading projects around
Europe. Since 2002 is member of PMI and during 2008
belongs to the PMI Madrid Chapter Board of Directors. He
founded GEDPRO --project management experts -- a global
company consulting of Project Management providing
consultancy services, technology, training and outsourcing.
Jose helps a lot of organizations to get results implementing
project management methodologies and EPM and PPM
solutions.
7

8. Today’s PMI EOGP CoP Presentation
Scheduling and Deployment of an EVM
System Integrated with Risk Management in a
Gas Distribution Project
• Introduction to integrated project management systems
• EVM and ANSI 748-B
• Risk Management
• EVM and Risk Management integration
• Deployment of an EVM and Risk Management system in
a gas distribution project.
• Analysis of the schedule of the repair of LNG carrier
8

9. Today’s PMI EOGP CoP Presentation
Introduction to integrated project management
systems
• How many management systems coexist in a company?
9

10. Today’s PMI EOGP CoP Presentation
Introduction to integrated project management
systems
• The Enterprise Management System have to cover:
• Scope
• Time
• Cost
• Quality
• Human Resources
• Communications
• Risks
• Procurement
• Safety
• Environmental
• ….
10

11. Today’s PMI EOGP CoP Presentation
Introduction to integrated project management
systems
s
on
ati
er
Op
11 11

12. Today’s PMI EOGP CoP Presentation
Introduction to integrated project management
systems
• How is implemented the Integrated
Project Management System?
• Tools:
• ERP
• CRM
• EPM or PPM
12

13. Today’s PMI EOGP CoP Presentation
EVM and ANSI 748-B
s
ion
at
er
Op
13

14. Today’s PMI EOGP CoP Presentation
EVM and ANSI 748-B
• The EVM involves :
• Planned Value (BCWS)
• Actual Cost (ACWP)
• Earned Value (BCWP)
14

15. Today’s PMI EOGP CoP Presentation
EVM and ANSI 748-B
• What have we achieved (Earned Value) with the money
we've spent (ACTUAL COSTS) compared to what we
had planned (PLANNED VALUE)
15

16. Today’s PMI EOGP CoP Presentation
EVM and ANSI 748-B
• ANSI 748-B
• 32 guidelines
• 10 processes
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17. Today’s PMI EOGP CoP Presentation
EVM and ANSI 748-B
• ANSI 748-B
• 32 guidelines
• Organization (5 guidelines):
• Planning, Scheduling and Budgeting (10
guidelines)
• Accounting Considerations (6 guidelines)
• Analysis and Management Reports(6 guidelines)
• Revisions and Data Maintenance(5 guidelines)
17

18. Today’s PMI EOGP CoP Presentation
EVM and ANSI 748-B
• ANSI 748-B
• 32 guidelines
18

19. Today’s PMI EOGP CoP Presentation
EVM and ANSI 748-B
• ANSI 748-B
• 10 processes:
• SOW
• WBS
• Program Organization
• Program Schedule
• Budget Allocation and Resource Planning
• Accounting Considerations
• Earned Value Methodology
• Performance Measurement
• Estimates at Completion
• Revisions and Data Maintenance
19

20. Today’s PMI EOGP CoP Presentation
Risk Management
• Risks
• Threats
• Opportunity
20

21. Today’s PMI EOGP CoP Presentation
Risk Management
• ISO 31000
• Principles
• Framework
• Process
Principles Framework Process
21

22. Today’s PMI EOGP CoP Presentation
Risk Management
• ISO 31000
22

23. Today’s PMI EOGP CoP Presentation
Risk Management
• ISO 31000 and PMBOK
23

24. Today’s PMI EOGP CoP Presentation
EVM and Risk Management integration
• Management of EVM and Risks
s
ion
at
er
Op
24

25. Today’s PMI EOGP CoP Presentation
EVM and Risk Management integration
Earned Value
Use EV to
Integration Use Risks to Incorporate Monitor
establish Risk Mitigation Performance of
suitable MR to Risk Mitigation Incorporate
Plans into
ensure MR Plans Risk impacts
Project
suffcient to into EAC
Schedules & Id Newly
handle high Budgets Developing
probability risk Risks
Risk Management
25

26. Today’s PMI EOGP CoP Presentation
EVM and Risk Management integration
• Reserves
Contingency
26

27. Today’s PMI EOGP CoP Presentation
EVM and Risk Management integration
• Multiple Baselines
27

28. Today’s PMI EOGP CoP Presentation
EVM and Risk Management integration
• Relationship between CPI, SPI and Risk Management
SPI 2 Review
Baseline
Investing in seeking Exploit the
options to minimize costs opportunity
1 2
0
CPI
Invest in planning and risk
management. Use
Reduce threats contingencies
to save time
0
28

29. Today’s PMI EOGP CoP Presentation
EVM and Risk Management integration
• Relationship between EVM indexes and Risk
Management process effectiveness
Risk process effectiveness
Alto
Problems with baseline
(CPI or SPI
Very high)
Risks well controlled
0 0,5 1 1,5 2 CPI ó SPI
Risks uncontrolled
Problems with baseline or scope
(CPI or SPI
Very Low)
Bajo
29

30. Today’s PMI EOGP CoP Presentation
Deployment of an EVM and Risk Management
system in a gas distribution project
• Project: "Analysis and optimization of the gas distribution
system"
• Initial study of the gas distribution system (routes,
fleet tankers, etc…)
• Study of current system costs gas distribution
• Define of actions to optimize the gas distribution
system
• Route optimization
• Fleet Strategy
• Fleet Modernization
• Project Duration: 8 months
30

31. Today’s PMI EOGP CoP Presentation
Deployment of an EVM and Risk Management
system in a gas distribution project
• Project: "Analysis and optimization of the gas distribution
system"
• Departments involved:
• Financial
• Operations
• Quality
• Engineering
• Projects
• Distribution
• General management
31

32. Today’s PMI EOGP CoP Presentation
Deployment of an EVM and Risk Management
system in a gas distribution project
• Project: "Analysis and optimization of the gas distribution
system"
• Project goal:
• Optimize the distribution
• Operating cost savings
• Define roadmap for actions (projects)
• Restrictions:
• Urgent project
32

33. Today’s PMI EOGP CoP Presentation
Deployment of an EVM and Risk Management
system in a gas distribution project
• Project: "Analysis and optimization of the gas distribution
system"
• Risks:
• Project with many risks as it involves different
departments in different locations
• Keys in the project:
• Good planning and coordination
• Good risk management
33

34. Today’s PMI EOGP CoP Presentation
Deployment of an EVM and Risk Management
system in a gas distribution project
• Project: "Analysis and optimization of the gas distribution
system"
• Project Management:
• Integration of Earned Value and Risk
Management
How was it
done?
34

35. Today’s PMI EOGP CoP Presentation
Deployment of an EVM and Risk Management
system in a gas distribution project
• Project: "Analysis and optimization of the gas distribution
system"
• How was it done?
• Planning
• Dynamic schedule
• Good planning practices
• Risk identificaction
• Budget allocated over time
35

36. Today’s PMI EOGP CoP Presentation
Deployment of an EVM and Risk Management
system in a gas distribution project
• Project: "Analysis and optimization of the gas distribution
system"
• How was it done?
• Planning
36

37. Today’s PMI EOGP CoP Presentation
Deployment of an EVM and Risk Management
system in a gas distribution project
• Proyecto “Análisis y optimización del sistema de
distribución de gas”
• How was it done?
• Planning
In Ms Project we created 3 baselines
• Regardless risks
• Incorporating risk response
• Incorporating response and contingency plans
37

38. Today’s PMI EOGP CoP Presentation
Deployment of an EVM and Risk Management
system in a gas distribution project
• Project: "Analysis and optimization of the gas distribution
system"
• How was it done?
• Planning – Integration of risk, costs and
deadlines
We used Risky Project
38

39. Today’s PMI EOGP CoP Presentation
Deployment of an EVM and Risk Management
system in a gas distribution project
• Project: "Analysis and optimization of the gas distribution
system"
• How was it done?
• Planning – Integration of risk, costs and
deadlines. Montecarlo Analysis
We used Risky Project
39

40. Today’s PMI EOGP CoP Presentation
Deployment of an EVM and Risk Management
system in a gas distribution project
• Project: "Analysis and optimization of the gas distribution
system"
• How was it done?
• Monitoring and Controlling – Joint analysis of
CPI, SPI and Risks
• The tracking of most activities was with EVT
0-100. It was possible because activities
were decomposed in less than 80 hours
• The monitoring was with Ms Project Server
2010. We used tracking of real work and
Physical % Complete
40

41. Today’s PMI EOGP CoP Presentation
Deployment of an EVM and Risk Management
system in a gas distribution project
• Project: "Analysis and optimization of the gas distribution
system"
• How was it done?
• Monitoring and Controlling – Joint analysis of
CPI, SPI and Risks
• In follow-up meetings was reviewed project
status and risks. Fortnightly meetings. With
the three baselines CPI and SPI indicators
were a range, not a single value
• Monte Carlo analysis was performed monthly
41

42. Today’s PMI EOGP CoP Presentation
Deployment of an EVM and Risk Management
system in a gas distribution project
• Project: "Analysis and optimization of the gas distribution
system"
• How was it done?
• Conclusions
• Earned Value Indicators helped identify the
effectiveness of risk management
• EAC were more realistic than other projects
that do not integrate Earned Value and Risk
• We had to change the way of planning
(create schedules)
42

43. Today’s PMI EOGP CoP Presentation
Analysis of the schedule of the repair of LNGC
• Planning
• To integrate EVM and Risk had to change planning
rules
• Schedules contractors were not dynamic
43

44. Today’s PMI EOGP CoP Presentation
Analysis of the schedule of the repair of LNCG
• Planning
• To integrate EVM and Risk had to change planning
rules
• Schedules were adapted
• Planning rules:
• In the WBS we created a specific control
account for materials
• LoE activities were limited
• We planned in terms of 30/60/90 days
44

45. Today’s PMI EOGP CoP Presentation
Analysis of the schedule of the repair of LNCG
• Planning
• To integrate EVM and Risk had to change planning
rules
• Schedules were adapted
• Planning rules :
• The activities should remain mostly the
EVT 0-100 for monitoring. At least in the
planning within the next 30 days
• The schedule in each month must have
at least one start milestone and one end
milestone for each work package
45

46. Today’s PMI EOGP CoP Presentation
Analysis of the schedule of the repair of LNCG
• Planning
• To integrate EVM and Risk had to change planning
rules
• Schedules were adapted
• Planning rules :
• All activities should have at least one
predecessor and successor
• Most relationships should be Finish –
Start
• We limited lags to less of 5 days
46

47. Today’s PMI EOGP CoP Presentation
Analysis of the schedule of the repair of LNCG
• Planning
• To integrate EVM and Risk had to change planning
rules
• Schedules were adapted
• Planning rules :
• We limited floats to less of 44 labour
days
• We limited the restrictions of activities
• We incorporated risks to schedule
47

48. Today’s PMI EOGP CoP Presentation
Analysis of the schedule of the repair of LNCG
• Planning
• To integrate EVM and Risk had to change planning
rules
• Schedules were adapted
• Planning rules :
• In monitoring the EVT used was 0-100
• In Ms Project we used the physical %
complete method to track the EV
48

49. Today’s PMI EOGP CoP Presentation
Analysis of the schedule of the repair of LNCG
• Planning
• To integrate EVM and Risk we had to change
planning rules
49

50. Today’s PMI EOGP CoP Presentation
Analysis of the schedule of the repair of LNCG
• Monitoring and controlling
50

51. Today’s PMI EOGP CoP Presentation
Scheduling and Deployment of an EVM
System Integrated with Risk Management in a
Gas Distribution Project
JOSE MORO MELON, PMP®
Jose.moro@gedpro.com
http://linkedin.com/in/josemoro
http://twitter.com/gedpro
51

52. Scheduling and Deployment
of an EVM System Integrated
with Risk Management in a
Gas Distribution Project
Presentation By:
José Moro Melón - Industrial Engineer and PMP®
Founder
GEDPRO -- Project Management Experts --