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  Discrete Effort, Apportioned Effort and Level of Effort (LOE) Explained

Discrete Effort vs Apportioned Effort vs Level of Effort (LOE) for PMP and CAPM Certification Discrete Effort, Apportioned Effort and Level of Effort (LOE) are the 3 types of activities used in Earned Value Management (EVM) to measure work performance. This is an area that is not well understood or explained in project management references. The purpose of this post is to distill all the information that you need to know on these topics for the PMP and CAPM exams, and present it in a simplified manner.

Let's start with the PMBOK® Guide, 5th Edition definitions of these terms.

Definition of Discrete Effort

An activity that can be planned and measured and that yields a specific output.

Definition of Apportioned Effort

An activity where effort is allotted proportionately across certain discrete efforts and not divisible into discrete efforts.

Level of Effort (LOE)

An activity that does not produce definitive end products and is measured by the passage of time.

Personally, I find these definitions confusing. First, the name of the term contains 'effort', but the definition says it's an 'activity'. Second, there is no elaboration or examples provided. So is it an effort or an activity? It is a type of activity. Now with that cleared, let's look at the simplified versions of these terms with examples.

What is Discrete Effort?

Discrete Effort is the work that can be directly associated to a Work Breakdown Structure (WBS) component or a tangible product or service. It can be directly measured and hence also known as Measurable Effort.

Examples of Discrete Effort are the effort to build a piece of software, or design a building, or to create a product manual or a (deliverable) report.

What is Apportioned Effort?

Apportioned Effort is work that cannot be directly associated to a WBS component or a project deliverable. The term 'apportion' means to divide or share. Apportioned Effort has a direct and supportive relationship to the Discrete Effort and the value of the apportioned effort is proportional to (a certain percentage) or the discrete effort that it supports.

Examples of Apportioned Effort include quality assurance and inspection activities.
Apportion means to divide or share.

What is Level of Effort (LOE)?

Level of Effort is a support-type project activity that does not produce tangible outcomes that can be measured objectively.

Examples of LOE include project management, management, seller or customer liaison, project cost accounting, maintenance of equipment, and administrative work to support projects.

Mnemonic to understand LOE

I think of Level of Effort as Level "off" Effort i.e. to spread out the work. This helps me to better relate to the true meaning of LOE.
Level of Effort is to spread out the work.

Application of LOE in Earned Value Management (EVM)

Let's say an activity to develop a software program (Discrete Effort) on a project has a Planned Value (PV) of $1,000. This software program has some quality assurance function associated to it. In this case, the project manager decides to allocate 20% of the PV of the Discrete Effort (to develop the software program) or $200 for the quality assurance activity.

As you can see, the effort estimate for the quality assurance effort is 'proportional' to the effort estimate of the base activity (Discrete Effort). If the estimate for the software development activity is increased or decreased so would be for the quality assurance activity by the same proportion.

LOE activities consume project resources and should be included in EVM planning and measurement too. LOE is based on the passage of time i.e. Planned Value (PV) is automatically credited as the Earned Value (EV) at the end of each measurement period.

Let's understand this with an example. Say you've allocated $10,000 as the PV for project management work for a 3-month period. At the end of 3 months, the EV of the project management work (LOE) is equal PV i.e. $10,000. In other words, Schedule Variance (SV) is always zero and Schedule Performance Index (SPI) is always 1 for an LOE activity. However, LOE activities can have non-zero Cost Variance (CV) and provide an indication of project cost performance.
Discrete Effort and Apportioned Effort are measured by physical progress (% complete) whereas LOE is measured by duration.

Can LOE activities be included on the WBS?

Yes. As an example, project management work is usually included on the WBS.

Can LOE activities be on the critical path?

No. An LOE activity should never be on the critical path of the project schedule, as it never of itself adds time to the project. LOE has both a Start-to-Start (SS) and Start-to-Finish (SF) relationship to its base activity (discrete activity). Due to this, the LOE appears to be hanging from the beginning and end of the base activity as an “hammock” activity. This is illustrated very well in the following tutorial video.


If you found this post useful, or you have any questions or comments, please post your comments below.

References
  • PMBOK® Guide, 5th Ed
  • Project Management: A Systems Approach to Planning, Scheduling, and Controlling, 10th Ed by Dr. Harold Kerzner
  • Practice Standard for Work Breakdown Structures, 2nd Ed
  • Practice Standard for Earned Value Management
  • Wikipedia
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1 comment:

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