earned value analysis

Earned Value

Elements of Project Control

• Creation of a Baseline Schedule

• Measurement of Performance

• Effective Corrective Actions

Schedule Updating

1. Schedule durations and sequences often vary from actual durations and sequences

– Subcontractors might use different methods– Force Majeure events delay the project– Etc

2. Participants would like to know how the project is progressing

– Owners – When can I move in? How much should I pay this month? What milestones have been met?

– Designers – When do I release drawings– Subcontractors – when do I come on to the site?

Usefulness of frequent schedule updating

• Current state of the project is always known

• Updates provide a valuable record of project status at a given time– Can document changes, responsibilities and

delays throughout the project– Useful during claims proceedings

• Schedule is a document that can be followed

More on updates

• Schedules should be updated periodically– Especially if a major event such as a logic

change occurs

• Updates should show– New start and completion dates– Completed activities– Percentage progress on activities

Percentage Complete

Planned Vs. Actual

Updating a Precedence Diagram

0 0

Start

0 0 0

0 4

F (3)4

3 3 7

0 3

A 3

0 0 3

3 9

B (4)6

3 0 9

6 8

D 2

7 1 9

3 6

E 3

4 1 7

9 9

Finish

9 0 9

6 8

C 2

7 1 9

Earned Value

• “We have spent 60% of the time for an activity but have completed 40% of the work. We are on schedule since we have completed the most time consuming parts of the activity”

Evaluating Progress on an Activity

• Units completed– Length of pipe laid, length of trench dug

• Effort expended– Plastering = 50%, Painting = 50% effort– 3 walls plastered, two painted out of 4 walls– Percentage complete = (3x0.5+2x0.5)/4 = 62.5%

• Expert opinion• Amount spent• Time taken (?)

Project Monitoring

Project Monitoring

• Planning and scheduling play an important role in project management

• But without monitoring the project, chances of completing the project on schedule is difficult

• Two parameters are monitored– Cost– Time

• The following graph shows the Time-cost relationship for a project

Project Monitoring

• This graph shows Project Progress

Time

Cost over-run with schedule

Time over-run

IdealCurve

Project Monitoring

• Cost is not proportional to the time/man-hours spent on each activity– Eg:- Installation of a projector in a classroom

• Cost of the projector is very high• Man-hours spent on installation are not significant

• Neither expenditure nor man-hours spent can be used to measure the project progress

• Expenditure and man-hours are inputs• Progress in terms of input does not indicate progress in

terms of output

Project Monitoring

• Quantities installed can give information regarding project progress, but is limited to very few activities and cannot be applied to the entire project as it involves various activities

• Thus with the help of above mentioned parameters, it is difficult to measure the project progress.

• Hence the use of “EARNED VALUE” of time or cost

Concepts of Earned Value

Concept of Earned Value

• Consider the following example:– Wall construction

Wall is divided into 4 sectionsFor 4-sections - 100 man-hours are requiredHence if 2-sections are completed,

(2/4) × 100= 50 man-hours

– We say that 50 man-hours have been EARNED

• The actual man-hours spent to construct these two sections can be more than or less than the Earned Value of man-hours


– Wall construction

If 4 sections cost Rs. 1000/-then the cost of constructing 2 sections = Rs. 500/-

We say that Rs. 500/- is the EARNED value of moneyThe actual cost incurred in constructing these two

sections can be more than or less than the Earned Value of money

It is important to note that Earned Value is based on the Actual quantities installed or Actual quantity of work done

Hence output is considered in the Earned Value concept


• Calculation of Earned Value– Earned Value of man-hours or money for an activity can be

calculated as follows:

Example 1

Example 1

• Determination of planned % complete:• Consider the following example

Draw % complete with respect to man-hours and money.

Activity A

Activity B

300

5000

700 (man-hours)

5000 (money)

500

10000

800 (man-hours)

70000 (money)

Example 1

• Determination of planned % complete based on man-hours.

Activity A

Activity B

300

5000

700 (man-hours)

5000 (money)

500

10000

800 (man-hours)

7000 (money)

Daily Cumulative

Total Cumulative

% Complete

300 1200 800

300 1500 2300

300 1200 300230023002300

= 1.0= 0.65= 0.13

Example 1

• Determination of planned % complete based on money.

Activity A

Activity B

300

5000

700 (man-hours)

5000 (money)

500

10000

800 (man-hours)

7000 (money)

Daily Cumulative

Total Cumulative

% Complete

5000 15000 7000

5000 20000 27000

= 1.0= 0.741= 0.185

5000 20000 90000270002700027000

Example 1

Stages

Example 1

BCWS – Man-hours

Stages 1 2 3 Total

Activity A 300 700 0 1000

Activity B 0 500 800 1300 2300

Stage Total 300 1200 800

Cumulative Total 300 1500 2300

Project % Complete 0.13 0.65 1.0

Example 1

BCWS – Money

Stages 1 2 3 Total

Activity A 5000 5000 0 10000

Activity B 0 10000 7000 17000 27000

Stage Total 5000 15000 7000


Project % Complete 0.185 0.741 1.0

• Determination of Earned Value of Man-hour.– Consider the previous problem (man-hours)

Example 1

500 800

700300Activity A

Activity B

% Complete

0.25 0.95 1.0

0.6 0.95

Activity A

Activity B

scheduled

Example 1

• Determination of Earned Value of Man-hour.– Stage 1:

EMh (A)

EMh (B)

Total Man-hours = 2300

% complete of project:% complete = 250 / 2300% complete = 0.11

Example 1


EMh (A)

EMh (B)



• Determination of Earned Value of Man-hour:

Earned Value(man-hours)

500 800

700300Activity A

Activity B

% Complete

0.25 0.95 1.0

0.6 0.95

Activity A

Activity B

scheduled

250 700 50 Man-hours

780 455 Man-hours

0.108 0.752 0.971Project - % Complete

Example 1

Example 1

• Determination of Earned Value of Man-hour.

BCWP

Stages 1 2 3

% complete

Activity AActivity B

0.250

0.950.6

1.00.95

Earned Value (man-hours)


Stage total

2500

250

700780

1480

50455505

Activity A (cum)Activity B (cum)

2500

950780

10001235

Total cumulative 250 1730 2235

Project % complete 0.109 0.752 0.972

Example 1

• Determination of Earned Value of Man-hour:ACTUAL MAN-HOURS

Actual(man-hours)

500 800

700300Activity A

Activity B scheduled

400 500 100 Man-hours

450 1000 Man-hours

Example 1


ACWP

Stages 1 2 3


4000

500450

1001000

Stage Total 400 950 1100


Example 1


Stage 1 Stage 2 Stage 3

BCWS SCHEDULED MAN-HOUR (Cumulative) 300 1500 2300

BCWP EARNED MAN-HOUR (Cumulative) 250 1730 2235

ACWP ACTUAL MAN-HOUR (Cumulative) 400 1350 2450

SV BCWP-BCWS -50 230 -65

CV BCWP-ACWP -150 380 -215

SPI BCWP/BCWS 0.83 1.15 0.97

CPI BCWP/ACWP 0.63 1.28 0.9122

Example 1

• Determination of Earned Value of Man-hour:Earned Value

Stages

Example 1

• Determination of Earned Value of Money– Consider the previous problem (money)

10000 7000

50005000Activity A

Activity B

% Complete

0.25 0.95 1.0

0.6 0.95

Activity A

Activity B

scheduled

• Determination of Earned Value of Money.– Stage 1:

EMh (A)

EMh (B)


Example 1


Example 1


EMh (A)

EMh (B)



Example 1

• Determination of Earned Value of Money.

Earned Value(money)

10000 7000

50005000Activity A

Activity B

% Complete

0.25 0.95 1.0

0.6 0.95

Activity A

Activity B

scheduled

2500 7000 500 Money

10200 5950 Money

0.093 0.730 0.969Project - % Complete

Example 1


BCWP

Stages 1 2 3

% complete


0.250

0.950.6

1.00.95

Earned Value (money)


Stage total

25000

2500

70001020017200

50059506450

Activity A (cum)Activity B (cum)

25000

950010200

1000016150

Total cumulative 2500 19700 26150

Project % complete 0.093 0.730 0.969

Example 1

• Determination of Earned Value of Money.ACTUAL MONEY

Actual(money)

10000 7000

50005000Activity A

Activity B scheduled

4500 6000 5000 Money

8500 7500 Money

Example 1


ACWP

Stages 1 2 3


45000

60008500

50007500

Stage Total 4500 14500 12500


Example 1


Stage 1 Stage 2 Stage 3

BCWS SCHEDULED MONEY (Cumulative) 5000 20000 27000

BCWP EARNED MONEY (Cumulative) 2500 19700 26150

ACWP ACTUAL MONEY (Cumulative) 4500 19000 31500

SV BCWP-BCWS -2500 -300 -850

CV BCWP-ACWP -2500 700 -5350

SPI BCWP/BCWS 0.5 0.99 0.97

CPI BCWP/ACWP 0.56 1.04 0.83

Example 1

• Determination of Earned Value of Money.Earned Value

Stages

Example 2

Example 2

• Determination of planned % complete:

Draw % complete with respect to Man-hours and Money.

MAN-HOURS

20 20 20 20 20

12.5 12.5 12.5 12.5

10 10

MONEY

8000 8000 8000 8000 8000

10000 10000 10000 10000

75000 75000

Sch. Qty. Sch. Mhrs

Flooring 400 100

Electrical 100 50

AV systems 20 20

Sch. Money

40000

40000

150000

Example 2

• Determination of planned % complete based on Man-hours:

Sch. Mhrs.

Flooring 100

Electrical 50

AV systems 20

170

20 20 20 20 20

12.5 12.5 12.5 12.5

10 10

20 20 32.5 32.5 32.5 32.5 10 10

20 40 72.5 105 137.5 150 160 170

20170

40170

72.5170

105170

137.5170

150170

160170

170170

0.118 0.235 0.426 0.618 0.809 0.882 0.941 1.0

Total Mhrs.

Cuml. Mhrs.

% complete

Stage 1 Stage 2 Stage 3 Stage 4

Example 2

• Determination of planned % complete based on money:

Sch. Money

Flooring 40000

Electrical 40000

AV systems 150000

230000

8000 8000 8000 8000 8000

10000 10000 10000 10000

75000 75000

8000 8000 18000 18000 18000 10000 75000 75000

8000 16000 34000 52000 70000 80000 155000 230000

8000230000

16000230000

34000230000

52000230000

70000230000

80000230000

155000230000

230000230000

0.034 0.069 0.147 0.226 0.304 0.347 0.673 1.0

Total Money

Cuml. Money

% complete

Stage 1 Stage 2 Stage 3 Stage 4

Example 2

• Scheduled-percentage complete

Days

Example 2

• Determination of Earned Value of Man-hour – UPDATE 1

Quantity Installed

50 70

12.5 17.5 0 0 0 0 0 0

12.5 30 30 30 30 30 30 30

0.074 0.176 0.176 0.176 0.176 0.176 0.176 0.176

Sch. Mhrs Inst. Qty.

Flooring 100 120

Electrical 50

AV Systems 20

170

Actual Man-hours

20 20

20 20 0 0 0 0 0 0

20 40 40 40 40 40 40 40

Earned Mhrs.

Cuml. Earned Mhrs.

% complete

Total Mhrs.

Cuml. Mhrs.

• Update 1

Example 2

Stages

Example 2


Quantity Installed

50 70 80 80

25 30

12.5 17.5 32.5 35 0 0 0 0

12.5 30 62.5 97.5 97.5 97.5 97.5 97.5

0.074 0.176 0.368 0.574 0.574 0.574 0.574 0.574

Sch. Qty. Sch. Mhrs Inst. Qty.

Flooring 400 100 280

Electrical 100 50 55

AV Systems 20 20

170

Actual Man-hours

20 20 30 30

15 15

20 20 45 45 0 0 0 0

20 40 85 130 130 130 130 130

Earned Mhrs.

Cuml. Earned Mhrs.

% complete

Total Mhrs.

Cuml. Mhrs.

Example 2

• Update 2

Days

Example 2


Quantity Installed

50 70 80 80 90 30

25 30 35 10

12.5 17.5 32.5 35 40 12.5 0 0

12.5 30 62.5 97.5 137.5 150 150 150

0.074 0.176 0.368 0.574 0.809 0.882 0.882 0.882

Sch. Qty. Sch. Mhrs Inst. Qty.

Flooring 400 100 400

Electrical 100 50 100

AV Systems 20 20 0

170

Actual Man-hours

20 20 30 30 30 15

15 15 15 15

20 20 45 45 45 30 0 0

20 40 85 130 175 205 205 205

Earned Mhrs.

Cuml. Earned Mhrs.

% complete

Total Mhrs.

Cuml. Mhrs.

Example 2

• Update 3

Days

Components of Earned Value

Components of Earned value Analysis

• Budgeted Cost of Work Scheduled (BCWS)– It is the budgeted cost of work scheduled to be performed– It is also called the Planned Value (PV)– It tells how much work have been completed


• Budgeted Cost of Work Performed (BCWP)– It is the budgeted cost of work actually performed– The Earned Value for the work actually completed– It tells how much work is actually completed


• Actual Cost of Work Performed (ACWP)– It is the amount actually spent on the work completed– This could be more or less than the Earned Value


• Scheduled Variance (SC)

– It compares work completed vs work planned– It helps to identify whether the project is ahead or behind

schedule– Negative value indicated that the project is behind schedule


• Scheduled Performance Index (SPI)

– It helps to identify whether the project is ahead or behind schedule

– Less than 1 indicates that the project is behind schedule– It can be used to forecast how long it will take for the project to

complete


• Cost Varience (CV)

– It compares what was planned to be spent on the work completed vs. what was actually spent

– It helps to identify whether the project is ahead or behind schedule

– Negative value indicates that the project is over budget


• Cost Performance Index (CPI)

– It helps to identify weather the project is above or below budget– Less than 1 means the project is over budget– It can be utilised to forecast how much amount will be required

to complete the project


• Budget at Completion (BAC)– It is the amount that was originally budgeted to complete the

project


• Estimate at Completion (EAC)– It is the estimated amount required to complete the project


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earned value analysis

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