Earned Value Management (EVM)

Shenin Hassan 2015

Outline

• Introduction• Basic Elements of EVM• Performance Analysis

and Forecasting• Guidance for the use of

Key EVM Practices

Introduction

• Feedback of the Project is critical – Identify problems– Early decision making

• EVM is one of the most effective “performance measurements and feedback tools”

EVM

• “Management with Lights On”– Illumine where a project

is and where it is going compared to where it was supposed to be

• Patterns and Trends in the past can be good predictors of the future

EVM

• Part of Monitoring and Controlling – Scope– Schedule & – Cost

• Includes– Measuring– Analysing– Forecasting– Reporting

EVM

Scope

Time

Cost

Quality & Risk

What’s the Project Status? Are we on Schedule?

Late by 2 Weeks

Mmm…so?...what’s the new finish date?

Couple of Changes…not only schedule…cost…

EVMS Answers to

When is the project likely to be completed?

Are we currently under or over our budget?

How efficiently are we using our resources?

Critical Data Elements of EVM

Planned Value - PV

Earned Value - EV

Actual Cost - AC

Planned Value

• Amount of resources (expressed in budget-numbers) that are EXPECTED (PLANNED) to accomplish a specific piece of work– Budgeted Cost of Work Scheduled (BCWS)– Spend Plan– Cost Estimate Amount of resources ($) that are

expected to be consumed to accomplish a specific piece of

work scope.

Example: Planned Value (PV)Task Budget Jan Feb Mar Apr1 12 6 62 20 8 123 28 7 21

PV 60 6 14 19 21CUM 6 20 39 60

Total PV = 60Total PV is called Budget at Completion (BAC)

Earned Value (EV)

• Amount of work accomplished at a given point in time.

• Budgeted Cost of Work Performed (BCWP)

Snapshot of work progress at a given point

in time

Example: Earned Value (EV) as of March

Task Budget Jan Feb Mar Apr1 12 6 62 20 8 123 28 7 21

PV 60 6 14 19 21CUM 6 20 39 60

EV 20 6 14 0CUM 6 20 20

NO Work Performed (as per PLAN) in March

For instance, in construction projects – no physical work might happen as per the plan, however money is spent on certain equipments and tools (rented

crane, idle laborers for e.g.)

Actual Cost

• Amount of resources expended in a specific time period to accomplish a task(s).

• Actual Cost of Work Performed (ACWP)• Resource Expenditure against Planned Work

Amount of money spent in a specific period of

time

Example: Actual Cost (AC) as of March

Task Budget Jan Feb Mar Apr1 12 6 62 20 8 123 28 7 21

PV 60 6 14 19 21CUM 6 20 39 60

EV 20 6 14 0CUM 6 20 20

AC 25 6 14 56 20 25

SummaryTask Budget Jan Feb Mar Apr

1 12 6 6

2 20 8 12

3 28 7 21

PV 60 6 14 19 21

CUM 6 20 39 60

EV 20 6 14 0

CUM 6 20 20

AC 25 6 14 5

6 20 25

• PV(As of Mar) = 39• EV (As of Mar) = 20 • AC (As of Mar) = 25• Total PV = 60• Total PV is called Budget

at Completion (BAC)

How do we analyse the current status of a project?

Answering Project Management Questions

Are we ahead or behind schedule? (VARIATION)

How efficiently are we using time? (PERFORMANCE INDEX)

When are we likely to finish work? (ESTIMATION/ FORECASTS)

Are we under or over our budget? (VARIATION)

What is the project likely to cost? (ESTIMATION/ FORECASTS)

What will the remaining work cost? (ESTIMATION/ FORECASTS)

How efficiently we must use our remaining resources ? (PERFORMANCE)

Analyzing Performance based on

VARIANCE INDICES (EFFICIENCY)

FORECASTS

Variance

Variance

During the Project – at a point in time

At Completion

• Variance– Schedule Variance– Cost Variance

• Both “during the course” of the project and at the “end” of the project

Variance Types

Schedule Variance

Cost Variance

Variance at Completion

Variance

Are we ahead or behind schedule? – Schedule Variance (SV)SV = EV – PV

Are we under or over budget? – Cost Variance ( CV)CV = EV- AC

Will we be under or Over Budget (at the end)? – Variance at Completion (VAC)

Project Management Question EVM Performance Measures Formula

Time-wise Schedule Analysis & Forecasting

Are we ahead or behind schedule? Schedule Variance SV= EV- PV

How efficiently are using time? Schedule Performance Index (SPI) SPI = EV/ PV

When are we likely to finish work? Time Estimate at Completion (EACt) EACt = BAC/ SPI

Cost-wise Cost Analysis & Forecasting

Are we under or over budget? Cost Variance (CV) CV = EV - AC

How efficiently are we using our resources?

Cost Performance Index (CPI) CPI = EV/AC

How efficiently must we use our remaining resources?

To-complete Performance Index (TCPI) TCPI = (BAC-EV)/ (BAC- AC)

What is the Project likely to cost? Estimate at Completion (EAC) EAC = BAC/CPI

Will we be under of over budget? Variance at Completion (VAC) VAC = BAC-EAC

What will the remaining work cost? Estimate to Complete (ETC) ETC = (BAC-EV)/ CPI

PMI Global Standard © 2005 PMI Page - 16

Elements Budget May June July AugustProfessional Development

1500 300(Buy 2 Books – 150 Each)

500Enroll for a short course worth 500

300(Buy 2 Books– 150 Each)

400(Buy 2 Books– 200 Each)

Home 12,000 3000 3000 3000 3000Entertainment 1500 500 200 300 500

PV 15,000 (BAC) 3800 3700 3600 3900CUM 3800 7500 11,100 15,000

EV 20 Bought 2 books

Enrolled for a short course

Short course continued to July – so did not touch what was planned in Juluy

CUM 6 20 20

AC 25 6 14 56 20 25