Earned value management in action - A Webinar by Vivek Prakash, pmwares

© 2012 pmwares – All rights reserved

Earned Value Management in Action

Vivek Prakash – Aug, 16, 2012


Earned Value Management

EVM Terms Explanation

Planned Value (PV) Estimated value of the work planned to be spent

as of today.

Earned Value (EV) Value of the work that is completed as of today

(PV of completed work)

Actual Cost (AC) Total cost actually incurred as of today

Budget at Completion (BAC) Total planned value of the project

Estimate at Completion (EAC) Forecasted total project cost as of today

Estimate to Complete (ETC) Estimated cost of the remaining work

Variance at Completion (VAC) The variance of total project cost project as of

today

Definitions



EVM Terms EVM Formula Explanation

Schedule Variance SV = EV - PV Measure of schedule performance.

–ve value indicate delay

Cost Variance CV = EV - AC Measure of cost performance. –ve

value indicate cost overrun

Schedule Performance

Index

SPI = EV/PV Measure of progress achieved.

Value less than 1 indicate delay

Cost Performance

Index

CPI = EV/AC Measure of value of the work

completed. Value less than 1

indicate cost overun

To Complete

Performance Index

TCPI =

(BAC-EV)

(BAC-AC)

Measure of cost performance to be

achieved on remaining work to

meet project objectives

Estimate to Complete ETC = EAC - AC Estimated cost of remaining work

Formulas



EVM Terms EVM Formula Explanation

Variance at

Completion

VAC = BAC - EAC Variance of total projected cost from

budget

Estimate at

Completion

(EAC)

AC + Bottom up ETC When original estimates are

fundamentally flawed

BAC

Cumulative CPI

Observing no variance, will continue

with same expenditure rate

AC + (BAC-EV) Variance observed as of now will not be

observed in future. Will complete the

project in remaining budget

AC + [(BAC-EV)/

(Cum.CPI x Cum.SPI)]

Current variance trends will continue.

Remaining budget is modified with cost

and schedule performance

Formulas


Time

Cost baseline

Cost



Actuals

Cost baseline


Time

Cost


Actuals

Earned

Cost baseline


Time

Cost


Actuals

Cost baseline PV

AC

EV


Time

Cost

Earned


Actuals

Earned

Schedule variance in $

Cost baseline


PV

EV

AC

Time

Cost


Cost baseline

Actuals

Cost variance

PV

AC

EV

Time

Cost

Earned




Side 1

Side 2

Side 3

Side 4

Task Week 1 Week 2 Week 3 Week 4 Status Cost incurred

Side 1 AS------AF Complete $1000 Side 2 AS--------PF Half done $800

Side 3 PS-----------PF To start

Side 4 PS-----------PF To start

AS – Actual Start, AF – Actual Finish, PS – Planned Start, PF – Planned Finish

A wall is to be constructed around a square plot. Each side takes 1 week with

estimated budget of $1,000. You have only one crew (with 1 supervisor and 3

workers), therefore construction is planned in sequence. After 1st week, a worker

fell ill. We are not at end of 2nd week and status of the project is as below

Status at the end of 2nd Week


# Terms Values Comments

1. PV

2. AC

3. EV

4. BAC

5. CV

5. SV

6. CPI

7. SPI

8. EAC

9. ETC

10. VAC



# Terms Values Comments

1. PV = 1000+1000 2000 We planned to do work worth $2000

2. AC = 1000+800 1800 We actually spent $1800

3. EV = 1000+500 1500 We actually completed $1500 worth of work

4. BAC 4000 Originally budgeted to complete in $4000

5. CV (EV-AC) = 1500 – 1800 -300 We are over budget by $300

5. SV (EV-PV) = 1500 – 2000 -500 We are behind schedule

6. CPI (EV/AC) = 1500/1800 0.833 We are getting 83 cents out of every dollar

invested

7. SPI (EV/PV) = 1500/2000 0.75 We are progressing @ 75%

8. EAC (BAC/CPI) = 4000/0.833 4801 We currently estimate that the total project

will cost $4801

9. ETC (EAC–AC) = 4801 – 1800 3001 We currently estimate that we have to spend

$3001 to finish the project

10. VAC (BAC–EAC) = 4000 – 4801 -801 We currently estimate that we will spend

$801 more than budgeted.


What it needs to implement EVM

Discipline

Planning

Stable baseline

Periodic tracking

Gathering data of actual progress from team

Actual Efforts & Remaining Efforts

Updating plan

Reporting

Measuring variance

Action Plan

Reporting to stakeholders


Business

Earned value management in action - A Webinar by Vivek Prakash, pmwares