Earned Value

Management

Prof. Vanita Ahuja PhD, PgMP, MRICS

Professor and Program Director
School of Construction
RICS School of Built Environment,
Amity University, Noida

Todays Discussion
 Earned Value Management Definition
 Required Planning Data
 Earned Value Indices
 Example
 Data Representation
 Guidelines
 Standards

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Tracking Requirements
 Project Progress
 Cost Variance
 Time Variance
 Impact on the remaining Project Progress
 Time required to complete the remaining work
 Cost for completing the remaining work

Tracking Requirements
 Expected Cost Variance at Project Completion
 Expected Time Variance at Project Completion
 Required efficiency of resources for catching
up on delays and completing the project within
the estimated cost

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Issue
 Projects include work with different units of
measurement

 Need to ‘roll up’ progress of various tasks into an

overall project progress

 Integrated impact of TIME, COST and SCOPE to be

measured

 Need a uniform unit of measurement

Earned Value Management

 Project Management technique used to track
Progress and Status of a Project & forecast
the likely future performance of the Project

Uniform Unit - Cost

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 Planning Requirement
 Performance Measurement Baseline

Activities List

Quantity of Work
WBS

•Duration Estimation
•Time
•Resource Requirement
•Resource
•Cost
•Cost

Sequence of Work
Network Diagram
and Scheduling

Added to a project for unexpected costs that are within project scope.
Not an allowance for changes to scope.
Not part of the cost estimate.
Added by upper management, not the project manager. Project
Budget (PB)
450.00
MANAGEMENT RESERVE
400.00
Budgeted at
350.00 Completion
(BAC)
CUM UL AT IV E CO S T

300.00

250.00

200.00

150.00

100.00

50.00

-
1 2 3 4 5 6 7 8 9 10 11 12
TIME

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HYBRID APPROACH

Planning Requirement
 Control Account Plans (CAP)
 Work Package Level at which Project
Performance shall be monitored
 Responsibility – Organisational, Individual
 Division (if necessary) into lower work packages
 Metrics for measuring performance
 Milestones
 % complete
 Other
Sum of CAPs constitutes the
Performance Measurement Baseline

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Planning Requirement
Variance Thresholds
450.00

400.00
Budgeted at
350.00 Completion
(BAC)
CUM UL AT IV E CO S T

300.00

250.00

200.00

150.00

100.00

50.00

-
1 2 3 4 5 6 7 8 9 10 11 12
TIME

 How much variance to allow depends on a

number of factors:
 Life-cycle phase
 Length of life-cycle phase
 Length of project
 Type of estimate
 Accuracy of estimate

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Planning Requirement
 Subsidiary Management Plans

Tracking and Monitoring

 Time Progress Control

 Resource Productivity Control
 Resource Mobilisation Control
 Direct Cost Control
 Budgeted Cost Control
 Earned Value Control

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 Variance Analysis
 Backward Looking

 Trends Forecasting
 Forecasting estimated progress for remaining work

BCWS

ACWP

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 ETC

Project Management - Session 11

Earned Value Parameters

BCWS - Budgeted Cost of Work Scheduled
Planned cost of the total amount of work scheduled to be
performed by the status date.

ACWP - Actual Cost of Work Performed

Cost incurred to accomplish the work that has been done to
date.

BCWP - Budgeted Cost of Work Performed – Earned Value

The planned (not actual) cost to complete the work that has
been done.

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 ETC

Project Management - Session 11

Derived Indices - Variances

SV: Schedule Variance (BCWP-BCWS)

 A comparison of amount of work performed during a
given period of time to what was scheduled to be
performed.
 A negative variance means the project is behind
schedule

CV: Cost Variance (BCWP-ACWP)

 A comparison of the budgeted cost of work
performed with actual cost.
 A negative variance means the project is over
budget.

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Derived Indices – Trends Forecasting
SPI: Schedule Performance Index (BCWP/BCWS)
SPI<1 means project is behind schedule

CPI: Cost Performance Index (BCWP/ACWP)

CPI<1 means project is over budget

CSI: Cost Schedule Index (CPI * SPI)

The further CSI is from 1.0, the project recovery
becomes less likely

Ref: http://www.theprojectgroup.com/blog/en/earned-
value-analysis-with-microsoft-project/#prettyPhoto/2/

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 Example – Planned Data

450.00
408.60
400.00
CUMULATIVE COST (LAKHS)

350.00

300.00

250.00

200.00

150.00

100.00

50.00

-
1 2 3 4 5 6 7 8 9 10 11 12
TIME (MONTHS)

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Example – Tracking Data upto Month 3

Example – Tracking Data at Month 3

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 450.00
408.60
400.00
CUMULATIVE COST (LAKHS)

350.00

300.00

250.00

200.00

150.00 91.50
100.00
100.00

50.00 89.25
-
1 2 3 4 5 6 7 8 9 10 11 12
TIME (MONTHS)

 Schedule Variance (SV) = 89.25 – 91.5 = -2.25

 Cost Variance (CV) = 89.25 – 100 = -10.75

 SV% = -2.25 / 89.25 = -0.02

Project is 2% delayed for the work performed

 CV% = -10.75 / 89.25 = -0.12

Project is 12% over budget for the work performed

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 SPI = 89.25 / 91.5 = 0.98

 CPI = 89.25 / 100 = 0.89

 CSI = 0.98 * 0.89 = 0.87

Derived Indices –
Impact on Cost of Remaining Work
Estimate To Complete (ETC): BAC – BCWP
CPI

Estimate at Completion (EAC): ETC + ACWP

Variance at Completion (VAC): BAC - EAC

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 ETC

Project Management - Session 11

Example
 Estimate to Complete (ETC) = 408.60 - 89.25 = 358.82
0.89

 Estimate at Completion (EAC) = 358.82 + 100 = 458.82

 Variance at Completion (VAC) = 408.60 - 458.82

= -50.22

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Derived Indices –
Impact on Duration of Remaining Work

PAC: Planned time for completion of the project

(from Baseline)

TAC: Time at Completion based on present progress

TAC: PAC
SPI

DAC (Delay at Completion): TAC - PAC

Example
 Time at Completion (TAC) = 12 / 0.98 = 12.24

 Delay at Completion (DAC) = 12 – 12.24 = -0.24

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500.00 458.82

VAC
450.00
400.00
350.00
408.60
DAC
300.00
250.00
200.00
91.50
150.00
100.00
100.00
50.00
89.25
-
1 2 3 4 5 6 7 8 9 10 11 12 13
TIME (MONTHS)

CPM vs EVM

Project Management - Session 11

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Derived Indices - % Complete
Project percent Complete Indices (PCIB)

PCIBBAC: BCWP
BAC
% Completion with respect to the original Budget of the
project. Preferred when there is high level of confidence
in the original cost estimate

PCIBEAC: ACWP
EAC
% Completion with respect to Actual cost incurred and
Estimate to Complete the remaining work. Preferred because
includes newer and more complete information

Example
 PCIBBAC = 89.25 / 408.60 = 0.2184
21.84%

 PCIBEAC = 100 / 458.82 = 0.2179

21.79%

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Derived Indices –
Productivity of Resources for Remaining Work

To Complete Performance Index (TCPI): BAC - BCWP

BAC - ACWP
Measures the amount of value that each remaining
rupee in the budget must earn to stay within the
budget.

• >1 indicates more work to be done then the budget left

and project may end up with a cost overrun or scope may
have to be reduced.
• <1 indicates that work can be completed in less than the
budgeted cost and there is also scope of quality
improvement.

 TCPI = 408.60 - 89.25 = 1.03

408.60 - 100

CSI = 0.98 * 0.89 = 0.87

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EVM Calculations
 SV = -2.25
 CV = -10.75
 SV% = -0.02 or 2% delay in progress
 CV% = -0.12 or 12% cost overrun
 SPI = 0.98
 CPI = 0.89
 CSI = 0.87

EVM Calculations
 EAC = 458.82 Lakhs
 VAC = -50.22 Lakhs
 DAC = -0.24 months
 PCBI = 21.8%
 TCPI = 1.03 or 103%

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 Data Representation
On Schedule

Behind Schedule, Under Cost Ahead of Schedule, Under Cost

On Budget
CV%

0
SV% = -0.02
-
CV% = -0.12

Behind Schedule, Over Cost Ahead of Schedule, Over Cost

- 0 +
SV%

Data Representation
1.2
CPI Cost Perf. Index (CPI)= BCWP
SPI ACWP
"GOOD"

1.1 Sched. Perf. Index (SPI) = BCWP

BCWS

1
CPI
"BAD"

0.9 SPI

0.8

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EVM Scenarios
 On Budget & Behind Schedule
 Negative Position
 Under Budget & Behind Schedule
 Mixed Position
 Over Budget & Ahead of Schedule
 Mixed Position
 Over Budget & Behind Schedule
 Negative Position
 Under Budget & Ahead of Schedule
 Good Position!!!!

Project Management - Session 11

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 Project Management - Session 11

Making Projections – Guidelines

 Once a project is 10% complete, the Time

overrun at completion will not be less than the
current overrun.

 Once a project is 20% complete, the CPI

does not vary from its current value by more
than 10%.

The CPI and SPI are statistically

accurate indicators of final cost results

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How can you use this information?
 Careful analysis of variance and trends
 Resetting schedule or budget, when appropriate

Variance Analysis Questions

 What is the problem causing the variance?
 What is the impact on time, cost and performance?
 What is the impact on other efforts, if any?
 What corrective action is planned or under way?
 What are the expected results of the corrective
 action?

Benefits
 EVM at Project level
 Measures achieving Project Objectives

 EVM at Program level

 Measures achieving Program Objectives

 EVM at Portfolio level

 Measures achieving Organisation’s Business
Objectives

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 Data Representation –
Program Managers
 Create project snapshot in Excel
 Helps in project tracking and Project prioritisation

Name Status Estimat Outsta S CV CPI SPI Other Earned

of ed nding V Value
projec complet issues indicators
t ion date

Critical Success Factors

 Adequate
 Project Planning
 Risk Planning
 Actual Data measurement, gathering and
archiving
 Management Support
 Implementation of Subsidiary Management Plans

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Project Management can be practiced without
EVM

EVM cannot be practiced effectively without

good Project Management

EVM Standards
 PMI Practice Standard for Earned Value
Management www.pmi.org
 BIS Code 15883 (Part 2) –
 Construction Project Management Guidelines –
Time Management

 NASA EVM Guidelines www.evm.nasa.gov

 ANSI/EIA–748A–2002 specification for
Earned Value Management

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vahuja@ricssbe.edu.in

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