12/22/2016

Progress Control – Earned Value

Prof. Omar El‐Anwar

Earned Value Method
Measures performance with regards to 
• Schedule
• Cost 
Three Measures:
• Budgeted Cost of Work Scheduled (BCWS)
• Budgeted Cost of Work Performed (BCWP), or 
Earned Value
• Actual Cost of Work Performed (ACWP)

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Budgeted Cost of Work Scheduled 
(BCWS) or Planned Value (PV)
• Estimated cost of work scheduled to be 
performed during a specific period of time

• Cost‐loaded schedule

Cost‐Loaded Schedule

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Budgeted Cost of Work Scheduled 
(BCWS)
Cost‐Loaded Schedule:

BCWS after 3 weeks = $89,000

Budgeted Cost of Work Performed 
(BCWP), or Earned Value (EV)
• BCWP or Earned Value

• Estimated cost of work actually performed
during a specific period of time
Use % complete for unfinished tasks

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Actual Cost of Work Performed
(ACWP) or Actual Value (AV)
• Actual cost of work performed during a 
specific period of time

Example of Earned‐Value Method
• You are managing a design project. The initial 
estimate of work hours required was 2,800. 
• You have 3 engineers assigned to the project full 
time (8 hours per day, 5 days per week) and one 
engineer assigned to the project half‐time (4 
hours per day, 5 days per week). 
• Each engineer’s work is charged to the project at 
$50 per hour. 
• At the end of 15 weeks, 80% of the design work 
has been completed at a cost of $130,000
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Example of Earned‐Value Method
• What would the duration of the project be 
based on the original estimate of work 
hours?
• Calculate BCWS, BCWP, ACWP.

Example of Earned‐Value Method
• What would the duration of the project be based on the 
original estimate of work hours?
• Number of working hours/week = 3x8x5 + 1x4x5 = 140 
hrs/week 
• Estimated Project Duration = 
initial estimate of work hours / No. of working hrs/week = 
2,800/140 = 20 weeks 

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Example of Earned‐Value Method
• Calculate BCWS, BCWP, ACWP.
• By the end of the 15th week, the number of work hours 
scheduled = (15/20) x 2,800 = 2,100 hrs
• BCWS = $50/hr x 2,100 hrs = $105,000 

• Work performed is 80% = 0.8 x 2,800 = 2,240 hrs
• BCWP = $50/hr x 2,240 hrs = $112,000 

• ACWP = $130,000 

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Earned‐Value Method
• Measures progress of work
– Schedule Variance (SV)
– Schedule Performance Index (SPI)
• Measures control of budget
– Cost Variance (CV)
– Cost Performance Index (CPI)
• Total Estimated Cost at Completion

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Measure Progress of Work
• Schedule Variance (SV)
SV = BCWP – BCWS
+ve: Ahead of Schedule
–ve: Behind Schedule

• Schedule Performance Index (SPI)
SPI = BCWP/BCWS
>1 : Ahead of schedule
<1 : Behind schedule

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Measure Control of Budget
• Cost Variance (CV)
CV = BCWP – ACWP
+ve: Under budget
–ve: Over budget

• Cost Performance Index (CPI)
CPI = BCWP/ACWP
>1 : Under budget
<1 : Over budget

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Total Estimated Cost at Completion 
(EAC)
• Assumes current performance will 
continue
Total Estimated Cost at Completion = Original 
Total Estimate (BAC)/CPI
• Assumes current performance will not 
continue
Total Estimated Cost at Completion = Original 
Total Estimate (BAC) ‐ CV

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Example of Earned‐Value Method 
(Continued)
• Evaluate project progress to data. Is the 
project behind schedule or ahead of 
schedule? 
• Evaluate control of project budget to date. 
Is the project over budget or under 
budget?
• Forecast total project cost at completion 
assuming that current performance will 
continue

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Example of Earned‐Value Method 
(Continued)
• Evaluate project progress to data. Is the project 
behind schedule or ahead of schedule? 

SV = BCWP – BCWS 
= $112,000 ‐ $105,000 = $7,000  (+ve) Ahead of 
Schedule 

Or

SPI = BCWP / BCWS = $112,000 / $105,000 = 1.067 
 (>1) Ahead of Schedule 

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Example of Earned‐Value Method 
(Continued)
• Evaluate control of project budget to date. Is the 
project over budget or under budget?

CV = BCWP – ACWP = 
$112,000 ‐ $130,000 = $‐18,000(‐ve) Over Budget 

Or

CPI = BCWP / ACWP = 
$112,000 / $130,000 = 0.86(<1) Over Budget 

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Example of Earned‐Value Method 
(Continued)
• Forecast total project cost at completion 
assuming that current performance will 
continue

Budgeted cost at completion (BAC) = 
2,800 hrs x $50/hr = $140,000

Total Estimate Cost at Completion (EAC) = 
BAC/CPI = $140,000/0.86 = $162,500 

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Earned value: basic elements
Apr. Term Information
PV Planned value What is the estimated value of the work planned to be
(BCWS) done

EV Earned value What is the estimated value of the work actually

(BCWP) accomplished

AV Actual cost What is the actual cost incurred

(ACWP)
BAC Budget at How much did we budget (plan) for the total job
completion
EAC Estimate at What do we currently expect the total project to cost
completion

ETC Estimate to From this point on, how much more do we expect to
completion pay until the end of the project

VAC Variance at How much over or under budget do we expect to be at

completion end of the project
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Earned value: basic elements
Term Formula
CV EV –AV
Cost variance
SV EV –PV
Schedule variance
CPI EV/AV
Cost performance
index
SPI EV/PV
Schedule performance
index
EAC BAC/CPI or BAC – CV (based
Estimate at completion on assumption)
ETC EAC - AV
Estimate to completion
VAC BAC – EAC
Variance at completion
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Questions?

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