Project Management for Engineers

CHAPTER:

MONITORING AND CONTROLLING THE PROJECT

EARNED VALUE

CONTENTS

1. Introduction

2. Earned value Cost/Schedule System

3. Assignments

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Project Management for Engineers

INTRODUCTION

The Project Control Process

1. Control
The process of comparing actual performance against plan to identify
deviations, evaluate courses of action, and take appropriate corrective
action.
2. Project Control Steps
1. Setting a baseline plan.
2. Measuring progress and performance.
3. Comparing plan against actual.
4. Taking actions

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Project Management for Engineers

Monitoring Time Performance

1. Tools used to catch negative variances from plan and communicate

project schedule status:
Tracking and baseline Gantt charts
• Show expected, actual, and trend data for event duration performance.
Control charts
• Plot the difference in scheduled time on the critical path with the actual point
on the critical path.

through Period 6

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Project Management for Engineers

Project Schedule Control Chart

Disparity Among Monitoring Systems

1. Time-Phase Baseline Plan

Corrects the failure of most monitoring systems to
connect a project’s actual performance to its
schedule and forecast budget.
Example: Weekly report of a construction project
Planned cost of Actual cost of week Difference at the
week 2: 12.000$ 2: 14.000$ end of week 2:
2.000$
Accumulatively Accumulatively Accumulative
planned cost at actual cost at the difference at the
the end of week 2: end of week 2: end of week 2:
25.000$ 29.000$ 4.000$
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Project Management for Engineers

Common problems:
• Systems that measure only cost variances do not identify resource and
project cost problems associated with falling behind or progressing ahead of
schedule.
• If expenditures are lower than expected for a given period it may be good or bad,
depending on whether progress is line with that amount of expenditure.
• If expenditures are higher than expected, this may be acceptable if progress is
sufficiently greater than planned for that period

1. Earned Value Cost/Schedule System

An integrated project management system based on the earned value
concept that uses a time-phased budget baseline to compare actual and
planned schedule and costs.

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Project Management for Engineers

EARNED VALUE
COST/SCHEDULE SYSTEM

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Developing an Integrated Cost/Schedule System

1. Define the work using a WBS. 3. Develop a time-phased

a. Scope budget using work packages
included in an activity.
b. Work packages
Accumulate budgets (PV).
c. Deliverables
4. At the work package level,
d. Organization units collect the actual costs for
e. Resources the work performed (AC).

f. Budgets 5. Multiply percent complete

times original budget (EV).`
2. Develop work and resource
schedules. 6. Compute the schedule
variance (EV-PV) and the
a. Schedule resources to cost variance (EV-AC).
activities
b. Time-phase work
packages into a network
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Project Management for Engineers

Project Management System Overview

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Cost/Schedule Graph

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Project Management for Engineers

Earned Value Example

Suppose that work on a project task was expected to cost $1500 to

complete the task and the workers were originally scheduled to have
finished today. As of today, however, the workers have actually
expended $1350, and our best estimate is that they are about 2/3
finished.
Evaluate the progress of project task by EV, PV, AC, CV, SV, CPI, SPI,
BAC, ETC, EAC, VAC

Project : 1000 m, total cost: 200 000 USD.

Plan: 25m/day, 200USD/m
If the 18th ,Actual: finish: 400 m, actual cost: 80 000 USD.
Evaluate project progress at the 18th

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Glossary of Terms
1. EV (Earned Value) BCWP—budgeted cost of the work
performed
The percent complete times its original budget. The percent of
the original budget that has been earned by actual work
completed. The older acronym for this value was BCWP—
budgeted cost of the work performed.
2. PV (Planned Value) (BCWS—budgeted cost of the work
scheduled)
The time-phased baseline of the value of the work scheduled. An
approved cost estimate of the resources scheduled in a time-
phased cumulative baseline (BCWS—budgeted cost of the work
scheduled).
3. AC (Actual Cost) ACWP—actual cost of the work
performed
The actual cost of the work completed. The sum of the costs
incurred in accomplishing work. (ACWP—actual cost of the work
performed).

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Project Management for Engineers

Glossary of Terms

1. CV (Cost Variance)
Cost variance is the difference between the earned
value and the actual costs for the work completed to
date where CV=EV-AC.
2. SV (Schedule Variance)
Schedule variance is the difference between the
earned value and the baseline line to date where
SV=EV-PV.

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Glossary of Terms

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Project Management for Engineers

Glossary of Terms
CPI
1. CPI (Cost 1,10
Integrating SPI and CPI
On schedule
Performance Schedule problems
and on budget
1,05 Week 4
Index) (0.84,1.01) Week 1
(1.01, 1.01)
CPI = EV/AC 1,00

2. SPI (Schedule 0,95

Budget
Performance Schedule and problems
0,90 budget problems
Index)
0,85
SPI = EV/PV
Week 2
0,80 (1.05, 0.85)
Week 3
(0.79,0.79)
0,75
0,75 0,80 0,85 0,90 0,95 1,00 1,05 1,10
SPI
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Glossary of Terms
1. BAC (Budgeted cost At Completion)
The total budgeted cost of the baseline or project cost accounts.
2. ETC (Estimate To Complete)
ETC = (BAC-EV)/CPI = ETCf
3. EAC (Estimated costs At Completion)
Estimated costs at completion. Includes costs to-date plus revised
estimated costs for the work remaining.
EAC = ETC + AC

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Project Management for Engineers

Glossary of Terms

ETCe
EACe

0 SD n1 n2
PV ETCf BAC
VACf
EV EACf
AC
VACe

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Glossary of Terms

1. VAC
Cost variance at completion (BAC-EACe), where EACe is derived by
estimators in the field.
Or, alternatively, cost variance at completion (BAC-EACf), where EACf is
derived from a formula using actual and earned value costs.
VAC indicates expected actual over-or underrun cost at completion.

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Project Management for Engineers

Glossary of Terms

1. Percent Complete Indexes

Indicates how much of the work accomplished represents of the total
budgeted (BAC) and actual (AC) dollars to date.
PCIB = EV/BAC
PCIC = AC/EAC

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Glossary of Terms

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Project Management for Engineers

Scope Changes to a Baseline

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EXAMPLES

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Project Management for Engineers

Project : 1000 m, total cost: 200 000 USD.

Plan: 25m/day, 200USD/m
If the 18th ,Actual: finish: 400 m, actual cost: 80 000 USD.
Evaluate project progress at the 18th
1. BCWS =PV (Planned Value) (BCWS—budgeted cost of the work scheduled)
2. ACWP= AC (Actual Cost) ACWP— actual cost of the work performed
3. BCWP= EV (Earned Value) BCWP—budgeted cost of the work performed
4. SV = BCWP-BCWS
SV>0: ahead schedule
SV=0: on schedule
SV<0: behind schedule
5. CV = BCWP-ACWP
CV>0: cost under run
CV=0: on cost
CV<0: cost over run
6. AV = BCWS-ACWP
AV>0: budgeted cost of the work scheduled > actual cost of the work performed
AV=0: budgeted cost of the work scheduled = actual cost of the work performed
AV<0: budgeted cost of the work scheduled < actual cost of the work performed
7. SPI = BCWP/BCWS
8. CPI = BCWP/ACWP
9. FCTC (Forecast cost to complete project)= (BCAC-BCWP)/CPI; BCAC: Budgeted cost at
completion
10. FCAC (Forecast cost at Completion) = ACWP+FCTC
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Glossary of Terms
1. EV (Earned Value) BCWP—budgeted cost of the work
performed
The percent complete times its original budget. The percent of
the original budget that has been earned by actual work
completed. The older acronym for this value was BCWP—
budgeted cost of the work performed.
2. PV (Planned Value) (BCWS—budgeted cost of the work
scheduled)
The time-phased baseline of the value of the work scheduled. An
approved cost estimate of the resources scheduled in a time-
phased cumulative baseline (BCWS—budgeted cost of the work
scheduled).
3. AC (Actual Cost) ACWP—actual cost of the work
performed
The actual cost of the work completed. The sum of the costs
incurred in accomplishing work. (ACWP—actual cost of the work
performed).

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Project Management for Engineers

The information is used for 8 questions in

below:
Task Predeces Duration Total budget Actual %
sor (week) of each task cost completed
(USD) (USD)
A - 2 300 400 100
B - 3 210 180 100
C A 2 250 300 100
D A 5 600 400 20
E B,C 4 400 200 20

1. The Gantt of the project:

2. The duration of project is
3. PV(BCWS), EV(BCWP) and AC(ACWP) of task A at the end of sixth week.
4. PV(BCWS), EV(BCWP) and AC(ACWP) of task B at the end of sixth week.
5. Consider the Schedule Variance (SV) index, the project is
6. Consider the Cost Variance (CV) index, the project is
7. Compute SPI of the project
8. Compute CPI of the project

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