EARNED VALUE

MANAGEMENT

By: TANVEER
Date: Jan 2021

L i n ke d In
 Earned Value Management

• Introduction

• Advantages & Disadvantages

What You’ll • Major Steps

• Terminology, Definition & Formulas

Learn • Interpretation of Basic EVM-Performance

• Solved Example

2
 Best practice focusing on

Project Monitoring and Control

Integrates
What is Technical Performance (status of work)

Earned Value Schedule Performance

Cost Performance

Management When use to its full extents, it allows

Measuring performance

Analysing Variance

Developing Forecast

3
 Data only for the current

Base Data period

(BAC, PV, EV, AC)

EVM Data Summary

Derived data based on
the base data to indicate
the Project Health
Data
Type (SV, CV, SPI, CPI)

Forecast Project Forecast/estimate

based on summary data

Data (VAC, EAC, ETC, TCPI)

4
 Easy to understand Low overhead

Integrate cost &

Based on results
schedule
Advantages
Simplifies status
Reliable Prediction
reporting

Well Proven

5
 The alleged complexity of surrounding
1 methodology and Processes

The effort required for collecting the

2 necessary input data and reporting

The effort of integrating the results into

Disadvantages 3 other

Doesn't address critical path

4
Doesn’t account Quality
5

6
Major Steps in Using EVM

ANALYZE AND
DEVELOP ACTIVITY RECORD ACTIVITY MEASURE PHYSICAL FORECAST REPORT
LEVEL BUDGET LEVEL USAGE PROGRESS PERFORMANCE PERFORMANCE

7
 EVM Terminology & Definition
ACRONYM NAME DEFINITION

PV Planned Value Planned Cost of Work to be done at this point in time

EV Earned Value Value of work actually accomplished
AC Actual Cost Cost of work
BAC Budget at Completion Total planned value for the entire project
SV Schedule Variance Difference Between EV & PV (-Ve is Behind Schedule & +ve is Ahead of Schedule)
SPI Schedule Performance Index How efficiently are we using our Time?
CV Cost Variance Difference Between EV & AC (-Ve is over budget & +Ve is under budget)
CPI Cost Performance Index How efficiently are we using our resources?
EAC Estimate at Completion What do we think the project will actually cost
ETC Estimate to Complete From this point, how much more will it cost to complete the project

VAC Value at Completion How much over/under do we expect to be at project end

TCPI To Complete Performance Index What cost performance goals must be met to stay within BAC

8
 Schedule Variance (SV) = EV-PV

Schedule Performance Index (SPI) = EV/PV

Cost Variance (CV) = EV-AC

EVM Cost Performance Index (CPI) = EV/AC

VAC = BAC-EAC
FORMULAS
EAC = BAC/CPI

ETC = EAC-AC

TCPI = (BAC-EV)/(BAC-AC)

9
 Interpretation of Basic EVM-Performance

SCHEDULE
SV > 0 SV = 0 SV < 0
SPI >1.0 SPI =1.0 SPI <1.0

CV > 0 Ahead of Schedule On Schedule Behind Schedule

CPI >1.0 Under Budget Under Budget Under Budget
COST

CV = 0 Ahead of Schedule On Schedule Behind Schedule

CPI = 1.0 On Budget On Budget On Budget

CV < 0 Ahead of Schedule On Schedule Behind Schedule

CPI <1.0 Over Budget Over Budget Over Budget

10
EVM-Scenarios
with Graphical
Representation Scenario # Case Remarks
1 Behind Schedule, Worst Case
Over Budget

2 Behind Schedule, May be critical

Under Budget

3 Ahead of Schedule, May be critical

Over Budget

4 Ahead of Schedule, Best Case

Under Budget
11
 Activity Day-1 Day-2 Day-3 Day-4 Status
End of

Example#1
Day-3

Side-1 S---F Complete,

Spent
SR10,000

Side-2 S---PF ---F Complete,

Construction of Spent
SR12,000
Fence#1
Side-3 PS--S--PF 50% done,
Spent
SR6,000
T he p r o j e ct ha s b o u nd a r y f e nc e
wi t h f o u r si d e . Ea c h si d e t o ta ke
Side-4 PS---PF Not Yet
o n e d a y t o b ui l t a n d SR 1 0 , 0 0 0 Started

has been b u d g e te d per si d e .

Si d e are planned to c om p l e t e
wi t h f i ni s h t o st a r t r e l a ti ons hi p
S Actual Start, F Actual Finish,
wi t h ze r o lag. C on s i d e r d a ta
PS Planned Start, PF Planned Finish
date as end of day-3

C a l c u l a t e P V, E V, A C , B A C , C V, C P I , S V, S P I , E A C , E TC , VA C
12
General Overview

Schedule
Schedule Variance Cost Variance
Performance Index
SV = EV-PV CV = EV-AC
SPI = EV/PV

Cost Performance
Index VAC = BAC-EAC EAC = BAC/CPI

CPI = EV/AC

TCPI = (BAC-
ETC = EAC-AC
EV)/(BAC-AC)

13
 Example#1 with Solution Solution:

C o n s t r u c t i o n o f Fe n c e SR # What is Calculation Answer Interpretation

The project has boundary fence with four side. Each

1 PV 10,000+10,000+10,000 30,000 What should have been done
side to take one day to built and SR10,000 has been
budgeted per side. Side are planned to complete
2 EV 10,000+10,000+5,000 25,000 What has been completed
with finish to start relationship with zero lag.
Consider data date as end of day-3.
3 AC 10,000+12,000+6,000 28,000 Actual Spending

Activity Day-1 Day-2 Day-3 Day-4 Status

End of 4 BAC 10,000 x 4 40,000 Project Budget
Day-3
5 CV EV-AC = 25,000-28,000 -3,000 Over Budget by 3,000
Side-1 S--F Complete,
Spent
6 CPI EV/AC = 25,000/28,000 0.893 Getting about 89.3%
SR10,000

Side-2 S--PF --F Complete, 7 SV EV-PV = 25,000-30,000 -5,000 Behind Schedule

Spent
SR12,000 8 SPI EV/PV = 25,000/30,000 0.833 Progressing at about 83.3% of
the planned rate
Side-3 PS--S-- 50%
PF done, 9 EAC BAC/CPI = 40,000/0.893 44,792 Total project estimated cost
Spent with same trend
SR6,000
10 ETC EAC-AC = 44,792-28,000 16,792 Required to complete the
Side-4 PS--PF Not Yet project
Started
11 VAC BAC-EAC = 40,000-44,792 4,792 We currently expected to be
4,792 over budget when
project will be completed
S Actual Start, F Actual Finish,
PS Planned Start, PF Planned Finish 14
EVM Terminology (Old & New)

NEW OLD
ACRONYM NAME ACRONYM NAME
PV Planned Value BCWS Budgeted Cost of Work Schedule

EV Earned Value BCWP Budgeted Cost of Work Performed

AC Actual Cost ACWP Actual Cost of Work Performed

15
 Thank you

ANY
QUESTION?

16
Scan and Ask