Khulna University of Engineering & Technology
Earned Value Analysis (EVA) /
Earned Value Management (EVM)
Presented by-
Md. Mehrab Hossain (Aopy)
Lecturer
Dept. of Building Engineering and Construction Management
Khulna University of Engineering & Technology
E-mail:
[email protected] Definition
Earned Value Analysis” is an industry standard way to
measure a project’s progress, forecast its completion
date and final cost, and provide schedule and budget
variances along the way.
EVA is a performance analysis method that compares the
scheduled amount of work (planned value) with the
achieved amount of work (earned value) at a point in
time.
Why use Earned Value Management (EVM)?
EVM Advantages & Disadvantages
Earned Value Analysis Key Dimensions
Planned Value (PV)/ Budgeted Cost of Work Scheduled
(BCWS):
Represents the planned work that should have been
completed till the time of measurement.
PV is the physical work scheduled or “what you plan to
do”.
Actual Cost (AC)/ Actual Cost of Work Performed (ACWP):
Represents the expenses incurred in the project till the time
of measurement.
AC is the cost incurred for executing work on a project or
“what you have spent”.
Earned Value Analysis Key Dimensions
Earned Value (EV)/ Budgeted Cost of Work Performed
(BCWP):
Represents the actual work that has been completed till the
time of measurement.
EV is the quantification of the “worth” of the work done to
date or “what you physically accomplished”.
EV is calculated by multiplying the budget for an activity by
the percent progress for that activity:
EV = % complete x budget
Typical Curve Showing PV, EV and AC
Performance Measurement
In the case of Earned Value Management,
performance measurements focus on cost and
schedule management.
Cost Management focuses on the cost
performance of the project.
It looks at the relationships between the Earned
Value (EV) and the Actual Cost (AC).
Performance Measurement
Schedule Management focuses on the schedule
performance of the project.
It looks at the relationships between the Earned
Value (EV) and the Planned Value (PV).
EVA Fundamental Formulae (Variance)
Cost Variance (CV)
Cost Variance (CV) is a cost comparison between what
has been earned and what has been spent ('Are we under
or over budget?').
Cost Variance = Earned Value - Actual Cost
CV greater than 0 indicates a cost under-run
CV equals 0 indicates on budget
CV less than 0 indicates a cost over-run
EVA Fundamental Formulae (Variance)
Schedule Variance (SV)
Schedule variance (SV) is the cost comparison between what
has been earned and what has been budgeted ('Are we
ahead or behind schedule?).
Schedule Variance = Earned Value - Planned Value
SV greater than 0 indicates that the project is ahead of
schedule
SV equals 0 indicates on schedule
SV less than 0 indicates that the project is behind schedule
EVA Fundamental Formulae (Variance)
Time Variance
The time variance is the difference in the time scheduled
for the work that has been performed (ST) and the actual
time used to perform it (AT).
ST - AT = Time Variance
Variance : SV & CV illustration
Earned Value : Cost/ Schedule + or -
Six Possible Arrangements of AC, EV and PV
Six possible arrangements
of AC, EV, and baseline
PV resulting in four
combinations of positive
and negative schedule
variance (SV) and cost
variance (CV)
EVA Performance Formulae
Schedule Performance Index (SPI):
Represents how close actual work is being completed
compared to the schedule.
SPI = Earned Value (EV)/Planned Value (PV)
SPI greater than 1 indicates that the project is ahead of
schedule
SPI equals 1 indicates on schedule
SPI less than 1 indicates that the project is behind schedule
EVA Performance Formulae
Cost Performance Index (CPI):
Represents the amount of work being completed on a
project for every unit of cost spent.
CPI = Earned Value (EV)/Actual Cost (AC)
CPI greater than 1 indicates a cost under-run
CPI equals 1 indicates on budget
CPI less than 1 indicates a cost over-run
EVA Performance Formulae
Time Performance Index (TPI):
Time Performance Index (TPI) = ST/AT
Variances: Cost Variance example
Let's calculate the Cost Variance (CV) for the ACME Home Building
Project -
Cost
Time
Variances: Cost Variance example
A Cost Variance of $749 tells you that the project is
“Underrun” or under budget.
Using the graph to right, you can see that on 1/31 the EV line
(green) is above the AC line (red).
This means that it cost less to accomplish the work than was
budgeted, thus a positive cost variance.
Cost
Time
Variances: Cost Variance example
Variances: Schedule Variance Example
Let's calculate the Schedule Variance (SV) for the ACME Home
Building Project -
Cost
Time
Variances: Schedule Variance Example
A Schedule Variance of -$5,120 tells you that the project is
“Behind” schedule.
Using the graph to right, you can see that on 1/31 the EV line
(green) is below the PV line (blue).
This means that what was earned to date is less than what
was planned to be accomplished.
Cost
Time
Variances: Schedule Variance Example
Variances: Review
Performance Indices: CPI example
Let's calculate the Cost Performance Index (CPI) for the ACME Home
Building Project -
Cost
Time
Performance Indices: CPI example
Potential Causes of Favorable & Unfavorable Cost Performance
Performance Indices: SPI example
Let's calculate the Cost Performance Index (CPI) for the ACME Home
Building Project -
Cost
Time
Performance Indices: SPI example
Potential Causes of Favorable & Unfavorable Schedule Performance
Review of Variance and Performance Indices
Estimate at Completion (EAC) & Budget at Completion (BAC)
Anticipating future progress requires determining when the project will be
completed and how much it will cost to complete it.
Estimate at Completion (EAC) is the actual cost to date plus an
objective estimate of costs for remaining authorized work.
The objective in preparing an EAC is to provide an accurate
projection of cost at the completion of the project.
The Budget at Completion (BAC) is the sum of all budgets
allocated to a project scope.
The Project BAC must always equal the Project Total PV. If
they are not equal, your earned value calculations and analysis
will be inaccurate.
Estimate at Completion
Calculating Estimate at Completion
The Estimate to Complete (ETC) is the estimated cost of
completing the authorized remaining work.
A detailed ETC will include a description of the work
remaining and any revisions to the estimated resources or cost
for completing the project.
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
In other words, the project is now forecasted to overrun by
$102 using this form of EAC.
Remember, this is only one method of forecasting the
performance of the project. Several other methods can be used.
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Earned Value Chart
Review: Earned Value Analysis
Building Engineering & Construction Management
