Earned Value Management
Part 1
Presented by
Sarbajit Roy Choudhury
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CONTENTS
Key Definitions
Use of Earned Value Management System
Earned Value Variance Metrics
Earned Value Forecasting Metrics
Schedule Variance (SV)
Schedule Performance Index (SPI)
Cost Variance (CV)
Cost Performance Index (CPI)
References
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Earned Value Management
Part 1
Key Definitions
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Key Definitions
BAC stands for Budget At Completion. This is the total budget for
the entire project.
PV stands for Planned Value. It is the value (based on the original
budget ) of work that we planned to complete as of today.
EV stands for Earned Value. It is the value (based on the original
budget ) of work complete as of today.
AC stands for Actual Cost. It is the money spent for work complete
as of today
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Example of BAC
The plan is to construct one small room made of bricks for storage
of materials. It will cost Rs.2000/- per day and total duration is 10
days to complete the works.
What is the BAC for this work?
BAC stands for Budget At Completion. This is the total budget for
the entire project.
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Example of PV
The plan is to construct one small room made of bricks for storage
of materials. It will cost Rs.2000/- per day and total duration is 10
days to complete the works.
In the end of day 3 what is planned value for the project?
PV stands for Planned Value. It is the value (based on the original
budget ) of work that we planned to complete as of today.
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Example of EV
The plan is to construct one small room made of bricks for storage
of materials. It will cost Rs.2000/- per day and total duration is 10
days to complete the works.
In the end of day 3 20% of the project is complete. What is the
earned value on day 3?
EV stands for Earned Value. It is the value (based on the original
budget ) of work complete as of today.
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Example of AC
The plan is to construct one small room made of bricks for storage
of materials. It will cost Rs.2000/- per day and total duration is 10
days to complete the works.
In the end of day 3 of the project Rs 8000 has been spent for the
work that is completed. What is the actual cost on day 3?
AC stands for Actual Cost. It is the money spent for work complete
as of today
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Graphical Representation of EV
BAC=Rs.20000
AC=Rs.8000
PV=Rs.6000
Cumulative Cost
EV=Rs.4000
DAY 3
Time
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Earned Value Management
Part 1
Use of Earned Value management
system
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Use of Earned Value Management System
Earned value management has been called “ Management
with lights on”
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Earned Value Management
Part 1
Earned Value Variance Metrics
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Earned Value Variance Metrics
SV=“ Schedule Variance = EV-PV”
CV=“ Cost Variance = EV-AC”
SPI=“ Schedule Performance Index = EV/PV”
CPI=“ Cost Performance Index = EV/AC”
PV stands for Planned Value. It is the value (based on the original
budget ) of work that we planned to complete as of today.
EV stands for Earned Value. It is the value (based on the original
budget ) of work complete as of today.
AC stands for Actual Cost. It is the money spent for work complete
as of today
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Earned Value Forecasting Metrics
BAC=“ Project Total PV= Approved authorized budget”
VAC=“ Variance at Completion = BAC-EAC”
EAC=“ Estimate at Completion = AC+ ETC”
ETC=“ Estimate to Complete = Money required to
complete the balance works”
EAC=“ AC+ ((BAC-EV)/Projected Performance Factor)”
TCPI=“ To Complete performance index
= (BAC-EV/EAC-AC)”
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Earned Value Management
Part 1
Schedule Variance-SV
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Schedule Variance (SV)
SV stands for schedule variance , It is a measure of how much the
project is ahead or behind the schedule
SV= EV-PV
If SV=0 the project is on schedule
If SV> 0 the project is ahead of schedule
If SV< 0 the project is behind schedule
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Schedule Variance (SV)-Example
The project schedule variance (SV) is - Rs 2000. This means
SV= EV-PV
1. The project is under budget
2. The project is ahead of schedule
3. The project is over budget
4. The project is behind schedule or Rs 2000 less work complete
as of today than planned
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Schedule Variance (SV)-Graphs
If the SV=0 the
project is on
schedule PV=Planned
SV= EV-PV Value
Cumulative Cost
SV=work complete
minus the work
AC=Earned
planned to be Value
completed
Today
Time
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Schedule Variance (SV)-Graphs
EV=Earned
If the SV is a positive Value
number the project
is ahead of schedule
SV= EV-PV
Cumulative Cost
SV=work complete PV=Planned
Value
minus the work
planned to be
completed
Today
Time
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Schedule Variance (SV)-Graphs
If the SV is a
negative number the
project is behind PV=Planned
schedule Value
Cumulative Cost
SV= EV-PV
SV=work complete
minus the work EV=Earned
planned to be Value
completed
Today
Time
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Schedule Variance (SV)-Graphical Example
The project status
AC=Actual
based on the graph: Cost
SV= EV-PV
CV=EV-AC
1. Behind schedule
and over budget PV=Planned
Value
2. Behind schedule
and under budget Cumulative Cost
3. Ahead of schedule
and over budget EV=Earned
Value
4. Ahead of schedule
and under budget
Today
Time
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Earned Value Management
Part 1
Schedule Performance Index- SPI
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Schedule Performance Index (SPI)
SPI stands for schedule performance index. It is a measure of how
the project is project is progressing against the plan
SPI= EV/PV
If SPI=1 the project is on schedule
If SPI> 1 the project is ahead of schedule
If SPI< 1 the project is behind schedule
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Schedule Performance Index (SPI)-Example
The project schedule performance index (SPI) is 1.1. This will
mean:
SPI= EV/PV
1. The project is under budget
2. The project is ahead of schedule
3. The project is over budget
4. The project is behind schedule
Ans: 2
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Schedule Performance Index (SPI)-Graphs
If the schedule
performance
index (SPI) is 1,
then the project is
on schedule EV=Earned
which is good for Value
PV=Planned
Cumulative Cost
the project. It
Value
means that we
have completed
planned work
what we have
planned. Today
Time
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Schedule Performance Index (SPI)-Graphs
If the project
schedule
EV=Earned
performance index
Value
(SPI) is greater than
1, then the project
is ahead of
schedule which is PV=Planned
good for the Cumulative Cost Value
project. It means
that we have
completed more
work than what we
Today
have planned.
Time
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Schedule Performance Index (SPI)-Graphs
If the project
schedule PV=Planned
performance index Value
(SPI) is less than 1,
then the project is
behind schedule
which is bad for the
Cumulative Cost
EV=Earned
project. It means Value
that we have
completed less
work than what we
have planned. Today
Time
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Earned Value Management
Part 1
Cost Variance- CV
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Cost Variance (CV)
CV stands for cost variance , It is a measure of how much the
project is over or under budget
CV= EV-AC
If CV=0 the project is on budget
If CV> 0 the project is under budget
If CV< 0 the project is over budget
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Cost Variance (CV)-Example
The project cost variance (CV) is – Rs 2000. This will mean:
CV= EV-AC
1. The project is under budget
2. The project is ahead of schedule
3. The project is over budget
4. The project is behind schedule
Ans: 3
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Cost Variance (CV)-Graphs
If the project cost
variance (CV) is EV=Earned
zero, then the Value
project is on
budget which is
good for the
Cumulative Cost
project. It means AC=Actual
Cost
that we have
completed
planned work
what we have
Today
planned to be
Time
complete for the
money spent.
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Cost Variance (CV)-Graphs
If the project cost
variance (CV) is EV=Earned
positive, then the Value
project is under
budget which is
good for the
Cumulative Cost
AC=Actual
project. It means Cost
that we have
completed more
work than what
we have planned Today
to be complete
Time
for the money
spent.
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Cost Variance (CV)-Graphs
If the project cost
variance (CV) is AC=Actual
Cost
negative, then the
project is over
budget which is
bad for the
Cumulative Cost
EV=Earned
project. It means Value
that we have
completed less
work than what
we have planned Today
to be complete
Time
for the money
spent.
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Earned Value Management
Part 1
Cost Performance Index- CPI
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Cost Performance Index (CPI)
CPI stands for cost performance index. It is a measure of cost
efficiency
CPI= EV/AC
If CPI=1 the project is on budget
If CPI> 1 the project is under budget
If CPI< 1 the project is over budget
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Cost Performance Index (CPI)-Example
The project cost performance index (CPI) is 0.9. This will mean:
CPI= EV/AC
1. The project is under budget
2. The project is ahead of schedule
3. The project is over budget
4. The project is behind schedule
Ans: 3
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Cost Performance Index (CPI)-Graphs
If the project cost
performance
index (CPI) is 1,
then the project is
on budget which EV=Earned
is good for the Value
AC=Actual
Cumulative Cost
project. It means
Cost
that we have
completed
planned work
what we have
planned to be Today
complete for the Time
money spent.
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Cost Performance Index (CPI)-Graphs
If the project cost
performance index
EV=Earned
(CPI) is greater than
Value
1, then the project
is under budget
which is good for
the project. It
Cumulative Cost
AC=Actual
means that we Cost
have completed
more work than
what we have
planned to be
Today
complete for the
money spent. Time
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Cost Performance Index (CPI)-Graphs
If the project cost
performance index
(CPI) is less than 1, AC=Actual
Cost
then the project is
over budget which
is bad for the
project. It means
Cumulative Cost
that we have EV=Earned
Value
completed less
work than what we
have planned to be
complete for the
money spent. Today
Time
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References
1. https://www.aileenellis.com
2. Internet Websites
3. Earned Value Management Handbook
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