What is Earned Value Analysis?

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Earned Value Performance Measurement
Time now

Budget
Cost

Actual

Good News or Bad?

Time

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Starting point …Recording Progress

The Plan is in place and work has started, so we need to

record progress of how we are doing
i.e. What have we achieved so far?

We derive the Earned Value by multiplying the progress

as a percentage against the overall budget whether this
be monies, hours or quantities

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Measuring using Manhours - example

Construct concrete walls (300m3) – 1000hrs , 20d

After 10 days;

150m3 completed – i.e. 50% complete

500 of 1000 budget hours earned

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What have we achieved on the Plan?
Schedule • What work has been started/completed?
• Real and measurable % progress
Good examples:
• Have you built as many rooms as you
planned to at this stage?
• Have you plumbed/wired as many rooms as
expected?
• Milestones achieved –we moved in on time!!
A bad example of progress is the double
glazing company is coming next week

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Progress…Underpinning Information
(Quantity Tracking)
We should use/provide underpinning information to
support our % progress complete figure e.g.
Drawings and documents produced
Numbers of cables, pipes, bricks, bottles of wine
Metres of Pipe types
Metres cubed of concrete
Items of equipment to install, i.e. kitchen cupboards,
dishwasher
Contractor programmes
Underpinning information removes any confusion, doubt,
or conflict when scrutinising performance

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Types of progress:

Staged Milestones
Actual % Complete – use of Quantity Tracking
Equivalent Units – Operational Performance via
MPS i.e. tonnes produced
Level of Effort – No Measurable Deliverables, i.e.
departmental personnel
Apportioned Effort – support to ‘doing’ tasks, i.e.
Project Management
Steps/Underpinning Schedule – Further detail to
enable progress to be ascertained

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 How is Earned Value measured?
How much work should be Budgeted Cost for Work Scheduled (BCWS)
done? plan
schedule
budget
How much work is done? Budgeted Cost for Work Performed (BCWP)
accomplishment
value of plan that has been earned
How much did it cost? Actual Cost of Work Performed (ACWP)
Actuals
Accruals
What is the total job Current Baseline Budget At Completion (CB BAC)
supposed to cost in the Baseline scope
execution year? plus approved and implemented changes

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 Earned Value Performance Measurement
BCWS
Time now

CB BAC
The value of the planned work
Cost

you have actually done is less

than your original estimate
BCWP i.e. you have done less work
ACWP than you anticipated

The costs of doing the work is

less than your original
estimate
You are under budget for the
Time
work you have performed

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Earned Value Performance Metrics
CPI & SPI
Under and over performance can be quantified using:
Cost Performance Index, CPI
Schedule Performance Index, SPI

The CPI is calculated as: BCWP / ACWP

The SPI is calculated as: BCWP / BCWS

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CPI & SPI

A CPI or SPI value greater than 1 indicates over-

performance
i.e. ahead of schedule, below planned cost

A CPI or SPI value less than 1 indicates under-

performance
i.e. behind schedule, above planned cost

CPI and SPI values of 1 indicates a good performance

i.e. We are delivering what we said, when we said

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Earned Value Performance Metrics
CV & SV
Under and over performance can be quantified using:
Cost Variance, CV
Schedule Variance, SV

The CV is calculated as:BCWP minus ACWP

The SV is calculated as: BCWP minus BCWS

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CV & SV
A positive CV or SV value indicates over-performance
i.e. ahead of schedule, below planned cost

A negative CV or SV value indicates under-performance

i.e. behind schedule, above planned cost

A CV or SV value of 0 indicates a good performance –

there is no variance between planned and actual costs or
work
i.e. We are delivering what we said, when we said

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 Good News or Bad News?

Project 1 BCWP Are the SPI and CPI less than or

Earned
greater than 1
ACWP
Actual Cost SPI? >1 <1
CPI? >1 <1
What action would you take?
£ BCWS
Planned Cost

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 Good News or Bad News?

Project 2 Are the SPI and CPI less than or

ACWP greater than 1
Actual Cost SPI? >1 <1
CPI? >1 <1
£ BCWS
Planned Cost
What action would you take?

BCWP
Earned

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 Good News or Bad News?

Project 3 Are the SPI and CPI less than or

BCWP
Earned
greater than 1
SPI? >1 <1
CPI? >1 <1
ACWP
What action would you take?
£ Actual Cost
BCWS
Planned Cost

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 Good News or Bad News?

BCWP
Earned
Project 4 Are the SPI and CPI less than or
greater than 1
SPI? >1 <1
CPI? >1 <1
£ BCWS
Planned Cost
What action would you take?

ACWP
Actual Cost

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In Summary
Earned Value is a simple process if applied in the correct
manner
There are individuals who perpetuate the myth that
Earned Value is a complex process in order to create a
niche market
Earned Value is best performed at the project detail level
and if necessary rolled up
Avoid applying Earned Value in non Project
environments i.e. Level of Effort tasks, it adds no value
Other applications of the process can cause the
corruption of the practice, unnecessary manipulation and
the proliferation of complex equations and rules as
illustrated on the next slide
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 Execution Year End Metrics
Year End EAC YE SV EAC (Baseline Carryover)
Current
Current Baseline EAC
Baseline BAC
Forecast Year
End SV
Cost

ACWP
Forecast Year
End BCWP
BCWS
BCWP
Slippage

Time Now Year End Forecast Completion

Time Date

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and finally

If you are relying on Earned Value to highlight

the big project issues then you are not really
engaged with the delivery of the project

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