Project Planning, Management

& Engineering Economics

Course Code – CE407

Project Monitoring & Control

using
Earned Value Management (EVM)
(S-Curve)
Lecture # 8
1
 Introduction
 Project Control is the process of comparing actual
performance against plan to identify deviations,
evaluate possible alternative courses of actions, and
take appropriate corrective action.
 The project control steps for measuring and evaluating
project performance are presented below:
1. Setting a baseline plan. (PMB / S-curve)
2. Measuring progress and performance.
3. Comparing plan against actual.
4. Taking action.
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 Performance Measurement Baseline (PMB)
PMB is “An approved, integrated scope-schedule-cost plan for
the project work against which project execution is compared to
measure and manage performance”
To use EVM we need primarily to develop a performance
measurement baseline (PMB).
 To develop a PMB we need to:
1. Create and develop the Work Breakdown Structure
2. Create the schedules
3. Authorize the budgets (budget at complete / BAC)
4. Time-phase the budget/Assign the cost
5. Define measures of performance
6. Construct the PMB
 The PMB is one of the most important element in EVM.
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Performance Measurement Baseline (PMB)
or Baseline S-Curve

4
 Introduction
 An S-curve is an important project management tool
that tracks progress over time. It shows the progress of
work over time (graphically) and form a historical
record of project trends and variations.
 The name is derived from the fact that the data usually
takes on an S-shape, with slower progress at the
beginning and end of a project (which is typical for
projects). Earned Value Management (EVM) is based on
S-Curve.

5
 Introduction
“EVM is a project performance measurement technique
that integrates project scope, cost and time”.
 EVM has been called ‘‘management with the lights
on’’ because it can help clearly and objectively
illuminate where a project is and where it is going.
 Earned Value Management (EVM) has proven itself to
be one of the most effective performance measurement
and feedback tools for managing projects.

6
 Introduction (Cont.)

EVM can play a crucial role in answering management

questions that are critical to the success of every project,
such as:
 Are we ahead of or behind schedule?
 How efficiently are we using our time?
 When is the project likely to be completed?
 Are we currently under or over our budget?
 How efficiently are we using our resources?
 What is the remaining work likely to cost?
 What is the entire project likely to cost?
 How much will we be under or over budget at the end?
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 Basic Elements
There are three basic elements of earned valued
management (EVM) system or earned value analysis (EVA)
(Also called performance measurements indicator)

 Planned Value (PV) / Budgeted cost of work scheduled (BCWS)

 Earned Value (EV) / Budgeted cost of work performed (BCWP)
 Actual Cost (AC) / Actual cost of work performed (ACWP)

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 Basic Elements Cont.
Planned Value (PV) = Budgeted cost of work scheduled (BCWS)
Planned work/cost -‐ the sum of budgeted amount of cost
of all work scheduled to be accomplished in a given time
period.
Earned Value (EV) = Budgeted cost of work Performed (BCWP)
Cost as planned of actual work -‐ the sum of budgeted
(planned) amount of cost for the work completed in a given
time period.
Actual Cost (AC) = Actual cost of work Performed (ACWP)
Actual work/cost -‐ the actual cost incurred in
accomplishing the work performed within a given time
period. 9
 18

8 16

14

0 6
On Day X:
• PLANNED VALUE (Budgeted cost of the work scheduled, BCWS) =
18 + 10 + 16 + 6 = 50
• EARNED VALUE (Budgeted cost of the work performed, BCWP) =
18 + 8 + 14 + 0 = 40
• ACTUAL COST (of the work performed , ACWP) =
10
45 (from your project tracking - not evident in above chart)
 Graphical Representation

Actual Cost: what you Today

have actually spent to
this point in time.
Cost (Person-Hours)

Planned Value: what your

plan called for sending on
the tasks planned to be
completed by this date.

Earned Value: value (cost)

of what you have
accomplished to date, per
the base plan.

Time (Date)

11 11
 Graphical Representation Cont.

Today

Over
Cost (Person-Hours)

Budget

Behind
Schedule

Time (Date)
 Performance Analysis & Forecasting

The Planned Value (PV), Earned Value (EV), and Actual Cost
(AC) cab be used to analyze the current status of a project
and forecast its likely future.
• Variances: Schedule Variance (SV); Cost Variance (CV); and
Variance at Completion (VAC)
• Indices: Schedule Performance Index (SPI); Cost
Performance Index (CPI); and To Complete Performance
Index (TCPI)
• Forecasts: Time Estimate at Completion (EACt); Estimate at
Completion (EAC); and Estimate to Complete (ETC)

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 Performance Analysis & Forecasting Cont.
These variances, indices, and forecasts can be used to answer
the key project management questions discussed above.

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 Performance Analysis & Forecasting Cont.

EVM Performance Measures

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 Schedule Analysis & Forecasting
Variance is any schedule or cost deviation from a specific plan.
1.1. Schedule Variance (SV): (Are we ahead or behind schedule?)
It shows deviation from work planned (it is not a measure of
changes in cost). It is calculated by subtracting Planned Value
(PV) from the Earned Value (EV).
+ Value => Ahead, - Value => Behind
SV = EV – PV = 40 – 50 = - 10 (unfavorable)
Schedule variance can be expressed as a percentage by dividing
the schedule variance (SV) by the planed value (PV).
SV% = SV / PV
= -10/50*100 = - 20% (unfavorable)
Means the project is 20 percent behind schedule 16
 Schedule Analysis & Forecasting Cont.
1.2. Schedule Performance Index (SPI)
(How efficiently are we using time?)

SPI = EV / PV
= 40 / 50 = 0.8 (unfavorable)

It means work is being accomplished at 80 percent efficiency or

this SPI indicates that—on average—for each 8-hour day worked
on the project, only 6 hours and 24 minutes worth of the
planned work is being performed (0.8*8hr = 6.4hr = 6hr 24min).

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 Schedule Analysis & Forecasting Cont.
1.3. Time Estimate at Completion (When are we likely to finish work?)
Using the Schedule Performance Index (SPI) and the average
Planned Value (PV) per unit of time, the project team can
generate a rough estimate of when the project will be completed,
if current trends continue, compared to when it was originally
supposed to be completed.
EACt = (BAC/SPI)/(BAC/Proj. Dur. In months)
= (88/0.8)/(88/12) = 15 months
Let the originally estimated completion time for the project was
12 months and that if work continues at the current rate the
project will take three months longer (15-12) than originally
planned. (It is important to note that this method generates a fairly rough estimate)
BAC = Budgeted cost at completion (Total planned cost of project) 18
 Cost Analysis & Forecasting
2.1. Cost Variance (CV): (Are we over or under a budget?)
It is deviation from budget (positive value of CV indicates under
budget while negative value of CV indicated over budget).
It is calculated by subtracting the actual cost (AC) from the
earned value (EV).
CV = EV – AC = 40 – 45 = - 5 (unfavorable)
This number can be expressed as a percentage by dividing the
Cost Variance (CV) by the Earned Value (EV).
CV% = CV / EV = -5 / 40 * 100 = -12.5% (unfavorable)
In other words, to date, the project is 12.5 percent over budget
for the work performed.
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 Cost Analysis & Forecasting Cont.
2.2. Cost Performance Index (CPI): (How efficiently are we
using our resources?)
It is determined by dividing the Earned Value (EV) by the Actual
Cost (AC).
CPI = EV / AC
= 40 / 45 = 0.8889 (unfavorable)

This means the project is overbudget (this means that Project has a cost
efficiency that provides $0.88 worth of work for every dollar spent to date)

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 Cost Analysis & Forecasting Cont.
2.3. To-Complete Performance Index (How efficiently must we
use our remaining resources?)
It helps the team determine the efficiency that must be achieved
on the remaining work for a project to meet a specified endpoint.
The TCPI (for achieving the BAC) is calculated by dividing the work
remaining by the budget remaining as follows
TCPI = (BAC - EV) / (BAC - AC)
= (88 - 40) / (88 - 45) = 1.12
This means that for Project to achieve the BAC, performance must
improve from a CPI of 0.88 to a TCPI of 1.12 for performance of
the remaining work.
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 Cost Analysis & Forecasting Cont.
2.4. Estimate at Completion (What is the project likely to cost?)
It is the estimated final cost of the project if current performance
trends continue.
EAC = BAC / CPI or EAC = AC + ETC
88 / 0.8889 = 99 or 45 + 54 = 99
2.5. Estimate to Complete (What will the remaining work cost?)
ETC = Work remaining / CPI
ETC = (BAC – EV) / CPI
= (88 – 40) / 0.8889 = 54
2.6. Variance at Completion(Will we be under or over budget?)
VAC = BAC – EAC = 88 – 99 = - 11 (additional cost required)
VAC% = VAC/BAC = -11 / 88 = - 12.5% (over budget) 22
 Class Example
Letssupposethatforaspecificprojectfollowingarevaluesof
3elementsofearnedvaluemanagement.

 Planned Value = Rs.55,000/-

 Earned Value = Rs.49,000/-
 Actual Cost = Rs.56,000/-
 BAC = Rs.230,000/-
 Completion Time = 12months
Find,SV,%SV,CV,%CV,SPI,CPI,CSI,VAC,EACt,EAC,ETCandals
oelaboratewhatthesevaluesmeantoprojectmanager?
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 Variances Examples
Assessing the current status of a project using the schedule
variance (SV) and cost variance (CV) are computed for each
reporting period.
A positive variance indicates a desirable condition, while a
negative variance suggests problems or changes that have taken
place.

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 Performance Analysis & Forecasting

Interpretation of EVM Performance Measures

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 Unfavorable Schedule Performance
Time Now
Prog
Budget

BCWS (PV) Schedule Slip

$ Resources

400 Schedule Variance

in dollars ($)

300
BCWP (EV)

200

100

Time
▲
J F M A M J J A

Schedule Variance in
time (behind schedule)
 Unfavorable Cost Performance

At Complete
Variance
Time Now
Prog
Budget

ACWP
$ Resources

(Actual
Cost)

Cost BCWS
400 Variance (Planned
Value)
BCWP
(Earned
300
Value)

200

100

Time
▲
J F M A M J J A
 Planned
Complete
Graphical Representation

Estimated
Complete
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30
Gantt Chart Showing Status—Through Period 7

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Estimated Total Cost at Completion (using CPI)
Thank you