BAC BUDGETED AT COMPLETION PV PLANNED VALUE EV

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EARNED VALUE
SV SCHEDULE VARIANCE CV COST VARIANCE SPI SCHEDULE
PERFORMANCE INDEX

CPI COST PERFORMANCE INDEX EAC ESTIMATE AT COMPLETION ETC

ESTIMATE TO COMPLETION

VAC VARIANCE AT
COMPLETION

Earned Value Analysis

Performance measuring system | Forecasting system

By Er. NikhilRaj

all rights reserved to www.tutomaash.com | any queries can be mailed to tutomaash@gmail.com 1

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Contents
What is earned value?
Why earned value?
EVM practiced industries
Application example
Application of same example in primavera p6
Generation of financial s-curve

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Definition
Earned value management (EVM) is a methodology that combines scope,
schedule, and resource measurements to assess project performance and
progress.
It is a commonly used method of performance measurement for projects.
It integrates the scope baseline with the cost baseline, along with the
schedule baseline, to form the performance baseline, which helps the
project management team assess and measure project performance and
progress
- PMBOK 5th Edition Pg.217

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Why EVM?
Quantify and measure program/contract performance,
Provide an early warning system for deviation from a baseline,
Mitigate risks associated with cost and schedule overruns,
Provide a means to forecast final cost and schedule outcomes

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EVM practiced industries
Department of Defense (DoD)
The Federal government
Construction
IT sector
Commercial sector
R&D
Aerospace

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 Example

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PLANNED
Imagine Ms Ann is the project manager of 100 miles road work
She must finish the project in 5 weeks
She can spent $10000/week

1W
2W
3W
4W
5W
2 weeks into the project

ACTUAL
2W

Ms Ann completed 35MILES

Also spent $15500
Calculate the
Performance
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 PLANNED VS ACTUAL

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TOTAL PROJECT BUDGET=$50000
PLAN PLAN PLAN ACTUAL ACTUAL ACTUAL
(TIME) (COST) (%COMPLETE) (TIME) (COST) (%COMPLETE)

W1 $10000 20%
20MILES W1
W2 $20000
PV
40%
40 MILES W2 $15500
AC
35%
35 MILES

W3 $30000 60%
60 MILES W3
W4 $40000 80%
80 MILES W4
W5 $50000
BAC
100%
100 MILES W5
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 VALUE
NAME DEFINITION EQUATION INTERPRETATION

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2nd week

BAC | BUDGETED AT
The value of total planned work, the project cost baseline $50000
VALUES

COMPLETION
FROM
PLAN

PV | PLANNED VALUE
The value of the work planned to be completed to a point in
COST
time, usually the data date, or project completion $20000
EV | EARNED VALUE The planned value of all the work completed (earned) to a
$17500
ACTUAL
VALUES

COST point in time, usually the data date, without reference to actual
FROM

costs
AC | ACTUAL COST The actual cost of all the work completed to a point in time,
usually the data date $15500
The difference between the value of work completed to a point Positive = Under planned cost
CV = EV
CV | COST VARIANCE in time, usually the data date, and the actual costs to the same
AC $2000 Neutral = On planned cost
point in time Negative = Over planned cost
VALUES CALCULATED
USING EQUATION

The difference between the work completed to a point in time,

Positive = Ahead of Schedule
SV | SCHEDULE and the work planned to be completed to the same point in SV = EV
VARIANCE time. PV -$2500 Neutral = On schedule
Negative = Behind Schedule

A measure of the cost efficiency of budgeted resources >1.0 = Under planned cost
CPI | COST
PERFORMANCE INDEX
expressed as the ratio of earned value to actual cost. CPI = EV/AC 1.129 Exactly 1.0 = On planned cost
<1.0 = Over planned cost

>1.0 = Ahead of schedule

SPI | SCHEDULE A measure of schedule efficiency expressed as the ratio of
PERFORMANCE INDEX earned value to planned value
SPI = EV/PV 0.875 Exactly 1.0 = On schedule
<1.0 = Behind schedule

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Project forecast
ETC= EAC-AC
AC= $15500 =$28786 (money to finish project)

2W
BAC= $50000 (Planned budget)

EAC= $44287 (Forecasted Budget calculated Based On 2nd week actual values)

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 VALUE
NAME DEFINITION EQUATION

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2nd week

If the CPI is expected to be the same for the remainder of the

project, EAC can be calculated using EAC = BAC/CPI $44286.979

If future work will be accomplished at the planned rate, use: EAC = AC + BAC EV $48000
EAC | ESTIMATE AT
FORECASTED VALUES

COMPLETION
If the initial plan is no longer valid, use: EAC = AC + Bottom-up ETC

If both the CPI and SPI influence the remaining work, use EAC = AC + [(BAC EV)/(CPI x SPI)] $48398.899
Assuming work is proceeding on plan, the cost of completing the
ETC | ESTIMATE TO remaining authorized work can be calculated using:
ETC = EAC AC $28786
COMPLETION
Reestimate the remaining work from the bottom up ETC = Reestimate

The estimated difference in cost at the completion of the project.

VAC | VARIANCE AT Positive = Under planned cost
COMPLETION Neutral = On planned cost VAC = BAC EAC $5713.021
Negative = Over planned cost

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