visualPRINCE Pty Ltd

Earned Value Management

 Earned Value
Cost

$1,400,000
It is about half way through the project. Today Forecast At
we were supposed to have completed exactly Completion
half the deliverables. In fact, we have only (FAC)
$1,200,000
completed 40% of scope originally estimated at
$400,000 (BCWP).
Budget At
We were supposed to have spent $525,000 Completion
$1,000,000 (BCWS) by now, but we’ve spent $675,000 (BAC)
(ACWP) - so are we $150,000 over budget?

$800,000

Actual Cost of Work Performed (ACWP) $675,000

$600,000 Cost
Variance
(CV) Schedule Budgeted Cost of Work Scheduled (BCWS) $525,000
Variance
(SV)
$400,000 Budgeted Cost of Work Performed (BCWP) $400,000

Actual

$200,000

Plan / Budget

0% 40% 50% 100%

Work Packages / Deliverables Completed
 EVM Calculations
• Pre-requisites:
o Sufficiently detailed project schedule
o An estimated total budget for the project
o Performance tracking to derive a % complete figure
• Key Performance Indicators:
o Calculation of ‘basic’ EVM criteria (ACWP, BCWP, BCWS, CV and SV)

Symbol Description Formula Explanation

BAC Budget At Completion Original budget for the total job $1,000,000
ACWP Actual Cost Work Use actual at % complete $675,000
Performed
BCWP Budgeted Cost Work Use budget at % $400,000
Performed complete (now)
BCWS Budgeted Cost Work Budget Cost at % From this point on, how much more will the project cost
Scheduled complete (expected)
CV Cost Variance BCWP – ACWP Negative is over budget. Positive is under budget.

SV Schedule Variance BCWP - BCWS Negative is behind schedule. Positive is ahead of schedule.
 EAC Calculation
• This Stage:
o Calculation of performance criteria – indicators of efficiency
o A review of potential future project risks
• Estimating Data Required for EAC and ETC

Symbol Description Formula Explanation

BAC Budget at Completion Original Budget $1,000,000
CPI Cost Performance Index BCWP / ACWP How efficient FINANCIALLY is the project to date?

SPI Schedule Performance Index BCWP / BCWS How efficient is PERFORMANCE of project? Used to predict cost overruns?

EAC Estimate at Completion Various Depending on Risk Outlook (next page)

ETC Estimate to Completion EAC - ACWP $ EAC - $675,000

VAC Variance At Completion BAC – EAC How much over or under budget will the project come in at?
 EAC Calculations
• Defined as actual cost to date + estimated cost of work remaining
• Should examine on monthly basis
• Cautionary note. Consider the following in EAC generation:
1. Takes performance to date into account
2. Impact of approved corrective action plans
3. Assumes strong(er) contingency plans in place for remaining schedule
4. Worst case estimate of all costs to complete remaining work (include
full lifecycle of testing and transition to production etc)

EAC Description Explanation

1 BAC / CPI CPI = Cost Performance Index BCWP / ACWP $1,694,915

2 ACWP + ETC Used if conservative view needs to be taken $1,694,915

3 ACWP + BAC - BCWP Best Case Scenario - using BCWP (which relies upon % complete) $1,275,000

4 ACWP + ((BAC – BCWP) / CPI) Worst Case (includes full project life cycle) $2,161,017
 Establishing a New Baseline

Time Now Revised

Budget

Program Original
Budget Budget
$ Resources

New
Baseline
BCWS
ACWP

400
BCWS “Single Point Adjustment”
300 • Eliminates variances
• Establishes new baseline
200
BCWP
100
Revised
▲ Schedule
D A J S D M J S