Project Management Systems and Techniques

Project Monitoring and Control

Earned Value Analysis

ACM C-A03

Aritra Halder 2nd Trimester NICMAR - Delhi NCR

 Earned Value Analysis - Introduction
• When we complete a project by 30%, does that mean 30% of the overall
budget have been spent? Or when 20% budgeted expenditure take place,
does that mean the project is also 20% complete?
• This ambiguity in project performance measurement gives rise to the
earned value management concept in project management.
• ‘‘The performance measurement to report the status of a project in terms
of both cost and time at a given data date’’ - Popescu and Charoenngam (1995)
• Started in 1960s as integrated project cost & schedule control system by
the US Airforce.
• In 1967, Department of Defense adapted the policy as official monitoring
system and named it Cost/schedule control systems criteria (C/SCSC) .
• After many iterations and revisions, the term earned value management
came into being.
Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 Earned Value Management - Concepts

1. Determine how much work you have done and how much you should
have done according to the plan.

2. Determine how much money you have earned and how much money
you have spent.

3. Calculate the time (schedule) and money (budget) deviations (variances)

so far.

4. Analyse the causes for the major deviations and determine possible
remedies.

5. Extrapolate these deviations to the end of the entire project.

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 Earned Value Management – Key Concepts

The EVMS provides the following benefits:

● Accurate display of project status
● Early and accurate identification of trends
● Early and accurate identification of problems
● Basis for course corrections

The EVMS can answer the following questions:

● What is the true status of the project?
● What are the problems?
● What can be done to fix the problems?
● What is the impact of each problem?
● What are the present and future risks?

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 Graphical Illustration of EVM

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 Basic Parameters of Earned Value Management

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 EVM : Basic Parameters and their interpretation

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 EVM Parameters & Brief Descriptions

• BCWS (PV) : Planned cost of the total amount of work scheduled to be

performed by the milestone date (e.g. by end of the project).
• BCWP (EV) : The planned (not actual) cost to complete the work that has
been done.
• ACWP (AC) : Cost incurred to accomplish the work that has been done to
date.
• Schedule Variance : BCWP – BCWS (-ve means underperformance)
• Cost Variance : BCWP – ACWP (-ve means overspending)
• Schedule Performance Index : BCWP/BCWS (SPI<1 = behind schedule)
• Cost Performance Index : BCWP/ACWP (CPI<1 = cost overrun)
• Variance at completion : BAC - EAC

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 EVM Parameters & Brief Descriptions

• EAC (Estimate at completion) = Actual Cost (AC) + Estimate to complete (ETC)

• Method 1: Future work will perform @ budgeted rate

• Accept the performance to date & assume future work will be completed at budgeted rate.
• Formula : EAC = AC + BAC - EV
• Method 2: Future work will perform @ present cost performance rate
• The present rate of performance (cost wise) will continue to future till completion.
• Formula : EAC = BAC/Cumulative CPI
• Method 3: Future work will perform @ present performance rate
• The present rate of performance both cost wise & schedule wise will continue to future till
completion.
• The most practical approach as the schedule always impacts the ETC.
• Combines both CPI & SPI
• Formula : EAC = AC + [(BAC-EV)/(CPIXSPI)]

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 EVM Relationships & interpretations

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 Illustrative Example
Time (Month)
Work Package
1 2 3 4 5 6 7 8 9 10
Cost 0.25 0.75 1 1.25 1.25 0.5
Earthwork
Schedule
Cost 8 16 16 20 12 8
Concrete Work
Schedule
Cost 4.2 8.4 8.4 10.5 6.3 4.2
Formwork
Schedule
Cost 11.25 22.5 22.5 28.125 16.875 11.25
Reinforcement Work
Schedule
Cost 3.4 5.1 6.8 6.8 6.8 3.4 1.7
Brickwork
Schedule
Cost 1.5 2.25 3 3 3 1.5 0.75
Plastering
Schedule
Cost 0.5 0.75 1 1 1 0.5 0.5
Painting
Schedule
Cost 11 16.5 22 22 22 11 5.5
Flooring
Schedule
Cost 6 6
Waterproofing
Schedule
Cost 3.375 3.375 3.375 3.375
Aluminum Work
Schedule
Cost 8.75 8.75 8.75 5.25 3.25
Electrical Work
Schedule
Cost 1 2 3 4 3 3 2 2
Plumbing Work
Schedule
Cost 8 8
Road Work
Schedule
Value per month 0.25 24.2 52.3 68.25 92.55 92.6 85.375 50.525 21.95 12
Cum. Value per month 0.25 24.45 76.75 145 237.55 330.15 415.525 466.05 488 500

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 Illustrative Example
BCWS (Scheduled BCWP (Actual ACWP (Cost against
Work Package Budget Scheduled Progress Actual Progress
progress * Budget) Progress * Budget) actual progress)
Earthwork 5 40% 50% 2.00 2.50 3.00
Concrete Work 80 30% 20% 24.00 16.00 18.00
Formwork 42 30% 30% 12.60 12.60 13.60
Reinforcement
112.5 30% 30% 33.75 33.75 35.00
Work
Brickwork 34 10% 15% 3.40 5.10 4.50
Plastering 15 0% 0% 0.00 0.00 0.00
Painting 5.25 0% 0% 0.00 0.00 0.00
Flooring 110 0% 0% 0.00 0.00 0.00
Waterproofing 12 0% 0% 0.00 0.00 0.00
Aluminum Work 13.5 0% 0% 0.00 0.00 0.00
Elecrical Work 34.75 0% 0% 0.00 0.00 0.00
Plumbing Work 20 5% 0% 1.00 0.00 0.00
Road Work 16 0% 0% 0.00 0.00 0.00
Total 500 76.75 69.95 74.1

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 Illustrative Example
BCWS (Scheduled BCWP (Actual ACWP (Cost against
Work Package Budget Scheduled Progress Actual Progress
progress * Budget) Progress * Budget) actual progress)
Earthwork 5 40% 50% 2.00 2.50 3.00
Concrete Work 80 30% 20% 24.00 16.00 18.00
Formwork 42 30% 30% 12.60 12.60 13.60
Reinforcement
112.5 30% 30% 33.75 33.75 35.00
Work
Brickwork 34 10% 15% 3.40 5.10 4.50
Plastering 15 0% 0% 0.00 0.00 0.00
Painting 5.25 0% 0% 0.00 0.00 0.00
Flooring 110 0% 0% 0.00 0.00 0.00
Waterproofing 12 0% 0% 0.00 0.00 0.00
Aluminum Work 13.5 0% 0% 0.00 0.00 0.00
Elecrical Work 34.75 0% 0% 0.00 0.00 0.00
Plumbing Work 20 5% 0% 1.00 0.00 0.00
Road Work 16 0% 0% 0.00 0.00 0.00
Total 500 76.75 69.95 74.1

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 Illustrative Example
BCWS (Scheduled BCWP (Actual ACWP (Cost against
Work Package Budget Scheduled Progress Actual Progress
progress * Budget) Progress * Budget) actual progress)
Earthwork 5 40% 50% 2.00 2.50 3.00
Concrete Work 80 30% 20% 24.00 16.00 18.00
Formwork 42 30% 30% 12.60 12.60 13.60
Reinforcement
112.5 30% 30% 33.75 33.75 35.00
Work
Brickwork 34 10% 15% 3.40 5.10 4.50
Plastering 15 0% 0% 0.00 0.00 0.00
Painting 5.25 0% 0% 0.00 0.00 0.00
Flooring 110 0% 0% 0.00 0.00 0.00
Waterproofing 12 0% 0% 0.00 0.00 0.00
Aluminum Work 13.5 0% 0% 0.00 0.00 0.00
Elecrical Work 34.75 0% 0% 0.00 0.00 0.00
Plumbing Work 20 5% 0% 1.00 0.00 0.00
Road Work 16 0% 0% 0.00 0.00 0.00
Total 500 76.75 69.95 74.1

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 Illustrative Example

• At the end of 3rd Month,

• BCWS = 76.75
• BCWP = 69.95
• ACWP = 74.1

• SV = BCWP – BCWS = 69.95-76.75 = -6.8 (<0, behind schedule)

• CV = BCWP – ACWP = 69.95-74.1 = -4.15 (<0, over budget)

• SPI = BCWP/BCWS = 0.911 (<1, underperformance)

• CPI = BCWP/ACWP = 0.944 (<1, cost overrun)

• BAC = 500
• EAC = ACWP + [(BAC-BCWP)/(CPIXSPI)] = 74.1+(500-69.95)/(0.911*0.944) = 574.2
• VAC = BAC- EAC= 500-574.2 = -74.2

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 Reference

• Construction Project Management –Theory and Practice, K N Jha

• Construction Project Scheduling and Control – Saleh Mubarak
• Project Management – A systems approach – H Kerzner
• Cenkaya University, Project Scheduling and Control, Fall 2012

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR
 Thanks!

Aritra Halder | Project Management Systems and Techniques | NICMAR Delhi NCR