Earned Value Management

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Agenda
General Introduction to EV Reporting Comparison with other Methods EV Management in Practise Earned Value
Planned Value Actual Costs Schedule Performance Index Cost Performance Index

Introduction

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Example, PV

PV = planned % complete * baseline cost PV: Value of work scheduled to have been completed at a certain moment in time.

Introduction

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Example, EV

EV = actual % complete * baseline cost EV: Value of work actually accomplished at a certain moment in time.

Introduction

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Actual Costs

AC:

Value that gives insight in how much is paid for the work actually accomplished.

Introduction

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Earned Value explained

How much Value was originally Planned to have been Delivered (as of today)? Planned Value (PV) How Much Value was Actually Delivered (as of today)? Earned Value (EV) How Much has the Project Cost (as of today)? Actual Cost (AC)
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Introduction

EV and PV Curve

Introduction

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EV Calculations
%Complete = Earned Value / Budget at Completion * 100

%Spent = Actual Costs / Budget at Completion * 100 % Over/Under Spent = [(Actual Cost / Earned Value) - 1] * 100

Introduction

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Variance Analysis

Cost Variance (CV) = Earned Value (EV) Actual Costs (AC) Schedule Variance (SV) = Earned Value (EV) Planned Value (PV)

Introduction

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Performance Indicators: SPI

Scheduled Performance Index

EV SPI PV

SPI 1 SPI 1
SPI 1

Ahead of schedule Behind schedule Exactly on track

Example:

400 SPI 0.83 480

Introduction

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Performance Indicators: CPI

Cost Performance Index

EV CPI AC

CPI 1

Better than budget Worse than budget On Budget

CPI 1

CPI 1

Example:

400 CPI 1.11 360

Introduction

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Combining SPI and CPI

Introduction

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Critical ratio
Critical Ratio (CR) = CPI * SPI

CR 1 CR 1 CR 1

Over all Project performance is excellent

Over all Project performance is poor

Project Performance on target

Introduction

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Ability to influence SPI and SPI

Ability to Influence SPI and CPI

Introduction

Ability to Influence SPI and CPI

High ability to change

Moderate ability to change

As we proceed further through the project, our ability to change the SPI and CPI values decreases exponentially. Very early in the project, the SPI and CPI values are elastic. However, starting very early in the project, the SPI and CPI values will increasingly reflect the final project condition

Low ability to change 0% 25% 50% 75% 100%

% Project Complete

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Forecast the future project status

Estimate at Completion
= Actual Costs to + [(Budget at Completion Earned Value) / CPI] = Actual Costs to date date + (Budget at Completion Earned Value) = Actual Costs to date + a new estimate for all remaining work

Schedule delay or acceleration

= (SPI-1)Approved Baseline duration)

Estimated duration at completion

= Approved Baseline Duration + Current Schedule Delay or Acceleration = Actual Time Used + (1/SPI) * Remaining Baseline Duration

Forecasting

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Advantages of EV Reporting
Early warnings Costs Forecasting Communication (External) Control

Comparison with other methods

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EV compared to other methods

Project to date cost versus budget

Advantages
Simple Little effort required

Disadvantages No insight in actual finished work

Questionable monetary relativity

Comparison with other methods

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EV compared to other methods(2)

Project to date versus planned budget at moment in time

Advantages
More insight in monetary relativity

Disadvantages No insight in which work has been

accomplished No insight in value of finished work

Comparison with other methods

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EV compared to other methods(3)

Milestone tracking

Advantages
Insight in accomplished work

Disadvantages No insight in monetary status

No insight in value of accomplished work

Comparison with other methods

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EV compared to other methods(4)

Combination of milestone tracking and project to date versus planned budget at moment in time

Advantages
Insight in accomplished work

Disadvantages
No insight in value of accomplished work

More insight in monetary

relativity

Comparison with other methods

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EV compared to other methods(5)

Standard EV Management

Advantages
Forecasting ability

Disadvantages
Requires realistic planning More time consuming to administer

Insight in value of accomplished work in the current and future situation

External control

Comparison with other methods

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EV compared to other methods(6)

EV Simplification

Advantages
Simple, using information readily available to most projects Common indicators for comparison with other projects

Disadvantages
Relies on realistic estimate of % Complete, (or EV) which may by nature be more subjective than tracking the accumulated completion values of many measurable smaller units.

Assumes that progress and spend forecasts are linear, which is normally not the true case.

Comparison with other methods

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Key Decisions
Method of EV Calculation; Tracking and Reporting Frequency Threshold Establishment What Cost Elements comprise Planned Value Whether to track resource actual hours including Overtime or a standard 8 hour day. Which resource labour costs should be included? Level of detail of EV management Baseline Timing
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EV Management in Practise

EV management Methods
Percentage complete Physical percentage complete Fixed percentage from start

EV Management in Practise

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Level of detail
Examples of levels
The project lifecycle stage The workstream (activity grouping)

EV Management in Practise

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Baseline timing

EV Management in Practise

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Baseline timing

EV Management in Practise

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Rebaseline and reprofile (2)

EV Management in Practise

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Example EV Report

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Example EV Report (2)

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Example EV Report (3)

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Example EV Report

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