Project Monitoring and Controlling With

Earned Value Management

 Feedback / Monitoring

Feedback is critical to the success of

any project. Timely and targeted
feedback can enable project
managers to identify problems early
and make adjustments that can
keep a project on time and on
budget.
 Project Monitoring
Provides an “Early Warning” signal for prompt
corrective action.

 Bad news does not age well.

 Still time to recover

 Timely request for additional funds

 Project Control
Project control focuses mostly on monitoring and reporting
the execution of project management plans related to scope,
schedule, and cost, along with quality and risk.

Hence, project control is a process for keeping work

performance and results within a tolerable range of the work
plan.
Upper Control Limit

1.2
1.1
1.0
0.9
0.8
Lower Control Limit
 Earned Value Management

Earned Value Management (EVM) is a

project performance measurement
technique that integrates scope, time, and
cost data.
 Earned Value Management
Earned Value Management (EVM)
has proven itself to be one of the
most effective performance
measurement and feedback tools
for managing projects.

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—as
compared to where it was
supposed to be and where it was
supposed to be going.
Earned Value Management Concept
 Steps in EVM – Prepare WBS
First step in EVMS is to develop a WBS
Project work needs to be broken down using a work
breakdown structure into executable tasks and
manageable elements often called control accounts
 Steps in EVM – Integration of WBS & OBS
Then, All of the work needs to be assigned to the
workforce for execution using an organization breakdown
structure (OBS)

Control Account Matrix

 Steps in EVM – Establishment of Work Plan
Work Plan is developed with time and Cost for activities
 Steps in EVM – Establishment of PMB
EVM requires the establishment of a performance
measurement baseline (PMB)
Project work needs to be logically scheduled and resourced in a
work plan; the work scope, schedule, and cost need to be
integrated and recorded in a time-phased budget known as a
performance measurement baseline (PMB)
Steps in EVM – Establishment of PMB
 Earned Value Management: Basic Elements

There are three basic elements of Earned Value Management

System (EVMS) / Earned Value Analysis (EVA)

 Planned Value
 Earned Value
 Actual Cost
 Earned Value Management: Basic Elements

Planned Value (PV) describes how far along project work is

supposed to be at any given point in the project schedule.

Also known as the Budgeted Cost of Work Scheduled (BCWS),

Planned Value is the “Planned cost of the total amount of work
scheduled to be performed by the specific point in time or by
some milestone date”.

It is a numeric reflection of the budgeted work that is

scheduled to be performed, and it is the established baseline
(also known as the performance measurement baseline, or
PMB) against which the actual progress of the project is
measured
Earned Value Management: Basic Elements
Planned Value (PV)
 Earned Value Management: Basic Elements

Earned Value (EV) is a snapshot of work progress at a given

point in time.

Also known as the Budgeted Cost of Work Performed (BCWP),

it reflects the amount of work that has actually been
accomplished to date (or in a given time period), expressed as
the planned value for that work.

Hence Earned Value is “the planned (not actual) cost to

complete the work that has been done”
Earned Value Management: Basic Elements
Earned Value (EV)
 Earned Value Management: Basic Elements

Actual Cost (AC), also known as the Actual Cost of Work

Performed (ACWP), is an indication of the level of resources
that have been expended to achieve the actual work
performed to date (or in a given time period).

Hence Actual Cost is “cost incurred to accomplish the work

that has been done to date”
Earned Value Management: Basic Elements
Actual Cost (AC)
Performance Analysis & Forecasting
 Some Derived Metrics; Variances
SV: Schedule Variance (EV-PV)
 A comparison of amount of work performed during a given
period of time to what was scheduled to be performed. It
determines whether a project is ahead of or behind
schedule

 The Schedule Variance can be expressed as a percentage by

dividing the Schedule Variance (SV) by the Planned Value
(PV)
 SV% = SV / PV

 A negative variance means the project is behind schedule.

 SV = EV - PV = 32 - 48 = - 16 {unfavorable}
 SV% = SV / PV = -16 / 48 = -33% {unfavorable}
 Some Derived Metrics; Variances
CV: Cost Variance (EV-AC)
 A comparison of the budgeted cost of work performed with
actual cost. It shows whether a project is under or over
budget.

 Cost Variance can be expressed as a percentage by dividing

the Cost Variance (CV) by the Earned Value (EV).
 CV% = CV / EV

 A negative variance means the project is over budget.

 CV = EV - AC = 32 - 40 = -8 {unfavorable}
 CV% = CV / EV = - 8 / 32 = -25% {unfavorable}
 Some Derived Metrics; Variances

VAC: Variance at Completion (BAC - EAC)

 This shows the team whether the project will finish under
or over budget, by subtracting the EAC from the BAC.

 A negative variance indicates the units by which the

project will be completed

 VAC = BAC – EAC = 150 - 187.50 = -37.50

 In other words, if current trends continue, the project

will cost an additional 37.50 units worth of resources than
originally planned.
 Some More Derived Metrics; Indices
SPI: Schedule Performance Index
 SPI=EV/PV
 SPI< 1 means project is behind schedule

CPI: Cost Performance Index

 CPI= EV/AC
 CPI< 1 means project is over budget
TCPI: To Compete Performance Index
 TCPI = (BAC - EV) / (BAC - AC)
 Helps the team determine the efficiency that must be
achieved on the remaining work for a project to meet a
specified endpoint.
CSI: Cost Schedule Index (CSI=CPI x SPI)
 The further CSI is from 1.0, the less likely project recovery
becomes.
 Some More Derived Metrics; Forecasts
EACt: Time Estimate at Completion
 EACt = (BAC/SPI)/(BAC/months)
 Indicates the time which the project will take than originally
planned if work continues at the current rate.

EAC: Estimate at Completion

 EAC = BAC / CPI
 It is the estimated final cost of the project if current
performance trends continue.
ETC: Estimate to Complete
 ETC = (BAC - EV) / CPI
 This shows what the remaining work will cost.
 Class Example

Lets suppose that for a specific project following are values of

3 elements of earned value management

 Planned Value = Rs. 55, 000/-

 Earned Value = Rs. 49,000/-
 Actual Cost = Rs. 56,000/-
 BAC = Rs. 230,000/-
 Completion Time = 12 months

Find, SV, % SV, CV, % CV, SPI, CPI, CSI, VAC, EACt, EAC, ETC and
also elaborate what these values mean to project manager?
 Variances
Schedule Variance = EV-PV
49,000
- 55,000
SV = - 6,000

%SV= SV/PV = -6000/ 55000

= - 11%

Cost Variance = EV-AC

49,000
56,000
CV = - 7,000

%CV= CV/EV = -7000/49000

= -14%
 Performance Metrics

SPI: EV/PV
49,000/55,000 = 0.891

CPI: EV/AC
49,000/56000 = 0.875

CSI: SPI x CPI

.891 x .875 = 0.780
 Forecasting Metrics

EACt: (BAC/SPI)/(BAC/months)
(230,000/ .891)/(230,000/12)= 13.47 months

EAC: BAC / CPI

230,000/0.875 = Rs. 262,857/-

ETC: (BAC - EV) / CPI

(230,000 – 49,000) / 0.891= Rs. 203, 143/-
 Another Variance

VAC = BAC - EAC

230,000 – 262,857 = - 32,857

 Making Projections; a case study

Once a project is 10% complete, the

overrun at completion will not be less
than the current overrun.

Once a project is 20% complete,

the CPI does not vary from its current
value by more than 10%.

The CPI and SPI are statistically accurate indicators of

final cost results.

Source: Defense Acquisition University

Understanding the EVM Matrices
 Assignment # 2 - A

All figures are cumulative

1. What is the CPI at
month PV AC EV the end of month 4
1 1000 1000 1000
2 2000 2500 2000
2. What is the SPI at
the end of month 4
3 3000 4000 3000
4 7000 8000 6000
3. What is the EAC at
5 12000
the end of month 4
6 14000
7 18000
8 20000 4. What is the ETC at
the end of month 4
 Assignment # 2 - B
All figures are cumulative
1. What is the CV at
month PV AC EV the end of month 4
1 1000 1000 1000
2 2000 2500 2000
3 3000 4000 3000
2. What is the SV at
4 7000 8000 6000 the end of month 4
5 12000
6 14000
7 18000
8 20000

3. If all the work completed in Month 4 fails quality testing, and has to be
reworked in Month 5, meaning that none of Month 5’s tasks can be completed:

3a. What is the EV at 3b. What is the AC at 3c. What is the CPI at
the end of month 5 the end of month 5 the end of month 5
 Assignment # 2 – C & D (group assignment)

2 C. Prepare a Quantities Sheet of 5 Marla house having covered area of 1500

SM, use suitable market rates and prepare abstract of cost. Submit Engineer’s
Estimate in integrated excel sheet for the approval ( assume necessary values
and assume it to be a brick masonry structure )

2 D. Based on this Estimate, can you prepare WBS? Prepare one for the same 5
Marla house

NOTE: Everybody has to defend his proposal and

cost in class participation presentation mode (2
marks out of class participation quota)
 Assignment # 2 – E

2 E. Prepare AOA & PDM, calculate Total Duration of the project, identify all
paths and then identify Critical Path. Calculate ES, LS, EF, LF & floats only for
PDM