Earned Value Analysisby

John Cornman

For Details -- Lewis, Ch 10

Introduction

• “Earned Value Analysis” is an industry standard way to measure a project’s progress, forecast its completion date and final cost, and provide schedule and budget variances along the way.

• Based on just 3 data points, it can provide consistent, numerical indicators with which you can evaluate and compare projects.

The 3 fundamental metrics

• Budgeted Cost of Work Performed.

• Budgeted Cost of Work Scheduled.

• Actual Cost of Work Performed.

Budgeted Cost of Work Performed

• This is the “Earned Value.”• Abbreviated as BCWP.• For completed work, it is the cost originally

budgeted to accomplish that work.• “How much work was actually done?”

Budgeted Cost of Work Scheduled

• Abbreviated BCWS.• It is the total budgeted cost up to the

analysis date.• Approximated by the total budget

multiplied by the fraction of total project duration at the analysis date.

• “How much work should have been done?”

Actual Cost of Work Performed

• Abbreviated ACWP.• What it actually cost to accomplish all the

work completed as of the analysis date.• “What did the work that was actually done

actually cost?”

Derived Metrics

• Schedule Variance (SV)• Schedule Performance Index (SPI)• Cost Variance (CV)• Cost Performance Index (CPI)

A Few More Acronyms

• BAC - Budget At Completion • = Total Original Budgeted Cost• Same as BCWS at completion

• EAC - Estimate At Completion• = Cumulative Actuals + Estimate-To-Complete

• VAC - Variance At Completion• = Forecast of final cost variance

Doing The Math• SV = BCWP - BCWS

• Negative means Behind Schedule

• SPI = BCWP / BCWS• Less than 1.00 means Behind Schedule

• CV = BCWP - ACWP• Negative means Over Budget

• CPI = BCWP / ACWP• Less than 1.00 means Over Budget

• EAC = BAC / CPI

An Example: Lemonade

• Make 1,000 cups over 50 days• Steady rate of 20 cups per day• Budgeted cost per cup is $0.50• Total project budget is $500

Lemonade Progress

• At end of day 10:• 150 cups have been made• Total actual cost is $90 (ACWP)

Lemonade Status

• BCWS = $100• 10 days x 20 cups per day x .50/cup budget

• BCWP = $75 (Earned Value)• 150 cups x .50/cup budget

• SV = BCWP - BCWS = -$25• SPI = BCWP / BCWS = 0.75• CV = BCWP - ACWP = $75 - $90 = -$15• CPI = BCWP / ACWP = 0.833

Lemonade Forecast

• EAC = BAC / CPI = $500 / 0.833 = $600• VAC = BAC - EAC = $500 - $600 = $100

(unfavorable)• Schedule at Completion =

50 / SPI = 50 / 0.75 = 66.67 days

MS Project 98 Support

ID Task Name BCWS BCWP ACWP SV CV EAC BAC VAC1 MS Project 98 Example $1,920.00 $840.00 $960.00 ($1,080.00) ($120.00) $2,760.00 $2,400.00 $360.00

F S SNo

Five Simple Criteria forEarned Value Applications

1.Define (scope) the project. . .with a WBS2.Plan and schedule the project scope3.Budget cost account plans to functions4.Establish and maintain a performance

baseline5.Monitor performance and forecast final

resultsFleming & Hoppleman. 1996. Earned Value Management. PMI

Earned Value Management

http://www.acq.osd.mil/pm/