Earned Value
Elements of Project Control
Creation of a Baseline Schedule
Measurement of Performance
Effective Corrective Actions
Schedule Updating
1. Schedule durations and sequences often vary from actual durations and sequences
Subcontractors might use different methods
Force Majeure events delay the project
Etc
2. Participants would like to know how the project is progressing
Owners When can I move in? How much should I pay this month? What milestones have been met?
Designers When do I release drawings
Subcontractors when do I come on to the site?
Usefulness of frequent schedule
updating
Current state of the project is always known
Updates provide a valuable record of project status at a given time
Can document changes, responsibilities and delays throughout the project
Useful during claims proceedings
Schedule is a document that can be followed
More on updates
Schedules should be updated periodically
Especially if a major event such as a logic change occurs
Updates should show
New start and completion dates
Completed activities
Percentage progress on activities
Percentage Complete
Planned Vs. Actual
Updating a Precedence Diagram
0 0
Start
0 0 0
0 4
F (3)4
3 3 7
0 3
A 3
0 0 3
3 9
B (4)6
3 0 9
6 8
D 2
7 1 9
3 6
E 3
4 1 7
9 9
Finish
9 0 9
6 8
C 2
7 1 9
Earned Value
We have spent 60% of the time for an activity but have completed 40% of the
work. We are on schedule since we have
completed the most time consuming parts
of the activity
Evaluating Progress on an Activity
Units completed
Length of pipe laid, length of trench dug
Effort expended
Plastering = 50%, Painting = 50% effort
3 walls plastered, two painted out of 4 walls
Percentage complete = (3x0.5+2x0.5)/4 = 62.5%
Expert opinion
Amount spent
Time taken (?)
Project Monitoring
Project Monitoring
Planning and scheduling play an important role in project management
But without monitoring the project, chances of completing the project on schedule is difficult
Two parameters are monitored
Cost
Time
The following graph shows the Time-cost relationship for a project
Project Monitoring
This graph shows Project Progress
Co
st
Time
Cost over-run with schedule
Time over-run
Ideal
Curve
Project Monitoring
Cost is not proportional to the time/man-hours spent on each activity
Eg:- Installation of a projector in a classroom Cost of the projector is very high
Man-hours spent on installation are not significant
Neither expenditure nor man-hours spent can be used to measure the project progress
Expenditure and man-hours are inputs
Progress in terms of input does not indicate progress in terms of output
Project Monitoring
Quantities installed can give information regarding project progress, but is limited to very few activities and
cannot be applied to the entire project as it involves
various activities
Thus with the help of above mentioned parameters, it is difficult to measure the project progress.
Hence the use of EARNED VALUE of time or cost
Concepts of Earned Value
Concept of Earned Value
Consider the following example:
Wall construction Wall is divided into 4 sections
For 4-sections - 100 man-hours are required
Hence if 2-sections are completed,
(2/4) 100
= 50 man-hours
We say that 50 man-hours have been EARNED
The actual man-hours spent to construct these two sections can be more than or less than the Earned
Value of man-hours
Concept of Earned Value
Wall construction
If 4 sections cost Rs. 1000/-
then the cost of constructing 2 sections = Rs. 500/-
We say that Rs. 500/- is the EARNED value of money
The actual cost incurred in constructing these two sections can
be more than or less than the Earned Value of money
It is important to note that Earned Value is based on the Actual
quantities installed or Actual quantity of work done
Hence output is considered in the Earned Value concept
Concept of Earned Value
Calculation of Earned Value
Earned Value of man-hours or money for an activity can be calculated as follows:
Example 1
Example 1
Determination of planned % complete:
Consider the following example
Draw % complete with respect to man-hours and money.
Activity A
Activity B
300
5000
700 (man-hours)
5000 (money)
500
10000
800 (man-hours)
70000 (money)
Example 1
Determination of planned % complete based on man-hours.
Activity A
Activity B
300
5000
700 (man-hours)
5000 (money)
500
10000
800 (man-hours)
7000 (money)
Daily Cumulative
Total Cumulative
% Complete
300 1200 800
300 1500 2300
300 1200 300 2300 2300 2300
= 1.0 = 0.65 = 0.13
Example 1
Determination of planned % complete based on money.
Activity A
Activity B
300
5000
700 (man-hours)
5000 (money)
500
10000
800 (man-hours)
27000 (money)
Daily Cumulative
Total Cumulative
% Complete
5000 15000 7000
5000 20000 27000
= 1.0 = 0.741 = 0.185
5000 20000 90000 27000 27000 27000
Example 1 P
erc
en
tag
e
Stages
Example 1
BCWS Man-hours
Stages 1 2 3 Total
Activity A 300 700 0 1000
Activity B 0 500 800 1300 2300
Stage Total 300 1200 800
Cumulative Total 300 1500 2300
Project % Complete 0.13 0.65 1.0
Example 1
BCWS Money
Stages 1 2 3 Total
Activity A 5000 5000 0 10000
Activity B 0 10000 7000 17000 27000
Stage Total 5000 15000 7000
Cumulative Total 5000 20000 27000
Project % Complete 0.185 0.741 1.0
Determination of Earned Value of Man-hour.
Consider the previous problem (man-hours)
Example 1
500 800
700 300 Activity A
Activity B
% Complete
0.25 0.95 1.0
0.6 0.95
Activity A
Activity B
scheduled
Example 1
Determination of Earned Value of Man-hour.
Stage 1: EMh (A)
EMh (B)
Total Man-hours = 2300
% complete of project: % complete = 250 / 2300
% complete = 0.11
Example 1
Determination of Earned Value of Man-hour.
Stage 2: EMh (A)
EMh (B)
Total Man-hours = 2300
% complete of project: % complete = 1730 / 2300
% complete = 0.752
Example 1
Determination of Earned Value of Man-hour.
Stage 3: EMh (A)
EMh (B)
Total Man-hours = 2300
% complete of project: % complete = 2235 / 2300
% complete = 0.97
Determination of Earned Value of Man-hour:
Earned Value (man-hours)
500 800
700 300 Activity A
Activity B
% Complete
0.25 0.95 1.0
0.6 0.95
Activity A
Activity B
scheduled
250 700 50 Man-hours
780 455 Man-hours
0.108 0.752 0.971 Project - % Complete
Example 1
Example 1
Determination of Earned Value of Man-hour.
BCWP
Stages 1 2 3
% complete
Activity A
Activity B
0.25
0
0.95
0.6
1.0
0.95
Earned Value (man-hours)
Activity A
Activity B
Stage total
250
0
250
700
780
1480
50
455
505
Activity A (cum)
Activity B (cum)
250
0
950
780
1000
1235
Total cumulative 250 1730 2235
Project % complete 0.109 0.752 0.972
Example 1
Determination of Earned Value of Man-hour: ACTUAL MAN-HOURS
Actual (man-hours)
500 800
700 300 Activity A
Activity B scheduled
400 500 100 Man-hours
450 1000 Man-hours
Example 1
Determination of Earned Value of Man-hour:
ACWP
Stages 1 2 3
Activity A
Activity B
400
0
500
450
100
1000
Stage Total 400 950 1100
Cumulative Total 400 1350 2450
Example 1
Determination of Earned Value of Man-hour:
Stage 1 Stage 2 Stage 3
BCWS SCHEDULED MAN-HOUR (Cumulative) 300 1500 2300
BCWP EARNED MAN-HOUR (Cumulative) 250 1730 2235
ACWP ACTUAL MAN-HOUR (Cumulative) 400 1350 2450
SV BCWP-BCWS -50 230 -65
CV BCWP-ACWP -150 380 -215
SPI BCWP/BCWS 0.83 1.15 0.97
CPI BCWP/ACWP 0.63 1.28 0.9122
Example 1
Determination of Earned Value of Man-hour: Earned Value
Ma
n-h
ou
r
Stages
Example 1
Determination of Earned Value of Money
Consider the previous problem (money)
10000 7000
5000 5000 Activity A
Activity B
% Complete
0.25 0.95 1.0
0.6 0.95
Activity A
Activity B
scheduled
Determination of Earned Value of Money.
Stage 1: EMh (A)
EMh (B)
Total Man-hours = 27000
Example 1
% complete of project: % complete = 2500 / 27000
% complete = 0.093
Example 1
Determination of Earned Value of Money.
Stage 2: EMh (A)
EMh (B)
Total Man-hours = 27000
% complete of project: % complete = 19700 / 27000
% complete = 0.730
Example 1
Determination of Earned Value of Money.
Stage 3: EMh (A)
EMh (B)
Total Man-hours = 27000
% complete of project: % complete = 26150 / 27000
% complete = 0.969
Example 1
Determination of Earned Value of Money.
Earned Value (money)
10000 7000
5000 5000 Activity A
Activity B
% Complete
0.25 0.95 1.0
0.6 0.95
Activity A
Activity B
scheduled
2500 7000 500 Money
10200 5950 Money
0.093 0.730 0.969 Project - % Complete
Example 1
Determination of Earned Value of Money.
BCWP
Stages 1 2 3
% complete
Activity A
Activity B
0.25
0
0.95
0.6
1.0
0.95
Earned Value (money)
Activity A
Activity B
Stage total
2500
0
2500
7000
10200
17200
500
5950
6450
Activity A (cum)
Activity B (cum)
2500
0
9500
10200
10000
16150
Total cumulative 2500 19700 26150
Project % complete 0.093 0.730 0.969
Example 1
Determination of Earned Value of Money. ACTUAL MONEY
Actual (money)
10000 7000
5000 5000 Activity A
Activity B scheduled
4500 6000 5000 Money
8500 7500 Money
Example 1
Determination of Earned Value of Money.
ACWP
Stages 1 2 3
Activity A
Activity B
4500
0
6000
8500
5000
7500
Stage Total 4500 14500 12500
Cumulative Total 4500 19000 31500
Example 1
Determination of Earned Value of Money.
Stage 1 Stage 2 Stage 3
BCWS SCHEDULED MONEY (Cumulative) 5000 20000 27000
BCWP EARNED MONEY (Cumulative) 2500 19700 26150
ACWP ACTUAL MONEY (Cumulative) 4500 19000 31500
SV BCWP-BCWS -2500 -300 -850
CV BCWP-ACWP -2500 700 -5350
SPI BCWP/BCWS 0.5 0.99 0.97
CPI BCWP/ACWP 0.56 1.04 0.83
Example 1
Determination of Earned Value of Money. Earned Value
Mo
ne
y
Stages
Example 2
Example 2
Determination of planned % complete:
Draw % complete with respect to Man-hours and Money.
MAN-HOURS
20 20 20 20 20
12.5 12.5 12.5 12.5
10 10
MONEY
8000 8000 8000 8000 8000
10000 10000 10000 10000
75000 75000
Sch. Qty. Sch. Mhrs
Flooring 400 100
Electrical 100 50
AV systems 20 20
Sch. Money
40000
40000
150000
Example 2
Determination of planned % complete based on Man-hours:
Sch. Mhrs.
Flooring 100
Electrical 50
AV systems 20
170
20 20 20 20 20
12.5 12.5 12.5 12.5
10 10
20 20 32.5 32.5 32.5 32.5 10 10
20 40 72.5 105 137.5 150 160 170
20
170
40
170
72.5
170
105
170
137.5
170
150
170
160
170
170
170
0.118 0.235 0.426 0.618 0.809 0.882 0.941 1.0
Total Mhrs.
Cuml. Mhrs.
% complete
Stage 1 Stage 2 Stage 3 Stage 4
Example 2
Determination of planned % complete based on money:
Sch. Money
Flooring 40000
Electrical 40000
AV systems 150000
230000
8000 8000 8000 8000 8000
10000 10000 10000 10000
75000 75000
8000 8000 18000 18000 18000 10000 75000 75000
8000 16000 34000 52000 70000 80000 155000 230000
8000
230000
16000
230000
34000
230000
52000
230000
70000
230000
80000
230000
155000
230000
230000
230000
0.034 0.069 0.147 0.226 0.304 0.347 0.673 1.0
Total Money
Cuml. Money
% complete
Stage 1 Stage 2 Stage 3 Stage 4
Example 2
Scheduled-percentage complete
Pe
rce
nta
ge
Days
Example 2
Determination of Earned Value of Man-hour UPDATE 1
Quantity Installed
50 70
12.5 17.5 0 0 0 0 0 0
12.5 30 30 30 30 30 30 30
0.074 0.176 0.176 0.176 0.176 0.176 0.176 0.176
Sch. Mhrs Inst. Qty.
Flooring 100 120
Electrical 50
AV Systems 20
170
Actual Man-hours
20 20
20 20 0 0 0 0 0 0
20 40 40 40 40 40 40 40
Earned Mhrs.
Cuml. Earned Mhrs.
% complete
Total Mhrs.
Cuml. Mhrs.
Update 1
Example 2 M
an
-ho
urs
Stages
Example 2
Determination of Earned Value of Man-hour UPDATE 2
Quantity Installed
50 70 80 80
25 30
12.5 17.5 32.5 35 0 0 0 0
12.5 30 62.5 97.5 97.5 97.5 97.5 97.5
0.074 0.176 0.368 0.574 0.574 0.574 0.574 0.574
Sch. Qty. Sch. Mhrs Inst. Qty.
Flooring 400 100 280
Electrical 100 50 55
AV Systems 20 20
170
Actual Man-hours
20 20 30 30
15 15
20 20 45 45 0 0 0 0
20 40 85 130 130 130 130 130
Earned Mhrs.
Cuml. Earned Mhrs.
% complete
Total Mhrs.
Cuml. Mhrs.
Example 2
Update 2
Ma
n-h
ou
rs
Days
Example 2
Determination of Earned Value of Man-hour UPDATE 3
Quantity Installed
50 70 80 80 90 30
25 30 35 10
12.5 17.5 32.5 35 0 0 0 0
12.5 30 62.5 97.5 137.5 150 150 150
0.074 0.176 0.368 0.574 0.809 0.882 0.882 0.882
Sch. Qty. Sch. Mhrs Inst. Qty.
Flooring 400 100 400
Electrical 100 50 100
AV Systems 20 20 0
170
Actual Man-hours
20 20 30 30 30 15
15 15 15 15
20 20 45 45 45 30 0 0
20 40 85 130 175 205 205 205
Earned Mhrs.
Cuml. Earned Mhrs.
% complete
Total Mhrs.
Cuml. Mhrs.
Example 2
Update 3
Ma
n-h
ou
rs
Days
Components of Earned Value
Components of Earned value Analysis
Budgeted Cost of Work Scheduled (BCWS)
It is the budgeted cost of work scheduled to be performed
It is also called the Planned Value (PV)
It tells how much work have been completed
Components of Earned value Analysis
Budgeted Cost of Work Performed (BCWP)
It is the budgeted cost of work actually performed
The Earned Value for the work actually completed
It tells how much work is actually completed
Components of Earned value Analysis
Actual Cost of Work Performed (ACWP)
It is the amount actually spent on the work completed
This could be more or less than the Earned Value
Components of Earned value Analysis
Scheduled Variance (SC)
It compares work completed vs work planned
It helps to identify whether the project is ahead or behind schedule
Negative value indicated that the project is behind schedule
Components of Earned value Analysis
Scheduled Performance Index (SPI)
It helps to identify whether the project is ahead or behind schedule
Less than 1 indicates that the project is behind schedule
It can be used to forecast how long it will take for the project to complete
Components of Earned value Analysis
Cost Varience (CV)
It compares what was planned to be spent on the work completed vs. what was actually spent
It helps to identify whether the project is ahead or behind schedule
Negative value indicates that the project is over budget
Components of Earned value Analysis
Cost Performance Index (CPI)
It helps to identify weather the project is above or below budget
Less than 1 means the project is over budget
It can be utilised to forecast how much amount will be required to complete the project
Components of Earned value Analysis
Budget at Completion (BAC)
It is the amount that was originally budgeted to complete the project
Components of Earned value Analysis
Estimate at Completion (EAC)
It is the estimated amount required to complete the project
Components of Earned value Analysis
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