Earned Value Analysisby

John Cornman

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 VAC

1 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 WBS

2.Plan and schedule the project scope

3.Budget cost account plans to functions

4.Establish and maintain a performance baseline

5.Monitor performance and forecast final results

Fleming & Hoppleman. 1996. Earned Value Management. PMI

Earned Value Management

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