Earned Value Management slides

Project managers use Earned Value Analysis (EVA) to objectively evaluate project performance and progress. Construction projects where cost, schedule, and scope are crucial benefit from it. EVA integrates scope, schedule, and costs to view project performance holistically.

Key EV Analysis Terms

PV: The estimated value of work to be done by a certain date.

EV: The value of work completed by a certain date.

Actual Cost (AC): Total cost of work completed by a certain date.

In EVA, key metrics include Cost Variance (CV) which measures cost performance.

For the formula: 𝐶 = 𝐸 - 𝐴 CV = EV - AC

Positive CV means under budget.

Negative CV means overspend.

Schedule variance (SV): Performance indicator.

Formula: 𝑆 = 𝐸 - 𝑃 SV = EV - PV

Good SV means ahead of schedule.

Negative SV means late.

CPI measures cost efficiency.

Formula: CPI = AC EV

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A CPI > 1 indicates cost efficiency.

CPI < 1 indicates cost overrun.

SPI: Evaluation of schedule efficiency.

Formula: 𝑆 𝑃 𝐼 = 𝐸 𝑉 𝑃 𝑉 SPI = PV EV

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SPI > 1 indicates schedule efficiency.

SPI < 1 signifies delays.

EAC: Estimated completion Estimates completion cost.

Formula simplified:

EAC = CPI BAC, where BAC is the Budget at Completion.

Estimate to Complete (ETC): Estimates remaining work costs.

In the formula, 𝐸 = − 𝐴 − ETC = EAC - AC.

VAC: Project cost variance at completion.

The formula for calculating VAC is −VAC = BAC - EAC.

Earned Value Analysis Procedure

Set Work Packages: Divide the project into manageable task.

Plan baseline: Set each work package's PV.

Monitor Progress: Check actual work (EV) and actual cost (AC) regularly.

Metric Calculation: Calculate CV, SV, CPI, and SPI with these formulas.

Performance Analysis: Interpret metrics for cost and schedule performance.

Predicted Results: EAC, ETC, and VAC projections using CPI and SPI.

Example in Construction

Road construction project with $1,000,000 (BAC) budget:

PV for week 4 work: $400,000.

Work completed by week 4 (EV): $350,000

Week 4 (AC) costs: $380,000

Calculations:

CV = 350, 000 - 380, 000 = -30,000 (Over budget).

SV = 350, 000 - 400, 000 = -50, 000 (Behind schedule)

Cost inefficiency (CPI) = 0.92 for 350, 380, 380,000, and 350,000.

To calculate schedule inefficiency, use the formula: SPI = 350, 000 / 400, 000 = 0.875.

Analysis: The project is late and over budget. Efficiency may require corrections.