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Earned Value Refresher By Robert Perrine, PMP http://www.robertperrine.biz Copyright reserved

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Copyright, Robert Perrine, PMP 2004 - 2006, Irvine, California, USA. Offered as is, with no warranty regarding the accuracy or suitability of this material. Copyright reserved. Please, however free to copy and share this document with the following restrictions. 1. You may not charge for use or distribution of this material. 2. Your usage of this material is conditioned upon your compliance with the PMI Code of Ethics. 3. All distributions must be made with the intent to further the collected wisdom of humanity. 4. You may not remove my name or my copyright notices from these documents.

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Overview Basics of EV Work a few quick problems Apply EV to more realistic problems

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Basics of EV

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Basics of EV – EQUATIONS Cost Performance IndexCPI = EV / AC Cost VarianceCV = EV - AC Earned Value (for a task)EV = PV * %Complete Estimate To CompleteETC = EAC - AC Schedule Performance IndexSPI = EV / PV Schedule VarianceSV = EV - PV Variance At CompletionVAC = BAC - EAC Estimate At Completion (EAC)EAC has a separate set of equations

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Basics of EV – Estimate At Completion EAC = AC + ETCRe-Estimated EAC = AC + (BAC - EV)Atypical EAC = AC + ((BAC - EV) / CPI)Typical EAC = BAC / CPITypical

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Basics of EV – Old Vocabulary ACWP Actual Cost of Work Performed replaced by AC BCWP Budgeted Cost of Work Performed replaced by EV BCWS Budgeted Cost of Work Scheduled replaced by PV

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Earned Value Basics of EV Work a few quick problems Apply EV to more realistic problems

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EV Problems – Scenario You are the project manager for a $250,000 upgrade to your company’s internet site. The current project status is shown on next slide. The next board meeting is scheduled for two months from today. The CEO of your company will demonstrate your new internet site to the board and to the investors attending that meeting.

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EV Problems – Project Status TaskDescriptionPVEVAC 1.0.0Operating system$25,000$23,000$27,000 2.0.0Database$90,000$85,000$80,000 3.0.0Web server$10,000$9,000 4.0.0Firewall$8,000 $11,000 5.0.0Internal testing$10,000$6,000$2,000 6.0.0“Beta” customers$12,000$1,000$2,000 7.0.0Marketing$40,000$5,000$4,000

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EV Problems – Question 1 Use the Project Status data, show above. Which task is on schedule? A) 1.0.0 B) 2.0.0 C) 3.0.0 D) 4.0.0 What is your answer ? Why ?

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EV Problems – Question 1 TaskDescriptionPVEVAC 1.0.0Operating system$25,000$23,000$27,000 2.0.0Database$90,000$85,000$80,000 3.0.0Web server$10,000$9,000 4.0.0Firewall$8,000 $11,000 5.0.0Internal testing$10,000$6,000$2,000 6.0.0“Beta” customers$12,000$1,000$2,000 7.0.0Marketing$40,000$5,000$4,000

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EV Problems – Question 2 You are the project manager for a $250,000 upgrade to your company’s internet site. The current EV data is shown in Table 1, above. The next board meeting is scheduled for two months from today. The CEO of your company will demonstrate your new internet site to the board and to the investors attending that meeting. Which task has the largest schedule variance? A) 2.0.0 B) 5.0.0 C) 6.0.0 D) 7.0.0 What is your answer ? Why ?

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EV Problems – Question 2 TaskDescriptionPVEVSV 1.0.0Operating system$25,000$23,000-2,000 2.0.0Database$90,000$85,000-5,000 3.0.0Web server$10,000$9,000-1,000 4.0.0Firewall$8,000 $0 5.0.0Internal testing$10,000$6,000-4,000 6.0.0“Beta” customers$12,000$1,000-11,000 7.0.0Marketing$40,000$5,000-35,000

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EV Problems – Question 3 Use Table 1, shown above. What is the CPI on task 7.0.0? A) 1.250 B) 0.800 C) 8000 D) 0.125 What is your answer ? Why ?

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EV Problems – Question 3 TaskDescriptionPVEVAC 7.0.0Marketing$40,000$5,000$4,000 CPI = EV / AC = 5,000 / 4,000 = 1.250

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EV Problems – Question 3 TaskDescriptionPVEVAC 7.0.0Marketing$40,000$5,000$4,000 CPI = EV / AC = 5,000 / 4,000 = 1.250 Is Task 7.0.0 under-budget so far? YES

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EV Problems – Question 3 TaskDescriptionPVEVAC 7.0.0Marketing$40,000$5,000$4,000 CPI = EV / AC = 5,000 / 4,000 = 1.250 Is Task 7.0.0 under-budget so far? YES Is Task 7.0.0 on-schedule so far? NO, but who asked

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Earned Value Basics of EV Work a few quick problems Apply EV to more realistic problems

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EV Problems – Question 4 You are the project manager for a $250,000 upgrade to your company’s internet site. The current EV data is shown in Table 1, above. The next board meeting is scheduled for two months from today. The CEO of your company will demonstrate your new internet site to the board and to the investors attending that meeting. The CEO has just called and asked you for the “percent completion” as of today. What is your answer? A) 45% B) 50% C) 55% D) 60%

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EV Problems – Question 4 Analyze the Question What does “Percent Complete” mean? Hours worked ? Miles of highway, lines of code ? Basic EV equation EV = PV * (%Complete) Applies to a Task Also applies to the project

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EV Problems – Question 4 Identify a Strategy For a task EV = PV * (%Complete) %Complete = EV / PV When expressed as a decimal it is SPI. For a Project %Complete = SUM(EV) / SUM(Project PV)

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EV Problems – Question 4 EV is based upon “A Point in Time” SPI = EV / PV AT THIS POINT IN TIME

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EV Problems – Question 4 Identify a Strategy For a task EV = PV * (%Complete) %Complete = EV / PV For a Project %Complete = SUM(EV) / SUM(Project PV) What is the total PV for a project?

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EV Problems – Question 4 Identify a Strategy For a task EV = PV * (%Complete) %Complete = EV / PV For a Project %Complete = SUM(EV) / SUM(Project PV) What is the total PV for a project? BAC

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EV Problems – Question 4 Identify a Strategy For a task EV = PV * (%Complete) %Complete = EV / PV For a Project %Complete = SUM(EV) / SUM(Project PV) What is the total PV for a project? BAC What is the BAC for this project ?

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EV Problems – Question 4 Identify a Strategy For a task EV = PV * (%Complete) %Complete = EV / PV For a Project %Complete = SUM(EV) / SUM(Project PV) What is the total PV for a project? BAC What is the BAC for this project ? BAC = $250,000

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EV Problems – Question 4 What do we know %Complete = Sum(EV) / BAC BAC = $250,000

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EV Problems – Question 4 What do we know %Complete = Sum(EV) / BAC BAC = $250,000 What else do we need to find ?

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EV Problems – Question 4 What do we know %Complete = Sum(EV) / BAC BAC = $250,000 What else do we need to find ? Sum(EV)

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EV Problems – Question 4 What do we know %Complete = Sum(EV) / BAC BAC = $250,000 What else do we need to find ? Sum(EV) = $137,000

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EV Problems – Question 4 What do we know %Complete = Sum(EV) / BAC BAC = $250,000 What else do we need to find ? Sum(EV) = $137,000 What is the ANSWER ?

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EV Problems – Question 4 What do we know %Complete = Sum(EV) / BAC BAC = $250,000 What else do we need to find ? Sum(EV) = $137,000 What is the ANSWER ? %Complete = 137,000 / 250,000 = 0.548

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EV Problems – Question 4 You are the project manager for a $250,000 upgrade to your company’s internet site. The current EV data is shown in Table 1, above. The next board meeting is scheduled for two months from today. The CEO of your company will demonstrate your new internet site to the board and to the investors attending that meeting. The CEO has just called and asked you for the “percent completion” as of today. What is your answer? A) 45% B) 50% C) 55% D) 60% What is your answer ?

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EV Problems – Question 4 You are the project manager for a $250,000 upgrade to your company’s internet site. The current EV data is shown in Table 1, above. The next board meeting is scheduled for two months from today. The CEO of your company will demonstrate your new internet site to the board and to the investors attending that meeting. The CEO has just called and asked you for the “percent completion” as of today. What is your answer? A) 45% B) 50% C) 55% D) 60% What is your answer ? C

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Earned Value Basics of EV Work a few quick problems Apply EV to more realistic problems Here’s another one

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EV Problems – Question 5 You are the project manager for a $250,000 upgrade to your company’s internet site. The current EV data is shown in Table 1, above. The next board meeting is scheduled for two months from today. The CEO of your company will demonstrate your new internet site to the board and to the investors attending that meeting. The CFO has just called and asked for your revised estimate on the total cost of the project. You review the data and realized that, aside from some hardware price increases initially, the remainder of the project plan is accurate. What is your revised estimated total project cost? A) $252,000 B) $250,000 C) $248,000 D) $246,350

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EV Problems – Question 5 Analyze the Question What is the EV name for “revised estimated total project cost”?

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EV Problems – Question 5 Analyze the Question What is the EV name for “revised estimated total project cost”? EAC “Estimate At Completion”

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EV Problems – Question 5 Analyze the Question What is the EV name for “revised estimated total project cost”? EAC “Estimate At Completion” What are the formulas for EAC ?

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EV Problems – Question 5 EAC EAC = AC + ETCRe-Estimated EAC = AC + (BAC - EV)Atypical EAC = AC + ((BAC - EV) / CPI)Typical EAC = BAC / CPITypical

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EV Problems – Question 5 EAC EAC = AC + ETCRe-Estimated EAC = AC + (BAC - EV)Atypical EAC = AC + ((BAC - EV) / CPI)Typical EAC = BAC / CPITypical Which one fits this problem ? Why ?

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EV Problems – Question 5 EAC EAC = AC + ETCRe-Estimated EAC = AC + (BAC - EV)Atypical EAC = AC + ((BAC - EV) / CPI)Typical EAC = BAC / CPITypical Which one fits this problem ? Why ?

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EV Problems – Question 5 EAC EAC = AC + ETCRe-Estimated EAC = AC + (BAC - EV)Atypical EAC = AC + ((BAC - EV) / CPI)Typical EAC = BAC / CPITypical Which one fits this problem ? Why ? What do we need to find ?

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EV Problems – Question 5 Totals TaskDescriptionPVEVAC 1.0.0Operating system$25,000$23,000$27,000 2.0.0Database$90,000$85,000$80,000 3.0.0Web server$10,000$9,000 4.0.0Firewall$8,000 $11,000 5.0.0Internal testing$10,000$6,000$2,000 6.0.0“Beta” customers$12,000$1,000$2,000 7.0.0Marketing$40,000$5,000$4,000 SUM137,000135,000

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EV Problems – Question 5 Calculate the Answer EAC = AC + (BAC - EV) = 135,000 + (250,000 – 137,000) = 135,000 + 113,000 = 248,000

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EV Problems – Question 5 Find Your Answer A) $252,000 B) $250,000 C) $248,000 D) $246,350

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EV Problems – Question 5 Find Your Answer A) $252,000 B) $250,000 C) $248,000 D) $246,350

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Earned Value – Summary A few formulas to memorize Know the vocabulary – new and old EAC has a few variations

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