1 Earned value analysis Planned value (PV) or Budgeted cost of work scheduled (BCWS) – original estimate of the effort/cost to complete a task (compare with idea of a ‘price’) Earned value (EV) or Budgeted cost of work performed (BCWP) – total value credited for the work completed at this time

Common methods of assigning EV are –0/100 technique –50/50 technique –Milestone technique The baseline budget Monitor the earned value –Once an activity is completed, its elapsed time is recorded and its earned value (EV) is accumulated to the cumulative EV

Schedule variance –= Earned Value – Planned value –Indicates how the actual schedule differs from the planned schedule Schedule performance index –= Earned Value / Planned value –SPI > 1 means “better than planned” –SPI < 1 means “slower than planned”

Cost variance –= Earned Value – Actual cost to date –Indicates how the planned cost differs from actual cost Cost Performance index, CPI –= Earned Value / Actual cost to date –CPI > 1 means “better than planned” –CPI < 1 means “slower than planned”

Software Project Management 5 Earned Value Analysis (cont’d)

Software Project Management 6 Earned Value Analysis (cont’d)

7 Earned value – an example Tasks –Specify module5 days –Code module8 days –Test module6 days At the beginning of day 20, PV = 19 days If everything but testing completed, EV = 13 days Schedule variance = EV-PV i.e = -6 Schedule performance indicator (SPI) = EV/PV i.e 13/19 = 0.68

8 Earned value analysis – actual cost Actual cost (AC) is also known as Actual cost of work performed (ACWP) In previous example, if –‘Specify module’ actually took 3 days (planned 5 days) –‘Code module’ actually took 4 days (planned 8 days) Actual cost = 7 days Cost variance (CV) = EV-AC i.e = 6 days Cost performance indicator (CPI) = EV/AC i.e = 13/7 = 1.86 Positive CV or CPI > 1.00 means project under budget or the work is completed better than planned

9 Earned value chart with revised forecasts (AC)(PV) (EV)