1. Earned Value Analysis by Miles M. Hamby, PhD Copyright©2014 Miles M
Earned Value Analysis by Miles M. Hamby, PhD Copyright©2014 Miles M. Hamby 1

2. Why do it? 70% of projects are over budget or behind schedule
52% of all projects finish at 189% of their initial budget
Some are never completed
Source:The Standish Group 2

3. What is EVA?
Compares the planned amount of work with what has actually been completed, to determine if cost , schedule, and work accomplished are progressing as planned.
Activities “earn value” as they are completed.
The value earned is the WBS budgeted cost of the activity completed to date. 3

4. What is EVA (cont’d) Measures scope, time project performance
Integrates cost, time, scope
Can be used to forecast future performance and project completion date
Integrates scope, cost and schedule measures. It compares actual results to planned result. Calculations are based on three key measures: Planned value, Actual cost, Earned value. 4

5. EVA is Required GPRA; 1993 FASA, Title V; 1994 Clinger-Cohen Act; 1996
OMB (Circular A-11, Part 7)
"Agencies must use a performance based acquisition management system, based on ANSI/EIA Standard 748, to measure achievement of the cost, schedule, and performance goals.” 5

6. Earned Value Technique
Used to establish the performance measurement baseline (PMB).
Measures project performance against project baseline
Quantifies project variance
Forecasts future performance 6

7. Primary Reference Data
PV – Planned Value (budgeted cost of work scheduled (BCWS)) - Planned cost of the total amount of work scheduled to be performed by the milestone date.
AC – Actual Cost (of work performed (ACWP)) - Cost incurred to accomplish the work that has been done to date.
EV – Earned Value (Budgeted cost of work actually performed (BCWP)) - The planned (not actual) cost to complete the work that has been done.
% Complete – Percentage an activity is actually complete at a given point (eg, Milestone) 7

8. OLD (still on MSProject)
Old and New Terms
OLD (still on MSProject)
NEW
BCWS - Budgeted Cost of Work Scheduled
PV - Planned Value – Cost of work scheduled to a milestone
BCWP - Budgeted Cost of Work Performed
EV - Earned Value – budgeted cost of work actually performed to that date
ACWP - Actual Cost of Work Performed
AC - Actual Cost – actual cost of work actually performed to that date 8

9. Derived Metrics SV: Schedule Variance (EV-PV)
A comparison of amount of work performed during a given period of time to what was scheduled to be performed.
A negative variance means the project is behind schedule
CV: Cost Variance (PV-AC)
A comparison of the budgeted cost of work performed with actual cost. A negative variance means the project is over budget. 9

10. Derived Metrics (Cont’d)
SPI: Schedule Performance Index = EV/PV SPI<1 means project is behind schedule
CPI: Cost Performance Index = EV/AC CPI<1 means project is over budget
CSI: Cost Schedule Index = CPI x SPI
The less CSI is than 1.0, the less likely the project will recover 10

11. Metrics Formulae EV Earned Value EV = PV * % Complete CV Cost Variance
CV = PV - AC SV
Schedule Variance
SV = EV - PV
CPI
Cost Performance Index
CPI = EV / AC
SPI
Schedule Performance Index
SPI = EV / PV
EAC
Estimate At Completion
EAC = BAC* / CPI
ETC
Estimate To Completion
ETC = EAC - AC
VAC
Variance At Completion
VAC = BAC* - EAC
*Budgeted Actual Cost 11

12. Meaning of Metrics If, then, and The project is AC > EV CV < 0
CPI < 1
Over Budget
AC = EV
CV = 0
CPI = 1
On Budget
AC < EV
CV > 0
CPI > 1
Under Budget
AC – Actual Value
EV – Earned Value
CV – Cost Variance
CPI – Cost Performance Index 12

13. EVA - Example
Your team has a project to build a new picket fence. Each side of the fence is scheduled to take one day to build and is budgeted for $1,000 per side. Total budget (Planned Value) is $4,000. ETC – 4 days
Each side is one activity and is planned to be completed one after the other, that is, the second side cannot begin until the first side is complete.
EVA is planned to be taken at each Milestone (MS). Each MS is planned to coincide with the planned (scheduled) completion date.

14. EV = PV * % completion at the MS
Example assuming no change in planned costs
EV = PV * % completion at the MS
Project EV at MS4 = $3,800
SV = EV – PV = -$200
“Behind Schedule”
PVAct = $1,000
PVCum = $1,000
EV = $1K*1
PVAct = $1,000
PVCum = $2,000
EV = $1K + $1K*.5
PVAct= $1,000
PVCum = $3,000
EV = $2K + $1K*1
MS0
MS1
MS2
MS3
MS4
PVAct = $1,000
PVCum = $4,000
EV = $3K + .8*$1K
80%
100%
50%
All 100%
(caught up)
Completion Status of Activity at MS

15. EV = PV * % completion at the MS
Same example with cost increases
EV = PV * % completion at the MS
Project EV = $3,800
SV = PV – EV = -$200
CV = EV – AC = -$5 00
“Behind Schedule” & “Over budget”
PVAct = $1,000
PVCum = $1,000
AC = $1,000
EV = $1K*1
PVAct = $1,000
PVCum = $2,000
ACCum = $1,700
EV = $1K + $1K*.5
SV=-$500, CV=-$200
PVAct= $1,000
PVCum = $3,000
ACCum = $3,500
EV = $2K + $1K*1
SV=$0, CV=-$500
MS0
MS1
MS2
MS3
MS4
PVAct = $1,000
PVCum = $4,000
ACCum = $4,300
EV = $3K + $1K*.8
SV=-$200, CV=$500
80%
100%
50%
All 100%
(caught up)
Completion Status of Activity at MS

16. EVA Analysis Chart (on Excel)16

17. Given: 4 Milestones (MS), PV $1,000 at end of each MS
EVA Example (cont’d)
Given: 4 Milestones (MS), PV $1,000 at end of each MS
Item
Calculation
Result
Interpretation
PV (Planned Value)
= 1, ,
MS MS2 MS3
 $3,000
We should have done $3,000 worth of work at this MS
EV (Earned Value)
Complete, complete, 50%
= 1, ,
$2,500
We have actually completed $2,500 worth of work at this MS
AC (Actual Cost)
= 1, ,
$2,800
We have actually spent $2,800 at this MS
BAC (Budgeted AC)
= 1, , , ,000
 $4,000
Our entire project budget is $4,000
CV (Cost Variance)
= EV – AC = 2,500 – 2,800
- $300
We are over budget by $300 at this MS
CPI (Cost Performance Ind.)
= EV/AC = 2,500 / 2,800
 .893
We have only earned 89.3% of the planned value of the project at this MS
SV (Schedule Var.)
= EV – PV = 2,500 – 3,000
 -$500
 We are behind schedule (unspecified time)
SPI (Schedule Performance Ind.)
= 2,500 / 3,000 
 .833
We have only performed 83% of the planned schedule as of this MS 
EAC (Estimated AC)
= BAC/CPI = 4,000 / .893 
 $4,479
We currently estimate that the total project will cost $4,479.
ETC (Estimated Time to Completion)
= EAC – AC = 4,479 – 2,800 
 $1,679
 We need to spend $1,679 to finish the project.
VAC (Var. of AC)
= BAC – EAC =4,000 – 4,479 
-$479
We currently expected to be $479 over the budget when the project is completed.  17

18. Making Projections
Once a project is 10% complete, overrun at completion will not be less than the current overrun.
Once a project is 20% complete, CPI does not vary from its current value by more than 10%.
CPI and SPI are statistically accurate indicators of final cost results.
Source: Defense Acquisition University 18

19. Shortcomings of EVA
Quantifying/measuring work progress can be difficult.
Time required for data measurement, input, and manipulation can be considerable. 19

20. Earned Value Analysis 20

21. EVA - Example
Your team has a project to build a new fence. Each side of the fence is scheduled to take one day to build and is budgeted for $1,000 per side. The sides are planned to be completed one after the other. Today is the end of Day 3. Using the project status chart below, develop a detailed EV analysis. Plot your EVA.
Activity
Day 1
Day 2
Day3
Day 4
Status at the end
of Day 3
Side 1
AS _________ AF
Completed, spent $1,000
Side 2
AS ____ PF
____ AF
Half Completed, spent $1,200
Side 3
PS ---AS__PF----
Half done, spent $ 600
Side 4
PS PF
Not yet started
At end of Day
PV = $1,000
AC = $1,000
EV = $1,000
CV = $0
AC = $1,200
EV = $500
CV =
Work Status: AS - Actual Start, AF - Actual Finish, PS - Planned Start, and PF - Planned Finish 21