1. Earned Value Analysis by John Cornman

2. 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.

3. The 3 fundamental metrics Budgeted Cost of Work Performed. Budgeted Cost of Work Scheduled. Actual Cost of Work Performed.

4. 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?”

5. 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?”

6. 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?”

7. Derived Metrics Schedule Variance (SV) Schedule Performance Index (SPI) Cost Variance (CV) Cost Performance Index (CPI)

8. 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

9. 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

10. 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

11. Lemonade Progress At end of day 10: 150 cups have been made Total actual cost is $90 (ACWP)

12. 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

13. 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

14. MS Project 98 Support

15. Five Simple Criteria for Earned 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

17. Earned Value Management http://www.acq.osd.mil/pm/