1. EARNED VALUE MANAGEMENT (EVM)

2. Introduction
EVM is a project management technique which measures the progress of a project by combining technical performance, schedule performance, and cost performance.
Work Accomplished
Schedule
Budget

3. Introduction
EVM compares PLANNED work to COMPLETED work to determine if work accomplished, cost, and schedule are progressing as planned.
The amount of work actually completed and resources actually consumed at a certain point in a project TO
The amount of work planned (budgeted) to be completed and resources planned to be consumed at that same point in the project

4. Key Definitions
Budgeted Cost of Work Scheduled (BCWS) The cost of the work scheduled or planned to be completed in a certain time period per the plan This is also called the PLANNED VALUE.
Budgeted Cost of Work Performed (BCWP) The budgeted cost of the work done up to a defined point in the project. This is called the EARNED VALUE.
Actual Cost of Work Performed (ACWP) The actual cost of work up to a defined point in the project

5. Variance Formulas Schedule Variance: SV = BCWP - BCWS
Schedule Performance Index:
SPI = BCWP / BCWS
Cost Variance:
CV = BCWP - ACWP
Cost Performance Index:
CPI = BCWP / ACWP

6. Results SV, CV = 0 Project On Budget and Schedule
SV, CV < 0 Over Budget and Behind Schedule
SV, CV > 0 Under Budget and Ahead of Schedule
CPI, SPI = 1 Project On Budget and Schedule
CPI, SPI < 1 Over Budget and Behind Schedule
CPI, SPI > 1 Under Budget and Ahead of Schedule

7. Example Project description
We are supposed to build 10 units of equipment
We are supposed to complete the project within 6 weeks
We estimated that 600 man-hours to complete all the units
It costs us $10/hour to build the equipment

8. Example We are supposed to build 1.67 units each week
Each unit costs $600
We will spend $1,000 each week

9. Example Project status: Week 3 4 units of equipment completed
400 man-hours spent
How are we doing?
Are we ahead or behind schedule?
Are we under or over budget?
Results:
Accomplished Work: 4/10 = %40 complete
Schedule: 3/6 = %50 over
Budget: 400/600 = %67 spent

10. Example BCWS=(600 man-hours*$10/hour)*(3/6 weeks) = $3000
BCWP=(600 man-hours*$10/hour)*(4/10 units) = $2400
ACWP=400 man-hours*$10/hour = $4000
The price of the job that we have done is only $2400
Schedule: in 3 weeks, the price of the job that we should have done was $3000
Cost: We spent much more; we spent $4000
SV = BCWP – BCWS = $ $3000 = -$600
SV is negative; we are behind schedule
CV = BCWP – ACWP = $ $4000 = -$1600
CV is negative; we are over budget

11. Example SPI = BCWP / BCWS = $2400 / $3000 = 0.8
SPI is less than 1; we are behind schedule
CPI = BCWP / ACWP = $2400 / $4000 = 0.6
CPI is less than 1; we are over budget

12. PROJECT PERFORMANCE PREDICTIONS
Earned Value analysis results are used to predict the future performance of the project
NOTE: There are various names in the literature.
Budget At Completion (BAC) = The total budget (PV or BCWS) at the end of the project. If a project has Management Reserve (MR), it is typically added to the BAC.
Amount expended to date (AC)
Estimated cost To Complete (ETC)
ETC = (BAC – EV) / CPI
Estimated cost At Completion (EAC)
EAC = ATC + AC