TOPIC 6a

EARNED VALUE MANAGEMENT

(EVM)

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 Some definition and formula
1) EVA = Earned Value Analysis
2) EVM = Earned Value Management

3) BCWS (Budgeted cost of work scheduled) = PV (Planned Value)..…e.g. amount stated in

tender sum / contract amount
4) BCWP (Budgeted cost of work performed) = EV (Earned Value)…..actual value of work
completed to date
5) ACWP (Actual cost of work performed) = AC (Actual Cost)…..cannot obtain from any
document other than actual amount spent.

6) CV (Cost variance) = BCWP – ACWP (Earned – Actual)

7) SV (Schedule variance ) = BCWP – BCWS (Earned – Planned)
8) CPI (Cost Performance Index) = BCWP/ ACWP. It indicates cost overrun or under run. If CPI<1
means project is over budget
9) SPI (Schedule Performance Index) = BCWP / BCWS. It indicates the projects is ahead or
behind the schedule. If SPI<1 means project is behind schedule

10) CV% (cost variance percent) = (CV / BCWP) * 100

11) SV% (schedule variance percent) = (SV / BCWS) * 100
12) CSI: Cost Schedule Index (CSI=CPI x SPI). The further CSI is from 1.0, the less likely project
recovery becomes.

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 Some definition and formula
13) BAC (Budget at completion) = Original project estimate
14) ETC (Estimate to complete) = (BAC – BCWP) / CPI. (scenario 1) ETC = estimate of the cost of
the remaining work on the project (task)
15) EAC (Estimate at completion) = ACWP + ETC. EAC = comprise of the cumulative to date the
actual cost of work performed plus the estimate to complete the remaining work. It is the
project manager’s estimate of what the final cost of the project (task) will be.
16) VAC (Variance At Completion) = Forecast of final cost variance = BAC – EAC

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 EAC and ETC
Frequently asked project management questions
"How much will this project really cost to complete it? (ETC)“
"How much will this project final cost? (EAC)“

Initially @ at beginning of project, both answer are BAC. In order to have the final project cost, the EAC, we
need to calculate the ETC; since EAC = ACWP + ETC. The four widely accepted methods of estimating ETC are:

Scenario 1--variances will be present in the future, current variances are typical
current variances will be continue to be present in the future; extrapolate the trend through to
the end of the project.

ETC1 = (BAC - EV) / CPI

EAC = AC + ETC1 (Actual to date plus remaining budget modified by performance)

Scenario 2--past estimated assumptions are not valid, past estimate was fundamentally flawed
we convince that original estimate is so far off, the past assumptions are not valid, variances are
neither isolated or clear trends, thus fresh estimates are needed. It is often applicable when
schedule acceleration are such as crashing or fast-tracking are used.

ETC2 = New estimate for the remaining work

EAC = AC + ETC2 4
 EAC and ETC
Scenario 3--current variances are atypical

variances occurred are typical and are not expected to occur in the future; cost variance occurred
is an isolated event, it is not a trend. Thus ETC is the original estimate for the remaining work
which is unchanged.

ETC3 = BAC – EV
EAC = AC + ETC3 (Actual to date plus remaining budget)

Scenario 4--current variances are typical, accelerate to complete project on time

there is a need to complete the project on time, accelerate the remaining tasks will cost money;
therefore the remaining work is divided by the SPI. The estimate for the remaining work is based
upon the Scenario 1 approach of considering any over-run or under-run trend.

ETC4 = (BAC - EV) / (CPI * SPI)

EAC = AC + ETC4

• Either method is personal judgment call based upon their understanding of the project
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BCWS, ACWP, BCWP (example)
Work Breakdown Structure (WBS) BCWS ACWP % of BCWS (BQ) BCWP
1 Preliminaries (lump sum) 17,280 16,470 100 17,280
site clearence
Site set up
mobilization
2 Earth work
Excavation 7,200 7,470 100 7,200
Earth filing 7,200 7,290 100 7,200
Earth disposal 7,200 7,290 100 7,200
3 Substructure
Piling works 5,400 3,960 100 5,400
Pile cap 1,440 810 100 1,440
Foundation 3,600 4,050 100 3,600
Stump 5,400 4,320 100 5,400
4 Ground work
Grd slab 7,200 5,670 100 7,200
Grd beam 7,200 3,240 100 7,200
Column 7,200 7,830 75 5,400
5 Superstructure
First flr slab 7,200 7,110 50 3,600
1st flr beam 3,600 3,960 20 720
col to roof 1,440 810 0 0
6 Roof
Rafter & Purlins 5,450 0 0 0
Heat proof sheet 3,200 0 0 0
Prebabricated roof sheet 2,500 0 0 0
7 End 99,710 80,280 79 78,840
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 Q2
Base on the S-Curve of BCWS, BWCP and ACWP. Identify the following elements on week 3, Week 4 and week
8. Comment on the data. Remember that they are cumulative data.
1) BCWS
2) BCWP
3) ACWP
4) CV
5) SV
6) CPI
7) SPI
8) CV%
9) SV%
10) CSI
13) BAC
14) ETC (Estimate to complete) = (BAC – BCWP) / CPI. (scenario 1)
15) EAC (Estimate at completion)
16) VAC (Variance At Completion)

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Week BCWS/PV BCWP/EV ACWP/AC
0 0 0 0
1
2
1,000
2,500
Q2 1,500
3,000
1,800
3,500
3 4,500 5,600 6,000
4 6,000 7,500 7,000
5 10,000 13,000 11,320
6 14,000 17,000 15,500
7 23,000 20,000 25,450
8 30,000 28,000 32,150
9 38,000 35,000 43,160
10 48,000 45,000 46,670
11 60,000 53,000 55,660
12 72,000 68,500 70,000
13 86,000 88,000 82,500
14 101,000 105,000 95,000
15 120,000 125,000 117,500
16 156,000 150,000 140,000
17 171,300 165,000 154,000
18 175,500 172,000 168,000
19 182,000 183,000 186,000
20 185,000 185,000 190,000
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 Example Q2
200,000

180,000

160,000

140,000

120,000

BCWS/PV
100,000
BCWP/EV
ACWP/AC
80,000

60,000

40,000

20,000

0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
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 Example Q2
BCWS/PV
200,000

185,000
182,000
180,000
175,500
171,300

160,000
156,000

140,000
V
a 120,000 120,000
l
u
100,000 101,000
e
BCWS/PV
86,000
(

R 80,000
M 72,000
)

60,000 60,000

48,000

40,000 38,000

30,000
23,000
20,000
14,000
10,000
4,500 6,000
0 0 1,000 2,500

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Week
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 Example Q2
BCWP/EV
200,000

185,000
183,000
180,000
172,000
165,000
160,000
150,000

140,000
V
125,000
a 120,000
l
u 105,000
100,000
e
88,000 BCWP/EV
(

R 80,000
M 68,500
)

60,000
53,000

45,000
40,000
35,000
28,000

20,000 17,000
20,000
13,000
5,600 7,500
0 0 1,500 3,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Week

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 Example Q2
ACWP/AC
200,000
190,000
186,000
180,000

168,000

160,000
154,000

140,000 140,000

V
a 120,000
117,500
l
u
100,000
e 95,000
ACWP/AC
(

82,500
R 80,000
M 70,000
)

60,000
55,660

46,670
43,160
40,000
32,150
25,450
20,000
15,500
11,320
6,000 7,000
1,800 3,500
0 0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
Week

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 Example Q2
Base on the S-Curve of BCWS, BWCP and ACWP. Identify the following elements on week 3, Week 4 and week
8. Comment on the data. Remember that they are cumulative data.

week 3 week4 week8

1)BCWS
1)BCWP
1)ACWP
1)CV
1)SV
1)CPI
1)SPI
1)CV%
1)SV%
1)CSI
13)BAC
13)ETC
13)EAC
13)VAC

comment :
1)
2)
3)
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 week 3 week4 week8
1)BCWS 2,000 1,500 7,000
2)BCWP 2,600 1,900 8,000
3)ACWP 2,500 1,000 6,700
4)CV 100 900 1,300
5)SV 600 400 1,000
6)CPI CPI>1, COST
1.04 1.90 1.19 PROJECT IS
UNDER BUDGET
7)SPI SPI >1, PROJECT IS AHEAD OF
1.30 1.27 1.14
SCHEDULE
8)CV% 3.85 47.37 16.25
9)SV% 30.00 26.67 14.29
10)CSI 1.35 2.41 1.36
13)BAC 185,000 185,000 185,000
14)ETC
175384.62 96368.42 148237.50
REMAINING COST TO COMPLETE
15)EAC THE PROJECT IS STILL UNDER THE
177,884.62 97,368.42 154,937.50
ORIGINAL COST
16)VAC 7,115.38 87,631.58 30,062.50
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 Earned Value: Example
Today

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On Day X:
• PLANNED VALUE (Budgeted cost of the work scheduled, BCWS) =
18 + 10 + 16 + 6 = 50
• EARNED VALUE (Budgeted cost of the work performed, BCWP) =
18 + 8 + 14 + 0 = 40
• ACTUAL COST (of the work performed , ACWP) =
45 (from your project tracking - not evident in above chart)

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 Earned Value: Example
Actual Cost: what you Today
Cost (Person-Hours)

have actually spent to this

point in time.

Planned Value: what your

plan called for sending on the
tasks planned to be completed
by this date.

Earned Value: value (cost)

of what you have
accomplished to date, per the
base plan.

Time (Date)
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 Earned Value: Example
Today
Cost (Person-Hours)

Over
Budget

Behind
Schedule

Time (Date)
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Earned Value & Variance: Example
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On Day X:
• PLANNED VALUE (BCWS) = 18 + 10 + 16 + 6 = 50
• EARNED VALUE (BCWP) = 18 + 8 + 14 + 0 = 40
• ACTUAL COST (ACWP) = 45 (from your project tracking)
Therefore:
• Schedule Variance = BCWP – BCWS = 40 - 50 = -10 (behind schedule)
• Schedule Performance Index = 40 / 50 = 0.8, or 80% of plan (a B-, at best)
• Cost Variance = BCWP - ACWP = 40 - 45 = -5
• Cost Performance Index = 40/45 = .89, or you’re getting an 89¢ return on every $1.00 (or,
person-hour) spent on this project
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