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Earned Value Analysis

Earned Value Analysis (EVA) is a project management technique used to objectively measure project performance and progress. It compares the planned value of work to the earned value and actual cost of work completed. Variances between these values indicate whether a project is under or over budget and ahead or behind schedule. Key EVA metrics like the cost performance index, schedule performance index, and estimate at completion help managers forecast project performance and take corrective actions if needed. EVA provides visibility into project status to improve cost and schedule management.

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103 views54 pages

Earned Value Analysis

Earned Value Analysis (EVA) is a project management technique used to objectively measure project performance and progress. It compares the planned value of work to the earned value and actual cost of work completed. Variances between these values indicate whether a project is under or over budget and ahead or behind schedule. Key EVA metrics like the cost performance index, schedule performance index, and estimate at completion help managers forecast project performance and take corrective actions if needed. EVA provides visibility into project status to improve cost and schedule management.

Uploaded by

Nobeen
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Khulna University of Engineering & Technology

Earned Value Analysis (EVA) /


Earned Value Management (EVM)

Presented by-

Md. Mehrab Hossain (Aopy)


Lecturer
Dept. of Building Engineering and Construction Management
Khulna University of Engineering & Technology
E-mail: [email protected]
Definition

 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.

 EVA is a performance analysis method that compares the


scheduled amount of work (planned value) with the
achieved amount of work (earned value) at a point in
time.
Why use Earned Value Management (EVM)?
EVM Advantages & Disadvantages
Earned Value Analysis Key Dimensions

Planned Value (PV)/ Budgeted Cost of Work Scheduled


(BCWS):
 Represents the planned work that should have been
completed till the time of measurement.
 PV is the physical work scheduled or “what you plan to
do”.
Actual Cost (AC)/ Actual Cost of Work Performed (ACWP):
 Represents the expenses incurred in the project till the time
of measurement.
 AC is the cost incurred for executing work on a project or
“what you have spent”.
Earned Value Analysis Key Dimensions

Earned Value (EV)/ Budgeted Cost of Work Performed


(BCWP):

 Represents the actual work that has been completed till the
time of measurement.

 EV is the quantification of the “worth” of the work done to


date or “what you physically accomplished”.

 EV is calculated by multiplying the budget for an activity by


the percent progress for that activity:
EV = % complete x budget
Typical Curve Showing PV, EV and AC
Performance Measurement

In the case of Earned Value Management,


performance measurements focus on cost and
schedule management.
 Cost Management focuses on the cost
performance of the project.
 It looks at the relationships between the Earned
Value (EV) and the Actual Cost (AC).
Performance Measurement

 Schedule Management focuses on the schedule


performance of the project.
 It looks at the relationships between the Earned
Value (EV) and the Planned Value (PV).
EVA Fundamental Formulae (Variance)

Cost Variance (CV)

 Cost Variance (CV) is a cost comparison between what


has been earned and what has been spent ('Are we under
or over budget?').

Cost Variance = Earned Value - Actual Cost

 CV greater than 0 indicates a cost under-run

 CV equals 0 indicates on budget

 CV less than 0 indicates a cost over-run


EVA Fundamental Formulae (Variance)

Schedule Variance (SV)

 Schedule variance (SV) is the cost comparison between what


has been earned and what has been budgeted ('Are we
ahead or behind schedule?).

Schedule Variance = Earned Value - Planned Value

 SV greater than 0 indicates that the project is ahead of


schedule

 SV equals 0 indicates on schedule

 SV less than 0 indicates that the project is behind schedule


EVA Fundamental Formulae (Variance)

Time Variance
 The time variance is the difference in the time scheduled
for the work that has been performed (ST) and the actual
time used to perform it (AT).

ST - AT = Time Variance
Variance : SV & CV illustration
Earned Value : Cost/ Schedule + or -
Six Possible Arrangements of AC, EV and PV

Six possible arrangements


of AC, EV, and baseline
PV resulting in four
combinations of positive
and negative schedule
variance (SV) and cost
variance (CV)
EVA Performance Formulae

Schedule Performance Index (SPI):

 Represents how close actual work is being completed


compared to the schedule.

SPI = Earned Value (EV)/Planned Value (PV)

 SPI greater than 1 indicates that the project is ahead of


schedule

 SPI equals 1 indicates on schedule

 SPI less than 1 indicates that the project is behind schedule


EVA Performance Formulae

Cost Performance Index (CPI):

 Represents the amount of work being completed on a


project for every unit of cost spent.

CPI = Earned Value (EV)/Actual Cost (AC)

 CPI greater than 1 indicates a cost under-run

 CPI equals 1 indicates on budget

 CPI less than 1 indicates a cost over-run


EVA Performance Formulae

Time Performance Index (TPI):

Time Performance Index (TPI) = ST/AT


Variances: Cost Variance example

Let's calculate the Cost Variance (CV) for the ACME Home Building
Project -

Cost

Time
Variances: Cost Variance example

A Cost Variance of $749 tells you that the project is


“Underrun” or under budget.
Using the graph to right, you can see that on 1/31 the EV line
(green) is above the AC line (red).
This means that it cost less to accomplish the work than was
budgeted, thus a positive cost variance.

Cost

Time
Variances: Cost Variance example
Variances: Schedule Variance Example

Let's calculate the Schedule Variance (SV) for the ACME Home
Building Project -

Cost

Time
Variances: Schedule Variance Example

A Schedule Variance of -$5,120 tells you that the project is


“Behind” schedule.
Using the graph to right, you can see that on 1/31 the EV line
(green) is below the PV line (blue).
This means that what was earned to date is less than what
was planned to be accomplished.

Cost

Time
Variances: Schedule Variance Example
Variances: Review
Performance Indices: CPI example

Let's calculate the Cost Performance Index (CPI) for the ACME Home
Building Project -

Cost

Time
Performance Indices: CPI example
Potential Causes of Favorable & Unfavorable Cost Performance
Performance Indices: SPI example

Let's calculate the Cost Performance Index (CPI) for the ACME Home
Building Project -

Cost

Time
Performance Indices: SPI example
Potential Causes of Favorable & Unfavorable Schedule Performance
Review of Variance and Performance Indices
Estimate at Completion (EAC) & Budget at Completion (BAC)

Anticipating future progress requires determining when the project will be


completed and how much it will cost to complete it.

 Estimate at Completion (EAC) is the actual cost to date plus an


objective estimate of costs for remaining authorized work.

 The objective in preparing an EAC is to provide an accurate


projection of cost at the completion of the project.

 The Budget at Completion (BAC) is the sum of all budgets


allocated to a project scope.

 The Project BAC must always equal the Project Total PV. If
they are not equal, your earned value calculations and analysis
will be inaccurate.
Estimate at Completion
Calculating Estimate at Completion

The Estimate to Complete (ETC) is the estimated cost of


completing the authorized remaining work.
A detailed ETC will include a description of the work
remaining and any revisions to the estimated resources or cost
for completing the project.
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion

In other words, the project is now forecasted to overrun by


$102 using this form of EAC.

 Remember, this is only one method of forecasting the


performance of the project. Several other methods can be used.
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Calculating Estimate at Completion
Earned Value Chart
Review: Earned Value Analysis
Building Engineering & Construction Management

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