‫– مفيدة ومخادعة في التحكم في المشروعات‬ ‫إدارة القيمة المكتسبة‬

Earned Value Management

Leading & misleading in Project Control

Prepared by:
Consultant/ Mohamed Maged Hegazy

Admin of:
https://www.facebook.com/Prof.Planner
Instructor: Mohamed Maged Hegazy
Project Control Manager, LLM, MBA, B.Sc. of Civil engineering, with
experience in MENA region of (construction, infrastructure, and roads)
Mega projects, in professions of Contract administration, Procurement,
Tender estimating, Cost control, Planning & Claim analysis.

Instructor of Planning & Project Management:

- Construction Management Planning and Control (CMPC).
- Delay, Claim and Dispute Resolution (DCDR) in PMBOK, FIDIC & SCL protocol.
- Project Management Professional (PMP).
- Free lectures with cooperation of Egyptian Engineers Association in Saudi:
- Product oriented construction management
- Top 10 planning fundamentals
- Scope creep – cases and preventive actions
- Claims and dispute resolution in FIDIC
References:
1- A GUIDE TO THE PROJECT MANAGEMENT BODY
OF KNOWLEDGE (PMBOK® Guide) – Fifth Edition.
2- Practice Standard for EARNED VALUE MANAGEMET – PMI Global
STANDARD.
3- EARNED VALUE Project Management - QUENWT. FILEMNING and JOEL M.
KOPPELMAN.
4- Skills & Knowledge of Cost Engineering – AACE International.
5- EARNED VALUE MANAGEMENT APM GUIDELINE FOR THE UK.
6- Earned Value Professional (EVP) Certification Study Guide– AACE International.
7- CMPC Course Material – Construction Management Planning & Control
(Prof.Planner).
8- Construction Project Scheduling and Control - Saleh Mubarak.
9- Project Management, Planning, and Control - Albert Lester.
10- Other posts and slide-shares from internet.
Lecture Topics

Project Control Earned Value Forecasting

Performance M. Baseline Earned Schedule
WBS & Control Accounts Finance & Cash flow
Concept of Cost Control Schedule Total Float
Why Earned Value? Tricky or Misleading
Earned Value Analysis Study & Practice
 Project Control
5

Project control is the continuous practice of

1. monitoring work progress,

2. comparing it to baseline budget and schedule,

3. detecting any deviations and their causes, and

4. taking a corrective action wherever and whenever

necessary.
April 26, 2023

Also called Project tracking, Project monitoring & Follow up.

 Manageable Level
6
of Control

Create WBS. subdividing project deliverables

and project work (including management work)
into smaller, more manageable components,
can be used as communications tool.

Tools & Techniques:

Decomposition. A technique used for dividing
and subdividing the project scope and project
deliverables into smaller, more manageable
parts (e.g. by phase or by major deliverables).
 WBS Dividing –
7
Scope Baseline

- Lowest level in WBS called Work Package, then it can be decomposed to Schedule Activities.
 ‫‪Baseline Schedule‬‬
‫‪8‬‬

‫•ماااعنم ااا ن‪Baseline Programme‬؟نهااالنرنام اااعمننرنلم ااا نرنم مااا ن‪accepted‬‬

‫لي امنمس ني منرنمجلعنرنيهنع ن مرسةنأينمطعناةنألن أخيم‪،‬نلف نحعناةنرع ماع ن ييامنماعنيا من‬
‫عل نرنام عمننرنلم ني منعملن ‪ revised baseline‬نلم عا ة‪.‬‬
 Cash Flow
9

Cost Baseline. The

approved version
of the time-phased
project budget,
excluding any
management
reserves.
 Work Package -
10
Control Account
 Cost Rolling-up
11

Cost Aggregation. Summing the lower-level cost estimates for a

given cost control account.
Planning Package. Control Account. A management control point
to earned value.
Reserve analysis. Budget reserve analysis can establish both the
contingency reserves and the management reserves.
Contingency Reserve. Allowance for identified risks that are
accepted (known unknown).
Management Reserve. for unforeseen work that is within scope
(unknown unknown).
Funding Limit Reconciliation. comparing the planned expenditure
against any limits.
 Control Account
12
Responsibility

The above
organizational process
flow of
There are three main
work authorization is
types of
captured in Work
organizational
Authorization
structures: functional,
Documents (WADs)
matrix, and project
that take many forms.
 Cost Control
13

- Cost control is related to cash out of Contractor most

probably.

- It is the process of comparing the estimated to be

spent for each (CA / activity / work package) and the
actual.

- Therefore, You are comparing apple to apple.

April 26, 2023
 Proper Estimating
(planning) is Very
Important for
Control
Scheduling and estimating are related and their relationships is probably one of
the most important relationships in project management.
These two areas intersected in many ways such as the following:

1) The estimator need to know how long the project will last in order to
estimate certain cost , particularly overhead.

2) Scheduling and Estimating department collaborate to provide information to

the procurement department.

3) Resource allocation and resource leveling may be cost related, although

these are scheduling issues. 14
 Schedule Update
15

What is an updated schedule?

A living copy schedule reflecting project performance data at a given
data date regarding completed activities, in progress activities, and
change in the logic, cost, and resources and allocated at any level.

What is data date?

The data date is the date as of which all progress on a project is
reported.
It is also called as- of date, cut-off date and status date . April 26, 2023
 Output of Update
16

Baseline Schedule
Cash Flow: Update:
Time phased Up to date
Budget Actual Value
Value of of Performed
Planned Work &
Work remaining
April 26, 2023
 Earned Value
17
History

➢ Earned Value Management

(EVM), started in 1800’s as a
method for integrated
project cost and schedule
control, then in the 1960’s,
was designed by the U.S. Air
Force and named the
Cost/Schedule Planning and
Control System. April 26, 2023
 Earned Value
18
Terminology

➢ Earned Value (EV)

Analysis: Earned
Value analysis is an
integrated cost-
schedule approach
to monitor and
analyze the
progress in a
project. April 26, 2023
 Earned Value
19
Analysis

➢ When EV is useless:
If the WP = WS which
happens for sure at
the project
completion if the
scope is the same.
April 26, 2023
 This’s Why Earned
20
Value…

EVM has been called

“ ”

Earned Value Management

 Earned Value
21
Reporting - Costs

➢ Budgeted Cost of Work Performed (BCWP) = earned value

➢ Actual Cost of Work Performed (ACWP) = actual cost

➢ Cost Variance (CV): Difference between earned and actual

costs for the completed work

➢ Cost Performance Index (CPI or CI): as following

CV = BCWP − ACWP
CPI = 1, on budget
BCWP CPI < 1, over budget
CPI = CPI > 1, under budget April 26, 2023

ACWP
 Earned Value
22
Reporting - Schedule

➢ Budgeted Cost of Work Performed (BCWP): earned value

➢ Budgeted Cost of Work Scheduled (BCWS): planned value

➢ Schedule Variance (SV): Difference between the value of work that was
planned to be accomplished and the value of the work that was
actually completed

➢ Schedule Performance Index (SPI or SI): as following

SV = BCWP − BCWS SPI = 1, on schedule

SPI < 1, behind schedule
BCWP SPI > 1, ahead of schedule
SPI = April 26, 2023

BCWS
 Earned Value -
23
Forecasting

Forecasted cost variance (FCV) =

CV ∕ % Complete = (budgeted)
$400 ∕ 26.7% = $1, 500

Schedule variance in days (SV, days) =

SV ($) ∕ Daily planned budget = (earned)
$-1,067 ∕ $266.67 = - 4 days
Forecasted schedule variance (FSV) =
SV ∕ %Complete =
-4 ∕ 26.7% = -15 days (actual)
23
 Example
24

Activity cost m1 m2 m3 m4 m5 m6
A simple problem will help to illustrate the 1 $22000
application of the principles of earned
2 $10000
value . A project has been defined that
consist of 12 activities for which the 3 $18000
estimated cost and duration have been 4 $30000
defined see figure . 5 $50000
After three and a half month , the 6 $40000
activates 1,2,4,5,7 are completed and (6) 7 $6000
is half complete and (8) is three–fourth
8 $16000
complete and (3) is half complete. The
9 $13000
incurred cost to date are 152000$ . What is
the status of this project in terms of the 10 $4000
April 26, 2023
schedule and the budget? 11 $34000
12 $14000
 Solution
25

ACWP =152000$

BCWS=22000+30000+50000+10000+18000+0.5(40000+
6000+16000)=161000$

BCWP=22000+30000+50000+10000+6000+0,5(40000)
+0.75(16000)+0.5(18000)= 159000$

SV= BCWP-BCWS= -2000$ its behind schedule

CV=BCWP-ACWP= 7000$ under the budget

EAC=ACWP+(BAC-BCWP)=152000+(257000-159000)
= 250000$
 Earned Value:
26
Cost and Time
Status

Cost +
CV
II I

- +
Time
SV
III IV

April 26, 2023

-
27
Earned Value Summary

(Factors)
28
 (Forecast & TCPI)

29
-Magnify the cost
variance.
-Maintain the
variance till end.
-More accurate.
-Time (SV) affect he
cost as well as (CV).

Budget value
of remaining
work / Value of
cost to spend
(up to Budget
or to Estimate)
30

(EV)
 Time-Based
31
Measures:
Earned
Schedule

SPI(time) = PT / AT

AT: Actual Time of Work

Performed (till Data date) (actual
time expended to date (ATE) for a
particular earned value)

PT: Planned Time of Work

Performed (originally planned
duration (OD) for that earned value)
April 26, 2023
 Scope & Time
32

Forecast Time:
EAC (t) = BAC (t) / SPI
Estimated Duration

Scope Control:
Schedule factors based
on cost.
Time Control:
Schedule factors based
on time. April 26, 2023
 Physical Units -
33
Resources

- EVM requires the recording of resource utilization in

resource units (i.e. labor, materials, and the like) for the
work performed to compare with budget of resource
units , and capture the actual costs.
- We can measure: Earned Quantity, Earned Workhours
& Credit ($) WH of actual quantity as per budget unit
rate, then Productivity Index (PI)= $ / unit.
- Lump Sum Projects Measurements April 26, 2023
 Cash flow:
34
Cash-out vs Cash-in

Cash in Received net

100%
advance added
Cash out Funding gap: budget
80%
Cash in Invoice gross overrun
60%

Turnover: Inflation &

40%
interest
20%

0%
Economics, Estimating,
Accounting & Finance

PAC
Month 08
Month 01

Month 02

Month 03

Month 04

Month 05

Month 06

Month 07

Month 09

Month 10

Month 11

Month 12

Month 13

Month 14

Month 15

Month 16

Month 17

Month 18

Month 19

Month 20

FAC
(EFCC – course)
 Total Float Vs EVM
35
Schedule Factors

Misleading in Each:

1- Out of sequence can disturb the

results of EVM schedule factors specially
if the progress of critical path is different.

2- Availability of resources and resource

usage in remaining works can affect the
rationality of the total float specially if
many paths overlapped in the April 26, 2023

remaining duration.
 Earned Value
36
Management -
Tricky or Misleading

Some amount of knowledge brings more……

 Cost Engineering
37

https://www.facebook.com/groups/prof.cost.engineers/
Earned Value Management - Arabic

Economics, Estimating, Accounting, Finance &

Earned Value Management - English Cost Control Topics
Study & Practice
Additional References:
• https://www.humphreys-assoc.com/evms/EIA-748.php
• https://www.humphreys-assoc.com/uploads/commerce/images/pdf/HumphreysPMUsingEV3rd-2014-1006.pdf
• http://www.aacei.org/cert/EVP_CertificationChecklist.pdf
Certificates:
• EVP – AACE International
• Control Account Manager (CAM)
38
Related Available Videos
 Thank You
Don’t Hesitate to contact….

M.Maged
[email protected]
mobile : 00966-580264968