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EVM

Earned Value Management (EVM) is a project management technique that measures project performance based on cost, scope, and schedule. It compares the planned value, earned value, and actual cost to calculate variances and indexes. Key terms include planned value, earned value, actual cost, cost variance, schedule variance, cost performance index, and schedule performance index. EVM allows managers to forecast the estimate at completion and estimate to complete of a project.

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27 views4 pages

EVM

Earned Value Management (EVM) is a project management technique that measures project performance based on cost, scope, and schedule. It compares the planned value, earned value, and actual cost to calculate variances and indexes. Key terms include planned value, earned value, actual cost, cost variance, schedule variance, cost performance index, and schedule performance index. EVM allows managers to forecast the estimate at completion and estimate to complete of a project.

Uploaded by

Sim
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© © All Rights Reserved
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EVM: Earned Value Management

Earned Value Management is a project management method to measure the

project’s performance, progress, and achievement based on cost, scope, and

schedule. It allows us to look at the three baselines by doing a series of calculations

and interpreting the results.

In Earned Value Management, there are three data sources:

 – the budget (or planned) value of work scheduled

 – the actual value of work completed

 – the “earned value” of the physical work completed

Earned Value takes these three data sources and can compare the budgeted value of

work scheduled with the “earned value of physical work completed” and the actual

value of work completed.

Some terms

Planned Value (PV): Planned value is the authorized budget that is assigned to

complete the scheduled work.

Earned Value (EV): Earned value is the measure of actual work performed

expressed in terms of the budget authorized for that work.

Actual Cost (AC): Actual cost is the actual expenditure incurred for the work

performed on an activity during a specific time period.


Cost Variance (CV): Cost variance is the process of evaluating the financial

performance of the project. Cost variance is calculated as, CV= EV – AC.

Schedule Variance (SV): Schedule variance is the process of determining the

schedule performance of the project. Schedule performance is calculated as, SV=

EV – PV.

Cost Performance Index (CPI): The cost performance index is the measure of

the cost efficiency of budgeted resources. The cost performance index is

calculated as, CPI= EV/AC; CPI > 1 indicates the project is under budget and CPI

< 1 indicates the project is over budget.

Schedule Performance Index (SPI): The schedule performance index is to

measure the efficiency of the project schedule. The schedule performance index is

calculated as, SPI= EV/PV; SPI > 1 indicates the project is ahead of schedule and

SPI < 1 indicates the project is behind schedule.

Estimate at Cost: (EAC): Estimate at cost is the prediction of how much the

project will cost upon completion. Estimate at cost is calculated as, EAC= Budget

at completion (BAC)/CPI.

Estimate to Complete: (ETC): Estimate to complete is the amount required to

complete the remaining work. The estimate to complete is calculated as, ETC=

EAC-AC.
Item Questions

Planned Value (PV) How much work should be done?

Earned Value (EV) How much work was done?

Actual Cost (AC) How much did the work cost?

Budget at Completion (BAC) What is the total job budgeted to cost?

Estimate at Completion (EAC) What do we expect the total

Terms Calculations Number Remarks

Cost Variance (CV) EV - AC positive – good


Negative - bad
Schedule Variance EV - PV Positive - good
(SV) Negative - bad
Cost Performance EV / AC Above 1 - good
Index (CPI) Below 1 - bad
Schedule Performance EV / PV Above 1 - good
Index (SPI) Below 1 - bad
Estimate At Budget at
Completion (EAT) completion / CPI

Estimate Time to Original time estimate


Complete (ETC) / SPI

What’s reported

Cost Variance (CV) EV - AC Cost means Actual Cost


Schedule Variance (SV) EV - PV Schedule means Plan
Cost Performance Index (CPI) EV / AC Cost means Actual Cost
Schedule Performance Index (SPI) EV / PV Schedule means Plan

Forecasted
Estimate At Completion (EAC) Original Budget / CPI New total budget
Completion Date Estimate (CDE) Original Schedule / SPI New total time needed

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