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Evm

The document provides an overview of earned value management (EVM) concepts including planned value, earned value, actual cost, schedule variance, cost variance, performance indices, and variance analysis. It explains that EVM establishes a relationship between planned and actual accomplishments, and compares earned value to actual cost and budgeted cost to determine variance and predict future performance. Variances are used to verify the budget and schedule, and performance indices above 1 indicate exceptional performance while below 1 indicates poor performance.

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Karan Doshi
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96 views26 pages

Evm

The document provides an overview of earned value management (EVM) concepts including planned value, earned value, actual cost, schedule variance, cost variance, performance indices, and variance analysis. It explains that EVM establishes a relationship between planned and actual accomplishments, and compares earned value to actual cost and budgeted cost to determine variance and predict future performance. Variances are used to verify the budget and schedule, and performance indices above 1 indicate exceptional performance while below 1 indicates poor performance.

Uploaded by

Karan Doshi
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Earned Value & Project Mgmt

Some slides in this presentation were originally developed by Mr. Tom Rethard, and most have been further enhanced and modified by Mr. Mike ODell for use in the CSE Senior Design class.

Earned Value - What is it?


Simply, it is a project monitoring and measurement system that:
1. establishes a clear relationship between planned accomplishments and actual accomplishments 2. reinforces and rewards good planning practices

Earned Value - What is it?


Basic concepts of Earned Value Management (EVM)
Each task in a project earns value as planned work is completed
For example (perhaps), if you were paid on this basis, you would earn $$ at key milestones based on the value of what you have completed (earned value)

Earned value can be compared to actual cost and budgeted cost to determine variance and predict future performance
3

Earned Value - What is it?


The budgeted cost (e.g., dollars, person-hours, person-days, etc.) in terms of your baseline plan/budget of the work performed up to a specified point in time
Also known as Budgeted Cost of Work Performed (BCWP)

Each task in the Work Breakdown Structure (WBS) is assigned a BCWP based on its individual cost.
Project BCWP is total of BCWP for all tasks required to complete the project

Earned Value Components


Planned Value (a.k.a. BCWS)
How much work (person-hours) you planned to have accomplished at a given point in time (this is from the WBS in your plan)

Actual Cost (a.k.a. ACWP)


How much work (person-hours) you have actually spent at a given point in time

Earned Value (a.k.a. BCWP)


The value (person-hours) in terms of your base budget of what you have accomplished at a given point in time (or, % complete X Planned Value)
5

Earned Value: Example


Today 18 8 14

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)
6

Earned Value: Example


Actual Cost: what you have actually spent to this point in time.
Today

Cost (Person-Hours)

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)
7

Earned Value: Example


Today

Cost (Person-Hours)

Over Budget

Behind Schedule

Time (Date)
8

Variance
Any schedule or cost deviation from a specific plan. Used within an organization to verify the budget and schedule for a project Frequently used as a key component of plan reviews and performance measurement

Variance
Must compare scheduling and budget variance at the same time
Schedule variance: deviations from work planned not a measure of changes in cost Cost variance: deviations from the budget not a measure of work scheduled vs. work completed
Example: applying more $$/people to a task may maintain the schedule, but it adds to cost schedule on track over budget on expenses (cost)
10

Performance Indices
Cost Performance Index
CPI = BCWP/ACWP

Schedule Performance Index


SPI = BCWP/BCWS

Analysis
CPI > 1.0 exceptional performance CPI < 1.0 poor performance Similar for SPI

11

Earned Value & Variance: Example


18 8 14

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 your getting an 89 return on every $ (person-hour) spent on this project
12

Primary Measurement Methods


Measurable efforts
Discrete increments of work with definable schedule and tangible results (i.e., real tasks with a deliverable)

Level of effort
Work that is not discernable in discrete, measurable tasks (e.g., project management, training)

13

Determining % Complete When?


Allocate based on time spent but what if you spend more time than allocated? Allocate 50% at start of task, 50% at end
But only for small, discrete tasks

Allocate 100% at start of task Allocate 100% at end of task


Best solution if you keep tasks very small

Our approach

Allocate value at Critical Milestones


Good solution when using with contract work

Others?
14

Example 2
Plans to spend 100K in each of first 4 weeks (baseline budget, per documented plan) Actuals, at end of week 4 show: 325K spent
BCWS = 400K (100K x 4) ACWP = 325K

What conclusions can you draw? Under budget? Is project on schedule?

15

Suppose BCWP is 300K


How is this determined?

What conclusions now?


SV = BCWP BCWS SV = 300k - 400K = -100K
Behind schedule, but what does the 100K in variance really mean?

CV = BCWP ACWP = 300K - 325K


Over budget by 25K
16

Earned Value Management


How can you use this information?
Careful analysis of variance and trends Resetting schedule or budget, when appropriate

Variance Analysis Questions


What is the problem causing the variance? What is the impact on time, cost and performance? What is the impact on other efforts, if any? What corrective action is planned or under way? What are the expected results of the corrective action?

17

Earned Value Management


Extraordinary variance or alarming trends may be cause for reset or cancellation of a project, but where do you draw the line? How much variance to allow depends on a number of factors:
Life-cycle phase Length of life-cycle phase Length of project Type of estimate Accuracy of estimate
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Variance Projection

19

Performance Index Trends

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Ideal Performance Index

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Summary
Cost, in the form of Earned Value or BCWP, can be used to analyze progress of a project Using Earned Value data to make critical project decisions must be based on careful analysis of data, variances and trends

22

Act. A B C D E F G H I j

Pred. A B B D E C F G

Dur. 3 1 4 4 5 2 3 4 2 3

Bud. Cost 600 200 800 700 500 200 500 400 600 300 4800

% of Completion at end of 7 days 100 100 75 100 95 80 50 0 0 0

BCWP 600 200 600 700 475 160 250 0 0 0 2985

% Scheduled Completion 100 100 100 100 100 100 33.33 0 0 0

BCWS 600 200 800 700 500 200 167.7 0 0 0 3167.7

BCWS (Budgeted Cost of Work Scheduled) = % Scheduled completion X Total Budgeted Cost = 3167.7 BCWP (Budgeted Cost of Work Performed ) = % Actual Completed X Total Budgeted Cost = 2985 ACWP ( Actual Cost of Work Performed) = % Actual Completed X Actual Cost incurred till date of reporting = 3100 Cost Performance Indices (CPI) = BCWP/ACWP = 2985 / 3100 = 0.96 Schedule Performance Indices (SPI) = BCWP/BCWS = 2985 / 3167.7 = 0.94 Cost of Completion = Budgeted Cost / CPI = 4800 / 0.96 = 5000 Time of Completion= Scheduled Duration/SPI = 12/0.94 = 12.76 i.e. 13 days

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