search engine by freefind


Earned Value Project Management

Published: 2009-04-01
Last updated: 2022-03-19


Earned Value Project Management uses Earned Value Analysis (EVA), which is another important project controlling tool that helps to control cost and schedule in larger projects or sub-projects. The following example shows how it works.


Let us assume we are at the end of week 16 of a small project with 12 work packages, 7 of which are already completed, and another work package has been started.


Earned Value Analysis Example: Gantt ChartEarned Value Analysis Example: Gantt Chart

Our project account shows the actual cost accrued, AC = 2.3 Mill. $, and the work package experts tell us the value of the work accomplished, earned value, EV = 1.4 Mill. $. The project planning documents show that by the end of week 16 we should have accomplished work corresponding to the planned value, PV = 1.8 Mill. $.


Earned Value Analysis - SnapshotEarned Value Analysis - Snapshot


In earlier presentations of that matter we find

  • Planned Value PV = Budgeted Cost of Work Scheduled BCWS
  • Earned Value EV = Budgeted Cost of Work Performed BCWP
  • Actual Cost AC = Actual Cost of Work Performed ACWP





Performance Indices: CPI & SPI


We use the values PV, EV and AC to calculate Cost Performance Index (CPI) and Schedule Performance Index (SPI):


Earned Value Analysis: Formulas for CPI, SPIEarned Value Analysis: Formulas for CPI, SPI

In our example, we obtain CPI = 0.609 and SPI = 0.778 indicating that we are over budget and behind schedule, because CPI < 1 and SPI < 1.

  • If CPI < 1, the project is over budget
  • If CPI = 1, the project is on budget
  • If CPI > 1, the project is under budget

  • If SPI < 1, the project is behind schedule
  • If SPI = 1, the project is on schedule
  • If SPI > 1, the project is ahead of schedule


Earlier presentations refer to

  • Cost Variance CV = BCWP – ACWP = EV - AC
  • Schedule Variance SV = BCWP – BCWS = EV – PV

In our example, this would lead to a

  • Cost Variance of CV = 1.4 Mill. $ - 2.3 Mill. $ = - 0.9 Mill. $
  • Schedule Variance of SV = 1.4 Mill. $ - 1.8 Mill. $ = - 0.4 Mill. $

Remark


Using earned value analysis might not be sufficient if we need to solve problems of cost or schedule overrun. Under most conditions, we can combine it with other tools like



35+ templates, tools, and checklists in one set

To save you time in your daily work as a project manager, I packaged more than 35 project management templates, tools, and checklists into one zip-file. You un-zip it, and you get all items in doc-format or xls-format. They strictly contain only standard Microsoft Word® or Excel® functionality, no macros, no other VBA code. You are allowed to use your own logo.

Templates & Checklists for Implementation and Closure Phase
for only
or click here for more info.





Traditional PM
Learning Path Navigation







Related topics






Return to Implementation Phase

Return to Project Management Dashboard

Return from Earned Value Project Management to Home Page





Your Comments

Have your say about what you just read! Leave me a comment in the box below.
Enjoy this page? Please pay it forward. Here's how...

Would you prefer to share this page with others by linking to it?

  1. Click on the HTML link code below.
  2. Copy and paste it, adding a note of your own, into your blog, a Web page, forums, a blog comment, your Facebook account, or anywhere that someone would find this page valuable.