More Related Content Similar to A simple example of Earned Value Management (EVM) in action (20) A simple example of Earned Value Management (EVM) in action2. The plan
• Our team has been tasked with planting the trees on
the plot of land behind our company’s new factory
• The plan:
– 30 batches of 20 trees (600 trees)
– 5 batches per day (100 trees)
– budgeted cost per tree 2.90$ (2.5$ per baby tree / 0.40$
for the slow release fertiliser)
→ total budget 1,740$
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3. After the first day…
• 70 trees were planted (the team hit a patch with
stones that had to be removed before the trees
could be planted)
• Total cost was 350 $ (we had to rent a special
machine to help remove the stones which cost 147$
for the day)
• Simple EVM calculation:
– Earned Value = 70 trees planted 2.90$ = 203$
– Budgeted Cost = 100 trees planned per day 2.90$ = 290$
– Actual Cost = 70 trees planted 2.90$ + 147$ for the machine = 350$
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14. The consequences
0
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Earned Value
today
Estimate at Completion
EAC = 3,000$
Budget at Completion
BAC = 1,740$
Extending the
Actual Cost
into the future
gives us the end
result if we do
not modify the
performance of
the project
16. The consequences
0
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1000
1500
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3000
Start 1st 2nd 3rd 4th 5th 6th 7th 8th 9th
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Earned Value
today
Planned end date
= 6 days
Estimate at completion
= 8.57 days
Project Slip
Estimate at Completion
EAC = 3,000$
Budget at Completion
BAC = 1,740$
Cost Overrun
17. The consequences
→ If we continue at this rate, we will need: 1,740$ 58% = 3,000 $
(cost estimate at completion)
and 6 days 70% = 8.57 days (schedule estimate at completion)
to finish the work.
→ If we want to finish on budget, we need to work at
(planned remaining budget) (actual remaining budget)
(1,740 – 290) (1740 – 350) = 104.3% of the originally planned
performance
→ If we want to finish on time, we need to work at
(actual remaining work) (planned remaining work)
(600 – 70) (600 – 100) = 106% of the originally planned
performance
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18. In technical terms…
In real life, the elements we calculated have slightly
different names:
• The Actual Cost is usually referred to as the Actual
Cost of Works Performed (ACWP)
• The Planned Cost = Budgeted Cost for Work
Scheduled (BCWS)
• The Earned Value = Budgeted Cost for Work
Performed (BCWP)
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19. Summary
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today
time
cost
ACWP
(Actual Cost of
Work Performed)
BCWS
(Budgeted Cost of
Work Scheduled)
BCWP
(Budgeted Cost of
Work Performed)
completion
date
Budget at
Completion (BAC)
Estimate at
Completion (EAC)
Schedule variance in $
SV = BCWS - BCWP
Cost variance in $
CV = ACWP - BCWP
Cost Overrun
Project SlipSchedule variance
in hours
20. To learn more about EVM and tools to
help manage it, visit our glossary:
www.planisware.com/glossary/earned-
value-management
© 2014 Planisware 20