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- 1. Earned Value Management in Action Vivek Prakash – Aug, 16, 2012 © 2012 pmwares – All rights reserved
- 2. Earned Value Management Definitions EVM Terms Explanation Planned Value (PV) Estimated value of the work planned to be spent as of today. Earned Value (EV) Value of the work that is completed as of today (PV of completed work) Actual Cost (AC) Total cost actually incurred as of today Budget at Completion (BAC) Total planned value of the project Estimate at Completion (EAC) Forecasted total project cost as of today Estimate to Complete (ETC) Estimated cost of the remaining work Variance at Completion (VAC) The variance of total project cost project as of today © 2012 pmwares – All rights reserved
- 3. Earned Value Management Formulas EVM Terms EVM Formula Explanation Schedule Variance SV = EV - PV Measure of schedule performance. –ve value indicate delay Cost Variance CV = EV - AC Measure of cost performance. –ve value indicate cost overrun Schedule Performance Index SPI = EV/PV Measure of progress achieved. Value less than 1 indicate delay Cost Performance Index CPI = EV/AC Measure of value of the work completed. Value less than 1 indicate cost overun To Complete Performance Index TCPI = (BAC-EV) (BAC-AC) Measure of cost performance to be achieved on remaining work to meet project objectives Estimate to Complete ETC = EAC - AC Estimated cost of remaining work © 2012 pmwares – All rights reserved
- 4. Earned Value Management Formulas EVM Terms EVM Formula Explanation Variance at Completion VAC = BAC - EAC Variance of total projected cost from budget AC + Bottom up ETC When original estimates are fundamentally flawed BAC Cumulative CPI Observing no variance, will continue with same expenditure rate AC + (BAC-EV) Variance observed as of now will not be observed in future. Will complete the project in remaining budget Estimate at Completion (EAC) AC + [(BAC-EV)/ Current variance trends will continue. (Cum.CPI x Cum.SPI)] Remaining budget is modified with cost and schedule performance © 2012 pmwares – All rights reserved
- 5. Earned Value Management Cost Cost baseline Time © 2012 pmwares – All rights reserved
- 6. Earned Value Management Cost Cost baseline Actuals Time © 2012 pmwares – All rights reserved
- 7. Earned Value Management Cost Cost baseline Actuals Earned Time © 2012 pmwares – All rights reserved
- 8. Earned Value Management AC PV Cost Cost baseline Actuals Earned EV Time © 2012 pmwares – All rights reserved
- 9. Earned Value Management AC PV Cost Cost baseline Actuals Schedule variance in $ Earned EV Time © 2012 pmwares – All rights reserved
- 10. Earned Value Management AC PV Cost Cost baseline Actuals Cost variance Earned EV Time © 2012 pmwares – All rights reserved
- 11. Earned Value Management A wall is to be constructed around a square plot. Each side takes 1 week with estimated budget of $1,000. You have only one crew (with 1 supervisor and 3 workers), therefore construction is planned in sequence. After 1st week, a worker fell ill. We are not at end of 2nd week and status of the project is as below Side 1 Side 2 Side 3 Side 4 Task Side 1 Side 2 Week 1 Week 2 Week 3 Week 4 AS------AF AS--------PF Side 3 Cost incurred Complete $1000 Half done PS-----------PF Side 4 Status $800 To start PS-----------PF To start Status at the end of 2nd Week AS – Actual Start, AF – Actual Finish, PS – Planned Start, PF – Planned Finish © 2012 pmwares – All rights reserved
- 12. Earned Value Management # Terms 1. PV 2. AC 3. EV 4. BAC 5. CV 5. SV 6. CPI 7. SPI 8. EAC 9. ETC 10. VAC Values Comments © 2012 pmwares – All rights reserved
- 13. Earned Value Management # Terms 1. 2. 3. 4. 5. 5. 6. PV = 1000+1000 AC = 1000+800 EV = 1000+500 BAC CV (EV-AC) = 1500 – 1800 SV (EV-PV) = 1500 – 2000 CPI (EV/AC) = 1500/1800 2000 1800 1500 4000 -300 -500 0.833 7. 8. SPI (EV/PV) = 1500/2000 EAC (BAC/CPI) = 4000/0.833 0.75 We are progressing @ 75% 4801 We currently estimate that the total project will cost $4801 9. ETC (EAC–AC) = 4801 – 1800 3001 We currently estimate that we have to spend $3001 to finish the project 10. VAC (BAC–EAC) = 4000 – 4801 -801 We currently estimate that we will spend $801 more than budgeted. Values Comments We planned to do work worth $2000 We actually spent $1800 We actually completed $1500 worth of work Originally budgeted to complete in $4000 We are over budget by $300 We are behind schedule We are getting 83 cents out of every dollar invested © 2012 pmwares – All rights reserved
- 14. What it needs to implement EVM Discipline Planning Stable baseline Periodic tracking Gathering data of actual progress from team Actual Efforts & Remaining Efforts Updating plan Reporting Measuring variance Action Plan Reporting to stakeholders © 2012 pmwares – All rights reserved

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