2. Earned Value (EVM)
A technique of Cost Control that compares what you’ve received or
produced to what you’ve spent by monitoring the planned value, earned
value, and actual costs expected to produce the work of the project
Needed to determine and document the cause of the variance, to
determine the impact or the variance, and to determine whether a
corrective action should be implemented as a result
EMV looks at schedule, cost, and scope project measurements together
and compares them to actual work completed to date
3. Planned Value (PV)
Planned Value is the cost of work that has been authorized and budgeted
for a scheduled activity or Work Breakdown Structure component during a
given time period or phase
PV is also known as the budget cost of work scheduled (BCWS)
It is usually a chart comparing Earned Value and Actual Cost
EV=3.8k
AC=5k
PV=4.5k
$0.
$2,000.
$4,000.
$6,000.
0 months 10 months
Visual Representation of Current Project Budget
Earned Value Acutual Cost Planned Value
4. Actual Cost (AC)
Actual Cost is the cost of complementing the work component in a given
time period
Also known as actual cost of work performance (ACWP)
5. Earned Value (EV)
Earned value is the value of the work completed to date as it compares to
the budgeted amount (PV) for the work component
EV is typically expressed as a percentage of work complete compared to
the budget
Also known as budget cost of work performed (BCWP)
Example-Budget amount is $1,000 and we have completed 30% of the work at
this date. EV=1000 x 30% so our EV= $300
6. Recap
PV=is the approved budget assigned to the work to be completed in a
given time
AC=the money (indirect or direct) that has actually been spent during a
given time period toward the completed work
EV=the value of the work completed at this moment compared to where
you were suppose to be according to the budget
7. Cost Variance (CV)
Are we on budget?
Cost Variance = Earned Value – Actual Cost
Example: Lets say the
Planned Cost (budgeted) (also known as the Planned Value) = $720k
Actual Cost = $600k
Earned Value = $680k
Our CV = EV-AC
680-600 = +80 a positive number means we are most likely going to be under budget
8. Schedule Variance (SV)
Compares an activity’s actual progress to date to the estimated progress
and is represented in terms of cost
Tells you if the schedule is going to be ahead of schedule, on time, or
behind
Schedule Variance = Earned Value – Planned Value
Example: Lets say the
Planned Cost (budgeted) (also known as the Planned Value) = $720k
Earned Value = $680k
680-720= -40 a negative number indicates the project is behind schedule
9. Performance Indexes
These are used to predict future project performance
All start with what you have (EV)
10. Cost Performance Index (CPI)
Measures the values of work completed at this date (today) against actual
cost
Cost Performance Index = Earned Value/Actual Cost
Example: Lets say the
Actual Cost = $600k
Earned Value = $680k
680/600 = 1.13 as the number is more than 1 it means your performance is better
than expected
11. Schedule Performance Index (SPI)
SPI measures the progress today against what is planned
Schedule Performance Index=Earned Value/Planned Value
Example: Lets say the
Planned Cost (budgeted) (also known as the Planned Value) = $720k
Earned Value = $680k
680/720= 0.94 as the value is less than 1 the project is behind schedule
12. Estimate at Completion (EAC)
EAC is used to forecast the total project budget based on the current project
performance and the remaining work
To get EAC you need to know
Budget at Completion (BAC)
The total amount of the budget for the work
Estimate to Complete (ETC)
The cost estimate for the remaining project work (usually gotten from expert judgment)
Estimate at Completion=Actual Cost + Estimate to Complete
Example: Lets say the
Planned Cost (budgeted) (also known as the Planned Value or BAC ) = $720k
Actual Cost = $600k
Estimate to Complete = $100k
600+100 = 700 as ETC is less than BAC you will most likely be under budget
13. To-Complete Performance Index (TCPI)
TCPI is the projected performance level that the remaining work of the
project must achieve in order to meet the stated financial or scheduled
goals
To-Complete Performance Index =
Budget at Completion (BAC) – Earned Value (EV) Budget at
Completion (BAC) – Actual Cost (AC)
Example:
Planned Cost (budgeted) (also known as the Planned Value or BAC ) = $720k
Actual Cost = $600k
Earned Value = $680k
(720-680) = 40 40/120 = 0.33 the TCPI is less than 1 so future work does not have
(720-600) = 20 to be as efficiently as past performance to meet the planned
schedule
14. Variance Analysis (VA)
Variance Analysis is a comparison of planned results with actual project
results
Most frequently used to examine the project schedule and project budget
15. Variance At Completion (VAC)
Variance At Completion calculates the difference between the budget at
completion and the estimate at completion
Variance At Completion (VAC)= Budget at Completion (BAC)- Estimate at
Completion (EAC)
Example:
Planned Cost (budgeted) (also known as the Planned Value or BAC ) = $720k
Estimate at Completion (EAC)= $100k
720-100= 620 VAC indicates we have a positive number meaning the project was
efficient
16. Final Cost (FC)
Final Cost can be predicted with the following equation
Final Cost (FC)=Budgeted Cost/Cost Performance Index (CPI)
Example:
Planned Cost (budgeted) (also known as the Planned Value or BAC ) = $720k
Cost Performance Index (CPI) = 1.13
720/1.13 = 637.17 meaning the final cost is projected to be $637.17k
17. Final Project Duration
Final Project Duration is how long the project will take at the current level
of effort
Final Project Duration = Planned Project Duration/Schedule Performance
Index (SPI)
Example
Planned Project Duration = 20 months
Duration/Schedule Performance Index (SPI) = 0.94
20/0.94=21.27 months
At the current effort the project will take about 5 to 6 weeks longer to finish
18. What this means
CV = a positive number we will most likely be under budget
CV = a negative number we will most likely be over budget
SV = a positive number we will most likely be ahead of schedule
SV = a negative number we will most likely be behind schedule
SV = zero we are neither ahead nor behind schedule
CPI = more than 1 means your performance is better than expected
CPI = less than 1 means your performance is worse than expected
SPI = more than 1 the project is ahead of schedule
SPI = less than 1 the project is behind schedule
EAC = if less than BAC you will most likely be under budget
EAC = if more than BAC you will most likely be over budget
TCPI = less then 1 future work does not have to be as efficient as past performance to
meet the goal
TCPI = more then 1 future work must be more efficient as past performance to meet the
goal