Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Project Management Earned Value

4,591 views

Published on

Published in: Economy & Finance, Business

Project Management Earned Value

  1. 1. PROJECT MANAGEMENT Via EARNED VALUE “ A Concept to Measure the Project Performance”
  2. 2. EARNED VALUE: INTRODUCTION 06/04/09 &quot;A method for measuring project performance. It compares the amount of work that was planned with what was actually accomplished to determine if cost and schedule performance is as planned.&quot; - Englert and Associates <ul><li>Money is used as a common parameter of calculating EV </li></ul><ul><li>Money is common to all the projects hence all the projects and their sub-projects can be compared </li></ul><ul><li>Inference can be drawn on Variance from budgeted cost and scheduled activities. </li></ul><ul><li>Results can be obtained very fast, even weekly </li></ul><ul><li>This Concept is useful for taking fast corrective actions </li></ul>
  3. 3. GLOSSARY <ul><li>Budget Cost of Work Scheduled (BCWS): Budget associated with the planned and scheduled activities. </li></ul><ul><li>Actual Cost of Work Performed (ACWP): The actual cost charged to those activities that have been completed </li></ul><ul><li>Budgeted Cost of Work Performed (BCWP): The planed cost of the activities that have been completed, also traditional “EV”. </li></ul>06/04/09 Example: Suppose if an activity was supposed to be completed after a week with an estimated cost of 1 lacs, but actually only 75% of the activity was completed after a week and the money incurred was 90 thousand, then BCWS is 1 lacs, ACWP is 90 thousand and BCWP is 75 thousand
  4. 4. CALCULATION OF EV <ul><li>Steps: </li></ul><ul><li>Establish the work breakdown structure (WBS) that divides the project into its component activities </li></ul><ul><li>Estimate and allocate a cost to each activity </li></ul><ul><li>Schedule the activities over time </li></ul><ul><li>With the time calculate the percentage of the activity completed and its corresponding budgeted cost </li></ul>06/04/09
  5. 5. Measurement of Project Performance From EV Concept <ul><li>Schedule variance (SV): Tells about the activities going on according to the schedule or not. </li></ul><ul><li>SV=EV-BCWS. </li></ul><ul><ul><ul><li>Positive SV means that project is progressing ahead of what was planned. </li></ul></ul></ul><ul><ul><ul><li>Negative SV means that Project is lagging behind the scheduled activities. </li></ul></ul></ul><ul><li>Cost Variance (CV): Provides information about the cost incurred compared to total budget allotted. </li></ul><ul><li>CV=EV-ACWP. </li></ul><ul><ul><ul><li>Positive CV means that Project is well under the budget. </li></ul></ul></ul><ul><ul><ul><li>Negative value of CV means that Project has crossed the budget. </li></ul></ul></ul><ul><li>… .Continued </li></ul>06/04/09
  6. 6. 06/04/09 IILUSTRATION Establish WBS WBS is a hierarchical breakdown of all the work required to achieve the scope of the portion of the objective Schedule variance (SV): Tells about the activities going on according to the schedule or not. SV=EV-BCWS. Cost Variance (CV): Provides information about the cost incurred compared to total budget allotted. CV=EV-ACWP. Actual Cost Activity Progressed Activity 1 Activity 3 Activity 2 Planned Actual Budgeted Cost Planned Schedule Cost Variance Schedule Variance EV
  7. 7. <ul><li>Schedule Performance Index (SPI): Another form of expressing the schedule variance, in a ratio format </li></ul><ul><li>SPI = EV/BCWS </li></ul><ul><ul><ul><ul><li>If SPI>1 then we are ahead of scheduled activities </li></ul></ul></ul></ul><ul><ul><ul><ul><li>If SPI<1 then we are lagging behind from scheduled activities </li></ul></ul></ul></ul><ul><li>Cost performance Index (CPI): Another from of expressing the cost variance, in a ratio format </li></ul><ul><li>CPI = EV/ACWP </li></ul><ul><ul><ul><ul><li>If CPI>1 Project is well under budget </li></ul></ul></ul></ul><ul><ul><ul><ul><li>If CPI<1 Project has crossed the budget already </li></ul></ul></ul></ul><ul><li>Estimate at Completion (EaC): This figure tells us were the project is heading as compared to total budget cost (BaC) </li></ul>06/04/09 or
  8. 8. UNDERSTANDING OF EV <ul><li>Graph of Actual cost incurred Vs Planned Value </li></ul><ul><li>No involvement of EV </li></ul><ul><li>It might appear that first Actual cost crossed the budget and then it came under the budget </li></ul><ul><li>No conclusions can be made as no information is provided regarding schedule of the activities </li></ul>06/04/09 … ..Continued
  9. 9. UNDERSTANDING OF EV <ul><li>Figure 3 depicts graphical representation of CV. When CV is positive, project is well under budget and vice versa. </li></ul><ul><li>These two graphs collectively provide information about the schedule of the activities and the cost incurred. </li></ul>06/04/09 <ul><li>Figure 2 depicts graphical </li></ul><ul><li>representation of SV. When </li></ul><ul><li>SV is positive project is ahead </li></ul><ul><li>in activities and vice versa. </li></ul>
  10. 10. 06/04/09 All cost Data is in INR Example Calculating EV and SV from Daily Progress Report Data of Piling activity PLANNED EXECUTED SV Piles/day Cum. Piles Cum. Cost Piles/day Cum. Piles Cum.Cost 1-June 4 4 260769.2 7 7 420000 159230.7 2-June 4 8 521538.4 6 13 780000 258461.5 3-June 0 0 521538.4 0 13 900000 258461.5 4-June 5 13 782307.6 2 15 1140000 117692.3 5-June 4 17 1043076.9 4 19 1320000 96923 6-June 4 21 1303846.1 3 22 1440000 16153.8 7-June 5 26 1564615.3 2 24 1560000 -124615.38 8-June 4 30 1825384.6 2 26 1680000 -265384.6
  11. 11. <ul><li>Graph 1 Shows BCWS, BCWP and SV </li></ul><ul><li>Target piling is 113 from June and 100 from July, in total 213 piles till 31 st July </li></ul><ul><li>BCWP represent a lag in progress of activity after 7 th June-2007 </li></ul><ul><li>Schedule Variance became negative due to considerable delay in activity </li></ul><ul><li>Red dotted line represent the expected BCWP or EV if work is progressed according to last week </li></ul><ul><li>Expected time of finish would be 10 th June as compared to 31 st July </li></ul><ul><li>Schedule variance slowly reaches to zero from initial negative value </li></ul>Chart 1 Chart 2
  12. 12. CONCLUSION <ul><li>Money turns out be a useful parameter for monitoring the project performance in terms of SV and CV </li></ul><ul><li>Results from EV concepts can be obtained very fast </li></ul><ul><li>EV is useful for taking corrective actions on time </li></ul><ul><li>We can also predict the future completion of the activities with EV </li></ul><ul><li>Not only time but also future expected cost of the activities can be very well predicted </li></ul><ul><li>Step-wise monitoring can also give an experience to plan accordingly for next projects/activities </li></ul>06/04/09
  13. 13. THANK YOU

×