2. Advantages
Earned value analysis is the project
management tool that is used to
measure project progress.
It compares the actual work completed at
any time to the original budget and
schedule.
It forecasts the final budget and schedule
and analyzes the path to get there.
It gives you the essential early warning
signal that things are going awry (wrong).
2
3. Terms Used
1.Planned Value (PV)
Planned Value, also known as Budgeted Cost of
Work Scheduled (BCWS), is defined as the amount
of the task that is supposed to have been
completed.
It is in monetary terms as a portion of the task
budget.
2.Earned Value (EV)
Earned Value, also known as Budgeted Cost of Work
Performed (BCWP), is the amount of the task that is
actually complete.
It is, again, in monetary terms as a portion of the
task budget.
3
4. 3. Actual Cost (AC):
The Actual Cost, also known as Actual
Cost of Work Performed (ACWP), as you
might guess, is the actual cost of the
work.
Generally employee hours need to be
converted into a cost, and all project
costs need to be added up, such as the
labour cost, material cost , equipment
cost etc.
4
5. Indicators
1.Schedule Variance (SV)
The Schedule Variance represents the schedule status of
the project.
SV = EV – PV
2.Cost Variance (CV)
The Cost Variance represents the cost status of the
project.
CV = EV – AC
SV and CV are the minimum requirement and work well
for small projects, there are other variables that are
derived from them which you might want to calculate:
5
6. Other status indicators
Schedule Performance Index (SPI): The
schedule variance expressed in percentage
terms,
for example, SPI = 0.8 means the project 20%
behind schedule.
SPI = EV / PV
Cost Performance Index (CPI): The cost
variance expressed in percentage terms,
for example, CPI = 0.9 means the project is 10%
over budget.
CPI = EV / AC
6
7. Interpretations
The first two calculations (SV and CV)
give you the basic indicator of project
progress.
A negative value indicates an
undesirable situation.
If the schedule variance (SV) is
negative, you are behind schedule.
If the cost variance (CV) is negative,
you are over budget.
7
8. :
Interpretation of CPI and SPI
You interpret CPI results as below:
CPI less than 1.0 indicates the project is
overspending funds.
CPI equals 1.0 than the project is on target.
CPI greater than 1.0 says the project is under
budget.
You interpret SPI results as below:
SPI less than 1.0 indicates the project is behind the
schedule
SPI equals 1.0 than the project is as per schedule .
SPI greater than 1.0 says the project is ahead the
schedule.
8
10. Que. It was supposed to complete 5 cubic
meter excavation in eight hrs. Review was taken
after 6 hrs., it was expected to complete 75 %
after 6 hrs. but actually work completed is 60 % .
The actual cost spent to complete the work is
Rs.13,000/- assume the cost require to
excavate one cubic meter per hour is Rs.500.
Calculate the different indices and interpret the
result obtained.
Ans: From the given Data:
Task Excavation budget=5 x 500 x 8= Rs.20,000/-
PV=75/100 x20,000=15,000/-
EV=60/100 x 20,000=12,000/-
AC=Rs.13,000/-
Example
10
12. Interpretation of results
First two indicators:
CV=Cost variance negative it means the
activity excavation is over the budget.
SV= Schedule variance is also negative
indicates that activity excavation is
behind the schedule.
Indicators third and fourth:
SPI is 0.75 (less than 1), indicates that the
excavation is 25 % behind than the
schedule and
CPI found 0.92(less than 1),indicates its
over budget by 8%.
12
