Earned Value ManagementDrexel University, Goodwin College CT431-120 Project ManagementR. Gottardi, Instructor/Author      ...
Some Definitions• Planned Value, PV (BCWS): the portion  of the approved total cost estimate during  a given period• Actua...
Project Tracking without Earned Value                                         Project Performance                         ...
What’s Missing• Any measure of how much work has been  accomplished• Earned Value: an estimate of the value of  the physic...
How Can We Measure Progress?• % complete of the tasks’ durations• Rate of performance (RP): % complete actual/%  compete p...
Establish Earning RulesRule         Credit at Start         Credit at End0/100                          0%                ...
Earned Value Vs. Planned Value                                      Project Performance                                   ...
Earned Value vs. Actual Cost                                         Project Performance                                  ...
Combine All Variables                                            Project Performance                                      ...
Variance Computations•   Cost Variance (CV)=EV-AC•   Schedule Variance (SV)=EV-PV•   Negative values are unfavorable•   Po...
Performance Indices• Cost Performance Index (CPI)=EV/AC• Schedule Performance Index  (SPI)=EV/PV• <1= unfavorable• >1=favo...
Earned Value• Integrates schedule & cost data• Explains causes of variances• Encourages objective measurement of  progress...
Problem• Given:  • EV = $5,000  • PV = $10,000  • AC = $15,000• Solve:  •   CV =  •   SV =  •   CPI =  •   SPI =          ...
Problem• Given:  • EV = $5,000 = Earned Value  • PV = $10,000  • AC = $15,000• Solve:  •   CV =  •   SV =  •   CPI =  •   ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000  • AC = $15,000• Solve:  •   CV =  •   SV =  •   CPI ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value  • AC = $15,000• Solve:  •   CV =  • ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value =BCWS  • AC = $15,000• Solve:  •   CV...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value =BCWS  • AC = $15,000 = Actual Cost• ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value =BSWS  • AC = $15,000 = Actual Cost• ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value =BSWS  • AC = $15,000 = Actual Cost• ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value =BSWS  • AC = $15,000 = Actual Cost• ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value =BSWS  • AC = $15,000 = Actual Cost• ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value =BSWS  • AC = $15,000 = Actual Cost• ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value =BSWS  • AC = $15,000 = Actual Cost• ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value =BSWS  • AC = $15,000 = Actual Cost• ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value =BSWS  • AC = $15,000 = Actual Cost• ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value =BSWS  • AC = $15,000 = Actual Cost• ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value =BSWS  • AC = $15,000 = Actual Cost• ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value =BSWS  • AC = $15,000 = Actual Cost• ...
Problem• Given:  • EV = $5,000 = Earned Value = BCWP  • PV = $10,000 = Planned Value =BCWS  • AC = $15,000 = Actual Cost• ...
Other Terms & Computations• BAC: Budget at Completion: The  original total budget for a project• EAC: Estimate at Completi...
Earned Value•   Title: Earned Value Management•   Filename: Earned Value Management Lecture 2009eMY31•   Author: Ron Gotta...
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project cost management, earned value management, performance measurement, schedule variance, cost variance, budget

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Earned value management lecture 2009e my31

  1. 1. Earned Value ManagementDrexel University, Goodwin College CT431-120 Project ManagementR. Gottardi, Instructor/Author May 31, 2009
  2. 2. Some Definitions• Planned Value, PV (BCWS): the portion of the approved total cost estimate during a given period• Actual Cost, AC: the total of the direct & indirect costs incurred in accomplishing work on a task or project during a given period 2
  3. 3. Project Tracking without Earned Value Project Performance BCWS Actual Cost 200 180 160 140 120$000 100 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 BCWS 10 20 25 40 62 80 98 125 137 149 160 175 Actual Cost 30 48 52 55 60 65 70 72 Weeks Conclusion: It looks like we are under budget. What’s missing? 3
  4. 4. What’s Missing• Any measure of how much work has been accomplished• Earned Value: an estimate of the value of the physical work actually completed• Can be – currency, e.g., $ – Quantities, e.g., tons, yds3, SF, etc. – Any agreed upon value for the tasks 4
  5. 5. How Can We Measure Progress?• % complete of the tasks’ durations• Rate of performance (RP): % complete actual/% compete planned• Physical quantities (works for some tasks but not others) – Tons of earth moved – Cubic yards of cement poured – Floors completed – Sq ft completed• Let’s use RP because it is common to many tasks & gives us a schedule related measure 5
  6. 6. Establish Earning RulesRule Credit at Start Credit at End0/100 0% 100%50/50 50% 50%25/75 25% 75%20/80 20% 80% Credit means the budgeted cost of work performed is included in the earned value calculation to the extent of the % indicated. 6
  7. 7. Earned Value Vs. Planned Value Project Performance PV(BCWS) EV(BCWP) 200 180 160 140 120$000 Schedule Variance 100 Behind Schedule 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 PV(BCWS) 10 20 25 40 62 80 98 125 137 149 160 175 EV(BCWP) 28 60 62 70 72 80 82 92 Weeks 7
  8. 8. Earned Value vs. Actual Cost Project Performance Actual Cost EV(BCWP) 100 90 Cost Variance ($) 80 Under Budget 70 60$000 50 40 30 20 10 0 1 2 3 4 5 6 7 8 9 10 11 12 Actual Cost 30 48 52 55 60 65 70 72 EV(BCWP) 28 60 62 70 72 80 82 92 Weeks 8
  9. 9. Combine All Variables Project Performance PV(BCWS) AC(Actual Cost) EV(BCWP) 200 180 160 PV 140 120$000 100 EV 80 60 AC 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 PV(BCWS) 10 20 25 40 62 80 98 125 137 149 160 175 AC(Actual Cost) 30 48 52 55 60 65 70 72 EV(BCWP) 28 60 62 70 72 80 82 92 Weeks 9
  10. 10. Variance Computations• Cost Variance (CV)=EV-AC• Schedule Variance (SV)=EV-PV• Negative values are unfavorable• Positive values are favorable 10
  11. 11. Performance Indices• Cost Performance Index (CPI)=EV/AC• Schedule Performance Index (SPI)=EV/PV• <1= unfavorable• >1=favorable 11
  12. 12. Earned Value• Integrates schedule & cost data• Explains causes of variances• Encourages objective measurement of progress• Measures performance 12
  13. 13. Problem• Given: • EV = $5,000 • PV = $10,000 • AC = $15,000• Solve: • CV = • SV = • CPI = • SPI = 13
  14. 14. Problem• Given: • EV = $5,000 = Earned Value • PV = $10,000 • AC = $15,000• Solve: • CV = • SV = • CPI = • SPI 14
  15. 15. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 • AC = $15,000• Solve: • CV = • SV = • CPI = • SPI = 15
  16. 16. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value • AC = $15,000• Solve: • CV = • SV = • CPI = • SPI = 16
  17. 17. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BCWS • AC = $15,000• Solve: • CV = • SV = • CPI = • SPI = 17
  18. 18. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BCWS • AC = $15,000 = Actual Cost• Solve: • CV = • SV = • CPI = • SPI = 18
  19. 19. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost• Solve: • CV = EV-AC • SV = • CPI = • SPI = 19
  20. 20. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost• Solve: • CV = EV-AC = 5,000-15,000 • SV = • CPI = • SPI = 20
  21. 21. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost• Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = • CPI = • SPI = 21
  22. 22. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost• Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV • CPI = • SPI = 22
  23. 23. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost• Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 • CPI = • SPI = 23
  24. 24. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost• Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 = -5,000 • CPI = • SPI = 24
  25. 25. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost• Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 = -5,000 • CPI = EV/AC • SPI = 25
  26. 26. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost• Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 = -5,000 • CPI = EV/AC = 5,000/15,000 • SPI = 26
  27. 27. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost• Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 = -5,000 • CPI = EV/AC = 5,000/15,000 = .33 • SPI = 27
  28. 28. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost• Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 = -5,000 • CPI = EV/AC = 5,000/15,000 = .33 • SPI = EV/PV 28
  29. 29. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost• Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 = -5,000 • CPI = EV/AC = 5,000/15,000 = .33 • SPI = EV/PV = 5,000/10,000 29
  30. 30. Problem• Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BCWS • AC = $15,000 = Actual Cost• Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 = -5,000 • CPI = EV/AC = 5,000/15,000 = .33 • SPI = EV/PV = 5,000/10,000 = .5 30
  31. 31. Other Terms & Computations• BAC: Budget at Completion: The original total budget for a project• EAC: Estimate at Completion = BAC/CPI (CPI = Cost Performance Index)• ETC: Estimate to Complete: EAC-AC• Variance at Completion: BAC-EAC 31
  32. 32. Earned Value• Title: Earned Value Management• Filename: Earned Value Management Lecture 2009eMY31• Author: Ron Gottardi• Author Affiliation: Drexel University, Goodwin College of Professional Studies• Course: CT431-120 Project management• Date: May 31, 2009• Copyright 2009 Ron Gottardi 32

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