The document discusses Earned Value Analysis (EVA) in construction project management, outlining its role in measuring project health through scope, time, and cost metrics. It explains key concepts such as Planned Value, Earned Value, Actual Cost, and various performance indices (e.g., Cost Performance Index and Schedule Performance Index) that help project managers assess project performance and make informed decisions. Additionally, it provides formulas and examples to illustrate the calculation of these metrics and their implications on project status and budgeting.

1. CHAPTER 4
Earned Value Analysis(EVA)
in construction

2. How is project health measured?
 Project Manager evaluates project’s triple constraint
of scope, time and cost
 Key Questions
– Is the project performing to budget?
– Is the project on schedule to deliver the agreed
scope?
 Typically Summarize Project Health using Green,
Yellow, Red Status (Traffic Light Reporting)

3. CONT’D….
 Earned value analysis in its various forms is the most
commonly used method of performance measurement.
 Earned Value Analysis is an objective method to measure
project performance in terms of scope, time and cost
 integrates scope, cost (or resource), and schedule measures to
help the project management team assess project performance.
 Use EVA metrics are used to measure project health and
project performance
3

4. The Earned Value
Concept
• Experienced project managers are familiar with the problems of using
only partial information, such as only costs or time to track the
status of a project.
• To illustrate, half of a project budget may be expended by the mid-
point of the scheduled duration, but only 20% of the work may
be accomplished.
• A monitoring of only time and cost would indicate the project is going
well;
• however, upon completion of the project there would likely be a
cost overrun and a delay in schedule because the measurement of
work was not included in the project control system.

5. The Earned Value
Concept
• Thus, a project manager must develop an integrated cost /
schedule / work system which provides meaningful feedback
during the project rather than afterwards.
• The status of a project can then be determined and
corrective actions taken when corrections can be made
at the least cost.
• It is one thing to meet a project deadline at any cost. It is
another to do it for a reasonable cost.

6. The Earned Value Concept
• Project cost control is concerned with ensuring that projects
stay within their budgets, while getting the work done
on time and at the correct quality.
• A variance is defined as any schedule, technical performance,
or cost deviation from a specific plan. Variances must
be tracked and reported.
• They should be mitigated through corrective actions and not
eliminated through a baseline change unless there is
a good reason.

7. Earned Value Characteristics
How much work did you PLAN to complete? (Planned Value)
How much work did you ACTUALLY complete? (Earned Value)
How much did you spend to complete the work? (Actual Cost)

8. EVA involves in calculating the following key values for each activities :-
1. Planned Value (PV)
 Also known as Budgeted Cost of Work Scheduled (BCWS)
 Is the amount of the task that is supposed to have been completed, in terms of
the task budget.
 is that portion of the approved cost estimate planned to be spent on the activity
during a given period.
PV = Percent Complete (planned) x Task Budget
2. Earned Value (EV)

Also known as Budgeted Cost of Work Performed (BCWP)

Is the amount of the task that is actually completed
EV = Percent Complete (actual) x Task Budget
8

9. Cont’d………
3. Actual Cost (AC)
 Also known as Actual Cost of Work Performed (ACWP)
 Is the actual to-date cost of the task
 is the total of costs incurred in accomplishing work on the
activity during a given period.
4. Schedule Variance (SV)
 tells the amount that the task is ahead or behind schedule
SV = EV – PV or
SV = BCWP-BCWS
If SV is negative, the task is behind schedule.
If SV is zero, the task is on schedule.
If SV is positive, the task is ahead of schedule.
9

10. Cont’d……
5. Schedule Performance Index (SPI)
 Similar to the SV, also indicates ahead or behind schedule
 Gives the project manager a sense of the relative amount of the
variance.
SPI = EV/PV or
SPI= BCWP/BCWS
If SPI < 1, the task is behind schedule
If SPI = 1, the task is on schedule
If SPI > 1, the task is ahead of schedule
10

11. Cont’d…...
6. Cost Variance (CV)
 Similar to the schedule variance, the Cost Variance tells the
project manager how far the task is over or under budget.
CV = EV – AC or
CV = BCWP - ACWP
If CV is negative, the task is over budget
If CV is zero, the project is on budget
If CV is positive, the project is under budget
11

12. Cont’d….
7. Cost Performance Index (CPI)
 Similar to the CV, also indicates over or under budget
 Gives the project manager a sense of the relative amount of the
variance.
CPI = EV/AC or
CPI = BCWP/ACWP
If CPI < 1, the task is over budget
If CPI = 1, the task is on budget
If CPI > 1, the task is under budget
12

13. Cont’d…..
8. Budget at Completion (BAC)
 It is simply the total project budget, which is the aggregate of
all of the task budgets.
BAC = Project Budget
13

14. Cont’d…
9. Estimate at Completion (EAC)
 This value tells the project manager what the overall project
budget will be if everything else went according to plan
 It is the extrapolation of the current project status to the end of
the project
EAC = BAC/CPI
EAC = AC + [(BAC – EV)/(SPI x CPI)]
EAC = AC + ETC 14

15. Cont’d….
10. Estimate to Complete (ETC)
 This value tells the project manager how much money must be
spent from this point forward, to complete the project
 Sometimes the project assumptions have changed and a new
estimate must be produced instead of old performance metrics
assumed.
 The project is expected to continue with the same performance
in the future as the past.
ETC = EAC – AC
ETC = new estimate 15

16. Cont’d…..
11. Variance at Completion (VAC)
 This value tells the project manager the forecasted cost variance
(CV) at the completion of the project.
 It is the extrapolation of the current project status, using the EAC
method chosen.
VAC = BAC – EAC
If VAC is negative, you need that much more money to
complete the project.
If VAC is positive, you will finish the project with that
much of a surplus.
16

17. Cont’d….
12. To Complete Performance Index (TCPI)
 Tells the project manager what CPI would be necessary to finish the project on
budget
 It gives an indication of how much efficiency needs to be found in the
remainder of the project to make up for past negative variances.
 If the project is required to finish within the original budget:
 If the project budget is flexible to accommodate the past variance:
 TCPI < 1 = under budget
 TCPI > 1 = over budget
TCPI = (BAC – EV) / (BAC – AC)
TCPI = (BAC – EV) / (EAC – AC)
17

18. Index Cost (CPI) Schedule (SPI)
>1.00 Under cost Ahead of schedule
=1.00 On cost On schedule
<1.00 Over cost Behind schedule

19. 19
Cost Variance (CV) = BCWP - ACWP
Schedule Variance (SV) = BCWP - BCWS
Cost Performance Index (CPI) = BCWP / ACWP
Schedule Performance Index (SPI)= BCWP / BCWS
Estimate to Completion (ETC) = (BAC -BCWP) / CPI
Estimate at Completion (EAC) = ACWP + ETC
Earned Value Analysis formulas

20. The Comparison between planned and earned values provides
work accomplishment or project performance in terms of cost and
time variances
20
Schedule Performance
Index
Cost Performance Index R
A
T
I
O
BCWS BCWP ACWP
Schedule
Variance
Cost Variance
V
A
R
I
A
N
C
E

21. Example
• A project has been defined that consists of 12 activities (each requires
1 month to complete) for which the estimated costs and duration
shave been defined below.
• The project costs are estimated to be $257,000 (𝐵𝐴𝐶 =sum of
the costs of all activities). The project is scheduled to be completed
in 6 months.
• After 3.5 months, the site work, excavation, foundation, fencing, and
rough electrical work are completed. The framing is one-half
complete, the rough plumbing is three-fourths complete, and the
paving is half complete.
• The incurred costs to date are $152,000. What is the status of this
project in terms of the schedule and the budget?

23. Solution
ACWP  $152, 000 (given)
BCWS  ($22, 000  $30,
000
 $50, 000  $10, 000  $18,
000)
 0.5  ($40, 000  $6, 000  $16, 000) 
$161, 000
BCWP  ($22, 000  $30, 000  $50, 000  $10, 000  $6,
000) 
1
2
 ($40,
000)

3
 (16, 000) 
1
 ($18, 000)  $159,
000
4 2

24. Solution
Pr oject status :
SV  BCWP - BCWS  $159, 000 - $161, 000  - $2,
000
SPI  BCWP / BCWS  $159, 000 / $161, 000  0.99
% SV  100  SV / BCWS  100 ($2, 000 / $161, 000)
 - 1.2% (Slightly behind schedule)
CV  BCWP - ACWP  $159, 000 - $152, 000  $7,
000
CPI  BCWP / ACWP  $159, 000 / $152, 000  1.05
%CV  100  CV / BCWP  100 ($7, 000 / $159, 000)
  4.4% (Below budget)

25. Solution
100%  $159, 000 / $257, 000
100%
PC  BCWP / BAC
 62%
complete
EAC  ACWP  (BAC - BCWP)  $152, 000  ($257, 000 - $159,
000)
 $250, 000
• Although the project is slightly behind schedule, it is performing
under budget.
• The project is currently at the 62 percent completion stage
and is estimated to be
completed for a revised estimated cost of
$250,000, a decrease from the original estimate.

26. Earned value analysis (EVA)
Problem 1
Compute Estimate At Completion (EAC) and Variance At
Completion (VAC) if both SPI and CPI influence the project work
when given variables are:-
Budget At Completion (BAC) = $22,000
Earned Value (EV) = $13,000
Planned Value (PV) = $14,000
Actual Cost (AC) = $15,000
26

27. Example Problem 2
 For the following project calculate SV,CV, SPI and CPI at the
end of second month.
Month 1 2 3 4
Planned value(PV) 1,110,000 600,000 2,500,000 800,000
Earned value(EV) 1,000,000 750,000
Actual cost(AC) 1,250,000 500,000
27

28. Example Problem 3
• You are managing a project which is into six months
of its execution. You are now reviewing the project
status and you have ascertained that project is behind
schedule. The actual cost of Activity A is 2,00,000
and that of Activity B is 1,00,000. The planned value
of these activities are 1,80,000 and 80,000
respectively. The Activity A is 100% complete.
However, Activity B is only 75% complete. Calculate
the schedule performance index(SPI) and cost
performance index (CPI) of the project on the review
date.
28

29. Problem Example 4
 The following bar chart shows the activities to complete a project in six
months (each cell represents 1 month). The total project cost is $1,480.
Activity Cost Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
A $100
B $200
C $60
D $80
E $40
F $150
G $300
H $100
H $50
J $400
29

30. Cont’d…..
After 3 months, Activities A, B, C, E, and half
of F are completed, for a cost of$490.
What is the status of the project in terms of the
budget (over or under) and the schedule (ahead or
behind)? (Give each answer in terms of a percent
variance)
30

31. Problem Example 5
• The following depicts a one-year schedule for a project.
Activity Cost Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
A $50
B $120
C $80
D $200
E $120
F $300
G $60
H $70
J $50
K $60
31

32. Cont’d…..
• After three months on the job (July 1), the contractor concluded
that 20% of Activity F , Activities A, B, and D was 100 %
completed, 80% of Activity C was completed, and 40% of
Activity E was completed. The project has cost the contractor a
total of $535.For this project, using earned value concepts
 determine the schedule variance and the cost variance. State if
the project is over or under budget and if it is ahead of or
behind
schedule.
32

33. Problem example 6
You are building a 4-sided fence. Each side is of equal length and
you estimate that each side will contain the same material and labor
costs as well as take the same amount of time to complete. You
estimate that the project will take 4 days to complete and your
budget, including a contingency reserve is $4,000.
At the end of 3 days, you are asked to prepare an Earned Value
calculation in order to determine how the project is progressing. You
determine that as of the end of day 3, total costs incurred are $3,500.
and 70% of the project is completed.
Determine :-
1. ACWP, BCWP, BCWS, CV, CPI, SV, SPI, EAC, BAC, VAC &
ETC
2. Status of the project
33

34. Problem example 7
Your project is tasked with excavation of 1,000,000
cubic feet of soil. According to the project management
plan you need to excavate 60,000 cubic feet of soil per
week at a cost of $5 per cubic feet. According to the
first month’s progress report the project’s EV was
1,000,000 and the AC was 1,200,000. According to the
second month’s progress report the project’s EV was
2,200,000 and the AC was 4,400,000. After the 3rd
month (12 weeks) you have 250,000 cubic feet of soil
remaining to be excavated and you total cost to date is
4,000,000. Determine the current values for each of the
terms AC, EV, PV, CV, CPI, SV, SPI, EAC, BAC ,VAC
& ETC
34

35. Problem example 8
You are the Program Manager managing the construction of a new airport. Five
project managers are directly reporting to you. Each project manager is
assigned a part of the total scope of works to be executed independently. The
total duration allowed to complete all works is 24 months and the total
approved budget is $10,000,000.
At the end of the first year, you should have completed $6,000,000 worth of
work but the project is only 50% complete. Actual costs reported by each
project manager for the first year are:
 Project manager 1: $200,000
 Project manager 2: $1,200,000
Project manager 3: $1,800,000
Project manager 4: $500,000
Project manager 5: $900,000
Determine the current values for the entire program for each of the terms AC,
EV, PV, CV, CPI, SV, SPI, EAC, BAC ,VAC & ETC
35

36. THANK YOU!
•
ተፈፀመ
•
Thank you very Mach for your
attention and respect over all the
course.