PMIS Course Part 3 – Earned Value Management

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University of Tehran, Project Management Information System (PMIS), Dr. Sasan Hosseyni, xwir@yahoo.com, 2018
University of Tehran
College of Engineering
School of Industrial Engineering
“Master of Science in Engineering” Program
Project Management Information System
PART 3 – Earned Value Management
2018 Fall Semester
Dr. Sasan Hosseyni
XWIR@yahoo.com

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Outlines:
• PART 1 Definitions (IS, PMBOK, PMIS)
• PART 2 PMIS in Practice
• PART 3 Earned Value Management
• PART 4 Business Process Management
• PART 5 Enterprise Resource Planning
• PART 6 Enterprise Architecture (for a Project Based Org.)
• PART 7 Implementation Methodologies
• PART 8 Organizational Change Management
• PART 9 Implementation Critical Success Factors
• PART 10 Academic Researches

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Earned Value Management (EVM) helps project managers to measure
project performance. It is a systematic project management process used to
find variances in projects based on the comparison of worked performed
and work planned.
EVM is used on the cost and schedule control and can be very useful in
project forecasting. The project baseline is an essential component of EVM
and serves as a reference point for all EVM related activities. EVM provides
quantitative data for project decision making. (projectsmart.co.uk, Dwivedi)
Earned Value Management Definition

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Some of the most well known organizations practicing EVM are:
• NASA
• Project Management Institute (PMI)
• Society of Cost Estimating and Analysis
• Defense Acquisition University
• Federal Acquisition Institute
• Acquisition Management (UK)
Earned Value Management Definition

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Schedule % Complete (S%):
Formula: (Data Date – Planned Start Date) / (Planned End Date - Planned Start Date)
If Data date (Time Now)= 3,
then S% = (3-1)/(6-1) = 2/5 = 40%
Day 1 Day 2 Day 3 Day 4 Day 5
1 2 3 4 5 6
Percent Complete

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Activity % Complete (A%): (ACTUAL % Complete)
Duration based:
Formula: (Original Duration – Remaining Duration) / Original Duration
If Data date = 3
If (You estimate that) the remaining duration to complete the work = 4 days
then A% = (5-4)/5 = 1/5 = 20%
For Calculation A% you don’t need to know:
• Activity Actual start date
Percent Complete

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Activity % Complete (A%):
Unit based:
Formula: Actual Units / (Actual Units + Remaining Units)
If Data date = 3
If Actual units (e.g. an earthwork m3) = 100
If (you estimate that) the remaining units to complete the work (e.g. an earthwork m3) = 900
then A% = 100 /(100+900) = 10%
• Remaining duration (needs to complete the remaining work)
Percent Complete

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Activity % Complete (A%):
Physical evidence based:
Based on a mutual agreement between client and contractor:
An example: For preparing a Drawing:
A% = First Issue: 70%, Second Issue: 90%, Final Issue: 100%
• Remaining duration (needs to complete the remaining work)
• Remaining units (need to complete the remaining work) and/or Actual units
Percent Complete

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Main Parameters
WORK
SCHEDULED PERFORMED
COSTS
BUDGETTED
PV
Budgeted Cost for Work
Scheduled (BCWS)
EV
Budgeted Cost for Work
Performed (BCWP)
ACTUAL X
AC
Actual Cost of Work
Performed (ACWP)

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Budget At Completion (BAC)
How much money will need to be spent to complete the project
Planned Value (PV)
OR Budgeted Cost for Work Scheduled (BCWS)
Formula: S% X BAC
The amount expressed in dollar of work to be performed as per the
schedule plan
If BAC = 500,
If Data date = 3
then S% = 40%
then PV = 40% X 500 = 200
Main Parameters

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Earned Value (EV)
OR Budgeted Cost for Work Performed (BCWP)
Formula: A% X BAC
The amount expressed in dollar on the actual worked performed
If BAC = 500
If A% = 20%
then EV = 20% X 500 = 100
Main Parameters

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Actual Cost (AC)
OR Actual Cost of Work Performed (ACWP)
No formula!
The sum of all costs actually accrued for an activity to date
AC = 300
Estimate to Complete (ETC)
Is a forecast of how much more money will need to be spent to complete
the project
Estimate At Completion (EAC)
EAC = AC + ETC (most common way)
Main Parameters

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An s-curve is a mathematical graph or illustration that properly illustrates
the appropriate cumulative data for a project or task. This data can cost, or
man-hours plotted against time.
EXAMPLE:
If Data Date = 9
Project S-Curve
Activity  A B
If BAC 100 700
If Duration 10 14
If Planned Start Date 1 5
If Actual Start Date 3 4
If Activity Percent Complete 90 20
If Actual Cost 120 250

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e.g. for Activity A:
S% = (Data Date – Planned Start Date) / (Planned End Date - Planned Start Date)
= (9-1)/(11-1) = 8/10 = 80%
Also assume that the A% , AC and Activity “Actual Start Date”
are stated by the activity’s work performer
Activity “A” Actual Start Date = 3
Data Date = 9

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For Activity A+ Activity B ?

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Cumulative
e.g. for Activity A:
Activity Duration = 10 Months AND BAC = 100
then PV for each month = 100/10 = 10
(Data Date – Actual Start Date) = (9-3) = 6 Months AND EV = 90
then EV for each month = 90/6 = 15
(Data Date – Actual Start Date) = (9-3) = 6 Months AND AC = 120
then AC for each month = 120/6 = 20
Cumulative
Cumulative

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Cumulative
Next Slide
Cumulative
Cumulative

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S-Curve for Activity A + Activity B

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Interpretation of Results

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Behind schedule
Over Planned Cost
Which means:
Behind schedule
Over Planned Cost
Activities

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Data Date
(Time Now)
AC
PV
EV
Time
Value
EAC
BAC



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Data Date
(Time Now)
AC
PV
EV
Time
Value
EAC
BAC
ETC 
Duration
Slippage 
VAC 

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Data Date
(Time Now)
AC
PV
EV
Time
Value
EAC
BAC
Time Behind 
Pro-Active Approach
Time Behind! 
(Needs a calculation for trend)
This one is my suggestion ;)

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Data Date
(Time Now)
AC
PV
EV
Time
Value
Late PV!
On as late as
possible path!
Schedule Variance (SV)
On Late Path!
Cost Variance
(CV)

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We are not allowed to use the “Late PV” as a base to calculate the delays!
Usually approved baseline will be developed based on Early dates not Late dates
PV includes the Duration Contingency Reserves (not Mgmt Reserves)
The best way to calculate the ETC : Reestimating!
The best way to calculate the EAC : AC + (ETC calculated by reestimating)
The only way to calculate the Duration Slippage of project: Rescheduling!
Do not use some unapproved formulas such as “Remaining time / SPI”! (this formula is one of
the several ways to forecast the completion date of an activity not whole of the project or even
a work package!)
The only way to calculate the Time Behind :
Data Date - The date that (S% = to-date A%)
OR my suggestion: The date that (A% = to-date S%) – Data Date
Attention!

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Data Date
(Time Now)
AC
PV
EV
Time
Value
Replan
(New PV)
Forecast for AC
(rough estimate)
Duration
Slippage
Forecasted
Completion Date
(Accepted by
Project Client)

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Data Date
(Time Now)
AC
PV
EV
Time
Value
Catch up Plan
(New PV on
Catch up path)
Forecast for AC
(rough estimate)

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Reschedule: Scheduling the project on a new Data Date
• Usually every month  to report the project status
Replan: Planning the project again! (to create a new baseline)
• After rescheduling, if Schedule Variance > 25% and/or
project plan is not realistic/applicable anymore
• After replan, the new baseline (New PV) and “forecasted completion date”
should be approved by project client
Catch-up Plan: Replan without change in “Completion Date”
• After replan, the new baseline (New PV) should be approved by project
client
Reschedule Vs. Replan

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SPI Trend
Data Date
0%
100% PV
EV
Alert! - descending for 4 periods
0.6
0.8
1.0
SPI = EV / PV
Safe
Warning
Danger

PMIS Course Part 3 – Earned Value Management

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