project control using earned value analysis - Part 01 waleed hamdy
Project control using earned value analysis - Part 01
Mission of the projects control division
Why the earned value management?
Establishment of the Performance Measurement Baseline
EVM Analysis & Forecasting
Earned Value Management is an important topic for PMP and PMI ACP Exam. Since the questions related with Earned Value Management are based on formulas so with practice, these concepts can be mastered and these questions can be answered confidently in the exam.
project control using earned value analysis - Part 01 waleed hamdy
Project control using earned value analysis - Part 01
Mission of the projects control division
Why the earned value management?
Establishment of the Performance Measurement Baseline
EVM Analysis & Forecasting
Earned Value Management is an important topic for PMP and PMI ACP Exam. Since the questions related with Earned Value Management are based on formulas so with practice, these concepts can be mastered and these questions can be answered confidently in the exam.
This lecture provides a short but comprehensive review of earned value analysis and how this technique helps us to determined the project financial and schedule situation.
Earned Value Management - Quantifiable project metrics for learning the current state of a project.
Examples and Value Definitions for EVM in relation to project management.
https://agile-mercurial.com
https://twentyfirstcenturyworkforce.com/
Abstract— Execution of engineering projects are tracked against critical metrics such as safety, quality,
delivery cost and inventory. Earned value is a key parameter that helps in assessing delivery (schedule) and cost.
Static shows that 70% of projects are over budget behind schedule, 52% of all projects finish at 189% of their
initial budget and some, after huge investments of time and money, are simply never completed. The rest of this
paper gives a perspective on monitoring project health by Earned value analysis.
Earned value management (EVM) is a methodology that combines scope, schedule, and resource measurements to assess project performance and progress.
It is a commonly used method of performance measurement for projects.
It integrates the scope baseline with the cost baseline, along with the schedule baseline, to form the performance baseline, which helps the project management team assess and measure project performance and progress
By Er.Nikhil Raj, Senior Planning Enginner, Navig Solution Pvt Ltd
Introduction
Overview of Key Performance Indicators ( KPI )
What Is The Earned Value Management ?
Why Project Managers Use EVM ?
Earned Value Management Terms and Formulas
Planned value (PV)
Earned value (EV)
Actual cost (AC)
Variance
Schedule Variance ( SV )
Cost Variance ( CV )
Performance Index
Schedule Performance Index (SPI)
Cost Performance Index (CPI)
Example ( Case Study )
Project Forecasting
Budget at Completion (BAC)
Estimate at Completion (EAC)
Estimate to Complete (ETC).
Variance at Completion (VAC)
To Complete Performance Index (TCPI)
This lecture provides a short but comprehensive review of earned value analysis and how this technique helps us to determined the project financial and schedule situation.
Earned Value Management - Quantifiable project metrics for learning the current state of a project.
Examples and Value Definitions for EVM in relation to project management.
https://agile-mercurial.com
https://twentyfirstcenturyworkforce.com/
Abstract— Execution of engineering projects are tracked against critical metrics such as safety, quality,
delivery cost and inventory. Earned value is a key parameter that helps in assessing delivery (schedule) and cost.
Static shows that 70% of projects are over budget behind schedule, 52% of all projects finish at 189% of their
initial budget and some, after huge investments of time and money, are simply never completed. The rest of this
paper gives a perspective on monitoring project health by Earned value analysis.
Earned value management (EVM) is a methodology that combines scope, schedule, and resource measurements to assess project performance and progress.
It is a commonly used method of performance measurement for projects.
It integrates the scope baseline with the cost baseline, along with the schedule baseline, to form the performance baseline, which helps the project management team assess and measure project performance and progress
By Er.Nikhil Raj, Senior Planning Enginner, Navig Solution Pvt Ltd
Introduction
Overview of Key Performance Indicators ( KPI )
What Is The Earned Value Management ?
Why Project Managers Use EVM ?
Earned Value Management Terms and Formulas
Planned value (PV)
Earned value (EV)
Actual cost (AC)
Variance
Schedule Variance ( SV )
Cost Variance ( CV )
Performance Index
Schedule Performance Index (SPI)
Cost Performance Index (CPI)
Example ( Case Study )
Project Forecasting
Budget at Completion (BAC)
Estimate at Completion (EAC)
Estimate to Complete (ETC).
Variance at Completion (VAC)
To Complete Performance Index (TCPI)
Deanna Spiedel, Tracy Wilson and Margaret Campbell spoke to SIAST instructors about Communication in the Classroom. The 7 Cs of Communication and the four communication styles were discussed.
Earned Value AnalysisTracking Project ProgressWh.docxsagarlesley
Earned Value Analysis
Tracking Project Progress
What Is Earned Value?The dollar amount you planned to spend for the work actually completed
Earned Value is the budgeted cost of the work that has actually been performed/completed
Earned Value = Budgeted Cost of the Work Performed (BCWP)
What Is Earned Value Analysis (EVA)?
EVA enables the project progress to be tracked in terms of:
The work that has actually been completed
--- Compared To ---
The work that was scheduled to be completed
Why Is Earned Value Analysis Important?EVA enables the project team to know:If the project is ahead of, or behind schedule
How far the project is ahead of, or behind schedule
If the project is over or under budget
How much the project is over or under budget
Why Is Earned Value Analysis Important?EVA enables the team to address the project’s triple constraints earlier rather than later Scope – re-prioritize/reduce requirements
--- and/or ---
Schedule – adjust the timeline
--- and/or ---
Cost – request additional funding
The Components of Earned Value Analysis WBS – Work Breakdown StructureIdentifies products to be delivered by the project Products or sub-products should be broken down to what can be completed in 80 hours (“80-hour rule”), when applicable
Provides the basis for Distinct products or sub-products – which help to provideValid estimates – which enableTracking earned value / project progress
The Components of Earned Value Analysis Earned Value (EV) ---- or BCWPThe budgeted cost of the work actually performed How much work was actually completed
Planned Value (PV) ---- or BCWSThe budgeted cost of the work scheduled to be performed How much work should have been completed
Actual Cost (AC) ------- or ACWPThe actual cost of the work performedHow much money has been actually spent
The Components of Earned Value AnalysisBudget at Completion (BAC)Dollar amount originally budgeted to complete the project
Estimate at Completion (EAC)Estimate of dollar amount needed to complete the project
Variance at Completion (VAC)Estimate of the dollar amount projected above or below budget
Schedule at Completion (SAC)Projection of the time needed to complete the project
The Components of Earned Value Analysis
Schedule Variance (SV)The work completed vs. the work planned to be completed
SV = (Earned Value – Planned Value)
Tells us if the project is ahead of, or behind schedule
Negative value means the project is behind schedule
The Components of Earned ValueSchedule Performance Index (SPI)Utilized to forecast how long it will take to complete the project
SPI = (Earned Value / Planned Value)
Tells us if the project is ahead of, or behind schedule
Less than 1.00 means the project is behind schedule
The Components of Earned Value
Cost Variance (CV)What we planned to spend on the work completed vs. what was actually spent on the work completed
CV = (Earned Value – Actual Cost)
Tells us if the project is over or under budget ...
Did you ever stop to think that your projects, or rather the wat your organization is running your projects, are stealing money from your organization's bottom line? If your organization's projects are consistently running behind schedule, having issues, are undergoing numerous changes in scope, or if your project team is spending time fixing defects, this is exactly what's happening to your organization.
Earned Value Probabilistic Forecasting Using Monte Carlo SimulationRicardo Viana Vargas
The aim of this article is to present a proposal of interconnection between models and probabilistic simulations of project as possible ways to determine EAC (Final cost) through Earned Value Analysis. The article proves that the use of the 3 main models of projection (constant index, CPI and SCI) as the basis of a triangular probabilistic distribution that, through Monte Carlo simulation will permit associate and determine the probability according to the accomplishment of budgets and costs of the project.
Develop a network schedule for your project using either the arrow.docxkhenry4
Develop a network schedule for your project using either the arrow diagramming method or the precedence method. Also, your project schedule should illustrate float/slack for each activity.
Table 1.1. Project Tasks details
Activity
Predecessor
Anticipated Resources
Added Resources
Duration
Early start date
A (Retirement and social security benefits)
None
$126
$50
One year
1/1/2019
B (Audit & risk evaluation)
A
$118
$25
11 months
2/1/2019
C (Equipment Maintenance)
B
$121
$30
8 months
2/1/2019
D (Training & Development)
A, B
$109
$25
One year
1/2/2019
E (Logistics, appraisals & rewards)
D, C
$118
$30
One year
1/2/2019
Precedence Diagramming Method:
ES
Duration
EF
Activity Legend
LS
Float/slack
LF
LS= Late start Dependency
LF= Late Finish
ES= Early start
EF= Early finish
F= Float/Slack
08/09/2019
1 year 7 months
03/04/2021
Activity B Audit & Risk Evaluation
12/19/2020
2 months
Resources=$25
03/04/2021
07/25/2019
11 months
06/22/2020
Activity C Equipment & Maintenance
08/1/2019
4 months
Resources=$30
12/22/2020
12/27/2019
8 months
08/05//2020
Activity A Retirement & social security
Resources =$50
03/05/2020
3 days
03/8/2020
07/31/2019
2 months
09/23/2019
Activity E Logistics, Appraisals & Rewards
08/10/2019
2 days
Resources=$30
08/12/2019
03/22/2019
1 month
04/09/2019
Activity D Training & Development
03/22/19
5 days
Resources =$25
03/28/2019
5 Activities with 6 dependencies
Running head: EVM PAPER 1
EVM PAPER 1
EVM Paper
Mary Krenisky
Joe Scott
BUS 419
August 27, 2018
EVM Paper
In the current project, additional resources are added at in each work activity to complete the work packages in a quickly. The resources are added to these activities to reduce the slack that may originate if the project is accomplished based on planned resources only. An earned value analysis has to be performed to keep track of a project’s performance. This type of assessment gives a general review about the performance of a project along the chosen course. It has been noted that after adding more resources for the achievement of the ventures successfully, the slack time has been decreased and the work is going on faster than planned.
Earned value management is employed in different forms to determine the performance of the projects. By using this technique, the cost, schedule and, scope of the project are integrated that in turn aids the team of project administration to calculate and evaluate fulfillment and growth of the plan (Usmani, n.d.). The measurements of earned value are utilized by all managers of the projects. There are three main components of earned value management which are
• Actual cost
• Earned value
• Planned value
Planned value
It is the value of a task to be accomplished in a specified time. Overall planned value is known as ‘Budget at completion.’ Planned value also acts as a project’s baseline (Usmani, n.d.).
Actual cost
Actual cost denotes the quantity of money which is i.
1. What is earned value analysis?
At the root of earned value analysis are three fundamental values calculated for each task:
The budgeted cost of tasks as scheduled in the project plan, based on the costs of resources assigned to those tasks, plus any fixed
costs associated with the tasks. Called "the budgeted cost of work scheduled," BCWS is the baseline cost up to the status date you
choose. For example, the total planned budget for a 4-day task is $100 and it starts on a Monday. If the status date is set to the
following Wednesday, the BCWS is $75.
The actual cost required to complete all or some portion of the tasks, up to the status date. This is the actual cost of work performed
(ACWP). For example, if the 4-day task actually incurs a total cost of $35 during each of the first 2 days, the ACWP for this period is $70
(but the BCWS is still $75).
The value of the work performed by the status date, measured in currency. This is literally the value earned by the work performed and
is called the budgeted cost of work performed (BCWP). For example, if after 2 days 60% percent of the work on a task has been
completed, you might expect to have spent 60 percent of the total task budget, or $60.
With me, so far? Let's go on.
Earned value analysis is always specific to a status date you choose. You may select the current date, a date in the past, or a date in the
future. Most of the time, you'll set the status date to the date you last updated project progress. For example, if the current day is
Tuesday, 9/12, but the project was last updated with progress on Friday, 9/8, you'd set the status date to Friday, 9/8.
Here is one example of how to analyze project performance with earned value analysis. Let's say a task has a budgeted cost (B CWS) of
$100, and by the status date it is 40 percent complete. The earned value (BCWP) is $40, but the scheduled value (BCWS) at the status
date is $50. This tells you that the task is behind schedule—less value has been earned than was planned. Let's also say that the task's
actual cost (ACWP) at the status date is $60, perhaps because a more expensive resource was assigned to the task. This tells you that the
task is also over budget—more cost has been incurred than was planned. You can see how powerful such an analysis can be. The earlier
in a project's life cycle you identify such discrepancies between ACWP, BCWP and BCWS, the sooner you can take steps to remedy the
problem.
One common way of visualizing the key values of earned value analysis is to use a chart. Start with a simple chart showing a steady
accumulation of cost over the lifetime of a project:
The vertical y-axis shows the projected cumulative cost for a project.
The horizontal x-axis shows time.
The planned budget for this project shows a steady expenditure over the lifetime of the project. This line represents the cumulative
baseline cost.
After work on the project has begun, a chart of the key values of earned value analysis may look like this:
2. The status date determines the values Project calculates.
The actual cost (ACWP) of this project has exceeded the budgeted cost.
The earned value (BCWP) reflects the true value of the work performed. In this case, the value of the work performed is less than the
amount spent to perform that work.
What else does earned value measure?
In addition to measuring BCWS, ACWP, and BCWP, earned value analysis measures:
Cost variance (CV)—the difference between a task's estimated cost and its actual cost (the formula CV = BCWP - ACWP). Take our
earlier example where the total planned budget for a 4-day task is $100 and it starts on a Monday. When the status date is set to the
following Wednesday, the BCWS is $75, the ACWP for this period is $70, and the BCWP is $60. In that case, the task's CV is -$10.
Schedule variance (SV)—the difference between the current progress and the scheduled progress of a task, in terms of cost (the formula
SV = BCWP - BCWS). In the example above, the task's SV is -$15.
The cost performance index (CPI)—the ratio of budgeted costs to actual costs (the formula CPI = BCWP / ACWP). In the example above,
the task's CPI is about .86, or 86 percent.
The schedule performance index (SPI)—the ratio of work performed to work scheduled (the formula SPI = BCWP / BCWS). In the
example above, the task's SPI is .80, or 80 percent.
The to complete performance index (TCPI)—the ratio of the work remaining to be done to funds remaining to be spent as of the status
date, or budget at completion (the formula TCPI = [BAC - BCWP] / [BAC - ACWP]).
How do I interpret earned value?
Earned value indicators that are variances or ratios can help you determine if there is enough money left in the budget and if the project
will finish on time.
Variances, such as a cost variance (CV), can be either positive or negative:
A positive variance indicates that the project is ahead of schedule or under budget. Positive variances might enable you to reallocate
money and resources from tasks or projects with positive variances to tasks or projects with negative variances.
A negative variance indicates that the project is behind schedule or over budget and you need to take action. If a task or project has a
negative CV, you might have to increase your budget or accept reduced profit margins.
Ratios, such as the cost performance index (CPI) and the schedule performance index (SPI), can be greater than 1 or less than 1:
A value that's greater than 1 indicates that the project is ahead of schedule or under budget.
A value that's less than 1 indicates that you're behind schedule or over budget. For example, an SPI of 1.5 means that you've taken only
67 percent of the planned time to complete a portion of a task in a given time period, and a CPI of 0.8 means that you've spent
25 percent more time on a task than was planned.
3. How does % complete versus physical % complete
affect earned value?
You can specify whether Project should use each task's percent complete value or physical percent complete value for earned value
calculations related to BCWP. (Remember, other values are calculated from BCWP, so your decision affects the entire earned value
analysis.)
Percent complete may be calculated by Project or entered directly by you, depending on how you track actual work.
Physical percent complete is always entered directly by you. Use physical percent complete when percent complete would not be an
accurate measure of real work performed or remaining.
Here's a simple example of how the two values may differ: a project of building a stone wall that consists of 100 stones stacked 5 high.
The first row of 20 stones can be laid in 20 minutes, but the second row would take 25 minutes because you have to lift the stones up
one row higher, so it takes a little longer. The third row would take 30 minutes, the fourth 35 minutes, and the last row would take
40 minutes to lay—150 minutes total. After laying the first three rows, the project could be said to be 60 percent physically complete
(you laid 60 of 100 stones). However, you only spent 75 of 150 minutes; so in terms of duration, the job is only 50 percent complete.
Depending on how you get paid for the work—how the value is earned (by the stone or by the hour)—you may choose the percent
complete value or the physical percent complete value to properly reflect this in the earned value analysis.
Which earned value quantities can I show or
calculate in Project?
With Project, you can show:
Actual cost of work performed (ACWP) shows actual costs incurred for work already performed by a resource on a task, up to the
project status date or today's date. Normally Project correlates actual costs with actual work. Only if you enter actual costs independent
of actual work or change resource pay rates will actual cost be out of step with scheduled cost.
Budget at completion (BAC) shows an estimate of the total project cost.
Budgeted cost of work performed (BCWP) shows how much of the budget should have been spent given the actual duration of the task.
BCWP is also referred to as "earned value." Note that Project calculates BCWP at the task level differently than it does at the assignment
level. For best results, use the task-level BCWP values, which are the values Project rolls up to summary task and the project summary
task BCWP values. This value is calculated for each individual task but analyzed at an aggregate level (typically at the project level).
Budgeted cost of work scheduled (BCWS) shows how much of the budget should have been spent in view of the baseline cost of the
task, assignment, or resource. BCWS is calculated as the cumulative timephased baseline costs up to the status date or today's date.
(Budgeted cost values are stored in the baseline fields, or if you've saved multiple baselines, in fields Baseline1 through Baseline10.)
Cost variance (CV) shows the difference between the budgeted cost of work performed (BCWP) on a task and its actual cost (actual cost
of work performed or ACWP). If the CV is positive, the cost is currently under the budgeted (or baseline) amount; if the CV is negative,
the task is currently over budget.
Schedule variance (SV) shows the difference between the budgeted cost of work performed (BCWP) and the budgeted cost of work
scheduled (BCWS). If the SV is positive, the project is ahead of schedule in cost terms; if the SV is negative, the project is behind
schedule in cost terms.
Variance at completion (VAC) shows the difference between the budget at completion (BAC) and the estimate at completion (EAC). In
Project, the EAC is the Total Cost field and the BAC is the Baseline Cost field from the associated baseline.
Cost performance index (CPI) is the ratio of budgeted, or baseline, costs of work performed to actual costs of work performed
(BCWP/ACWP).
Cumulative cost performance index (CPI) is the sum of the BCWP for all tasks divided by the sum of the actual costs of work performed
(ACWP) for all tasks. Cumulative CPI is often used to predict whether a project will go over budget and by how much.
Schedule performance index (SPI) is the ratio of work performed to work scheduled (BCWP/BCWS). SPI is often used to estimate the
project completion date.
Estimate at completion (EAC) is the expected total cost of a task or project, based on performance as of the status date. EAC is also
called forecast at completion, and is calculated like this: EAC = ACWP + (BAC - BCWP) / CPI.
To complete performance index (TCPI) is the ratio of remaining available budget to be spent to the remaining scheduled cost as of the
status date. TCPI is calculated like this: TCPI = (BAC - BCWP) / (BAC - ACWP). A TCPI value greater than 1 indicates good projected
performance for remaining work; less than 1 indicates poor projected performance.
4. Where in Project do I see earned value data?
You can see earned value information in any sheet view by applying the Earned Value table or the Earned Value Cost Indicators table.
The Earned Value table shows you BCWS, BCWP, ACWP, SV, CV, EAC, BAC, and VAC. Use this table to see consolidated earned value
information, including the key variance fields. Use EAC, BAC, and VAC to evaluate the difference between your scheduled and budgeted
costs. Compare CV, which shows the difference between your budgeted and actual cost?of work, with SV, which shows the difference
between the budgeted cost of work and the actual cost of work.
The Earned Value Cost Indicators table shows you BCWS, BCWP, CV, CV%, CPI, BAC, EAC, VAC, and TCPI. Use this table to analyze cost
variances. Check the CPI and TCPI to see how the project is progressing against its budget and how the rate of work compares with the
expected rate. If CPI is less than than 1, you are getting less work per dollar than planned. The TCPI tells you how much of an increase in
performance you'll need on the remaining tasks in order to keep within budget.