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t/ Tasks

Contra

**Presenting Earned Value
**

Ear ned Budget Spendin g

Successfully

Totals

for Pro ject

Oct obe

r

Task 1 Task 1-A Task 1-B

2002 Nov em ber

Summa ry

Decem

Progra m Revie w

ber Budget $4,025.0 0 $950.00 $300.00 $400.00 $250.00 $1,300.0 0 $725.00 ACWP Spe ndi ng $1,375.0 0 $725.00 $743.50 $200.00 $235.71 $350.00 $321.74 $175.00 $186.05 $500.00 $836.56 $200.00 $483.33 $100.00 $109.29 $200.00 $243.94 BCW Ear ned P Value $2,585.6 2

Status

PRCNT CMPLT 64.2% 78.3% 78.6% 80.4% 74.4% 64.4% 66.7% 48.6% 69.7%

Task 1-C

Task 2 Task 2-A

Task 2-B

Task 2-C

Value $4,000.0 0 $3,000.0 0 $2,000.0 0 $1,000.0 0 $0.00

$225.00 $350.00

**Review mance 2002 Perfor ril
**

t/ Projec Tasks

March Ap

May .00 $3, 000 Bu dge t

Total t Budge

**BCWP ACWP Value ing E BCWS Spend
**

$1, 740 $300 $400 $128 $456 $189 $159 $107 $1, 575 $350 $400 $175 $200 $100 $200 $150

Contrac ts review: 11-30-02 Sign Off: ______ ______ SV _____ PRCNT

CV $431 ($50)

CPI 1.27

SPI 1.15 1.00 1.00 1.09 1.24 1.12 1.40 1.57

**CMPLT 67. 4% 100.0% 100.0% 55. 8% 77. 8% 52. 6% 63. 6% 30. 6%
**

Program

$267 $0 $0

$2, 005 $300 $400 $140 $564

0.86 1.00 0.80

$2, 975 $300 $400

$0 ($35) $364 $111

**ABC Project Task 1 Task 2 Task 3 Task 4 Task 5 Task 6 Task 7
**

BCWP

.00 $2, 500

$12 $108 $22

2.82 2.11 1.12

.00 $2, 000

$250 $725 $400 $350

.00 $1, 500 BCWS ACWP .00 $1, 000 0 $500.0

$211 $223 $168

$64 $61

$23 $18

1.12

**$550 $0. 00 BCWS BCWP t Budge ACWP
**

Sum mar y d Task

Review ve 1.3

CPI from 1 to 1.3 w1 CPI belo

Stat us Incomple te Task

CPI abo

Com plete

Your guide to Earned Value Management

**What is Earned Value Management?
**

Earned Value Management (EVM) is a project management system that combines schedule performance and cost performance to answer the question, “What did we get for the money we spent?” Basic concepts of EVM: • • • All project steps “earn” value as work is completed. The Earned Value (EV) can then be compared to actual costs and planned costs to determine project performance and predict future performance trends. Physical progress is measured in dollars, so schedule performance and cost performance can be analyzed in the same terms.

Earned Value has been used since the 1960’s by the Department of Defense as a central part of the C/SCSC (Cost/Schedule Control Systems Criteria). Recently, the DOD revised the 35 criteria contained in the C/SCSC and produced the 32 criteria for EVMS (Earned Value Management Systems). These criteria have since been accepted by the American National Standards Institute/ Electronic Industry Association as a new standard, called ANSI/EIA 748. Now, EVM is being used in a wider variety of government contracts, and is spreading through the private sector as a valuable tool for project managers.

Successfully

Presenting Earned Value

page 2

**What are the beneﬁts of using Earned Value Management?
**

In a typical spend plan analysis, physical progress is not taken into account when analyzing cost performance. Instead, a project’s actual costs to date are simply compared to planned costs, often with misleading results. Example: A task has a planned value (PV) of $1000, and actual costs (AC) of $1000. It appears this task has perfect cost performance, and is in good shape to ﬁnish on-budget (Figure 1). However, if physical progress is taken into account, the results may differ.

March April May

$3,000.00

Budget-at-Completion

$2,500.00

$2,000.00

Planned Value = $1000

$1,500.00

$1,000.00

**Actual Costs = $1000
**

2002

March April May $3,000.00

$500.00

$0.00 Budget AC

$2,500.00

Actual Costs = $1000 Planned Value = $1000

$2,000.00

Figure 1

$1,500.00

$1,000.00

Earned Value = $750

$500.00

In Figure 2, the project has spent $1000 in actual costs but has only achieved $750 of Earned Value. This is called a cost overrun, and this project would have a Cost Variance (CV) of -$250.

$0.00 EV Budget AC

Figure 2

From this example, we can see that EVM expands on the two-dimensional analysis– “Has this project spent more or less money than planned?”– by adding the third dimension– “What did we get for the money we spent?”

Successfully

Presenting Earned Value

page 3

**Building Blocks of Earned Value Analysis
**

In addition to more accurate project status assessment, EVM makes it easy for a project manager to analyze both schedule and cost performance in a variety of ways. Using a limited set of basic task information, it is possible not only to determine how a project has been performing, but to predict future performance trends as well. Basis for Earned Value Analysis: • • • Budget at Completion (BAC) = Overall approved budget for a task. Actual Costs (AC) = Total amount spent on a task up to the current date. Percent Complete = Task progress, related as either EV/BAC, or simply physical progress shown by the ﬁll of the task bar.

Contract Review

Earned Value Report

Project / Tasks

Totals for Project Task 1 Task 1-A Task 1-B Task 1-C

2002 October November December

$4,000.00

BAC

$4,025.0 $950.0 $300.0 $400.0 $250.0

AC

$1,375.00 $725.00 $200.00 $350.00 $175.00

% Complete 63.7% 78.3% 78.6% 80.4% 74.4%

Once these three measurements have been established, the following calculations can be performed: • • Earned Value (EV) = BAC x Percent Complete. The budgeted cost of completed work as of the current date. Planned Value (PV) = The point along the time-phased budget that crosses the current date. Shows the budgeted cost of scheduled work as of the current date.

Successfully

Presenting Earned Value

page 4

**Building Blocks of Earned Value Analysis
**

Project / Tasks

Totals for Project Task 1 Task 1-A Task 1-B Task 1-C

October

1 2 3 4 5 6

November

7 8 9 10

December

11 12 13 14

% 64% 78% 79% 80% 74%

BAC

$4,025 $950 $300 $400 $250

**Actual Earned Planned Value Costs Value
**

$1,375 $725 $200 $350 $175 $2,564 $743 $236 $322 $186 $2,780 $783 $246 $339 $198

**View detailed EVM data in actual dollars as part of a presentation schedule...
**

October November December

DATE LINE

BAC

$4,000.00

$3,500.00

$3,000.00

PV

$2,500.00

...or use an easy-to-read DataGraph for at-a-glance visual analysis of project trends.

EV

$2,000.00

$1,500.00

$1,000.00

AC

$500.00

$0.00 Earned Value Budget Actual Costs Planned Value

Summary

Program Review

Status

Successfully

Presenting Earned Value

page 5

**Performance Indices and Variance
**

Once Earned Value and Planned Value are known, they can then be used to determine schedule and cost variance, and calculate performance efﬁciency. • Schedule Variance (SV) = Earned Value – Planned Value. The difference between what was planned to be completed and what has actually been completed as of the current date. Cost Variance (CV) = Earned Value – Actual Costs. The difference between the work that has been accomplished (in dollars) and how much was spent to accomplish it.

November December January

•

October

$3,500.00

$3,000.00

Schedule Variance (SV) Cost Variance (CV)

$2,500.00

In Figure 6, the project shown has a negative SV, because it has “earned” less value than was planned, as of the current date. However, it has a positive CV, because the Earned Value is greater than the Actual Costs accrued.

$2,000.00

$1,500.00

$1,000.00

$500.00

$0.00 Planned Value Earned Value BAC Actual Costs

Figure 6

Successfully

Presenting Earned Value

page 6

**Performance Indices and Variance
**

• • Schedule Performance Index (SPI) = Earned Value / Planned Value. Schedule variance related as a ratio instead of a dollar amount. A ratio less than 1 indicates that work is being completed slower than planned. Cost Performance Index (CPI) = Earned Value / Actual Costs. Cost variance related as a ratio instead of a dollar amount. A ratio less than 1 indicates that the value of the work that has been accomplished is less than the amount of money spent.

Performance Review

Tasks

Project A BAC

March $850

2004

April May

**Earned Planned Actual Value Value Costs
**

$270 $335 $250

CPI

1.08

SPI

0.81

Task 1

$350

$195

$260

$150

1.30

0.75

Task 2

$500

$75

$75

$100

0.75

1.00

Figure 7

In Figure 7, Project A has a CPI greater than 1.00. This shows us that the project has been earning value faster than it has been accruing costs. However, Project A also has a SPI value that is less than 1.00. Although Actual Costs are low, Task 1 is behind schedule, so the project has not earned as much value as was planned.

Successfully

Presenting Earned Value

page 7

**Forecasting Future Performance Trends
**

The Schedule Performance and Cost Performance Indices not only monitor current project performance, they can also be used to predict future performance trends. • To-Complete Performance Index (TCPI) = (BAC-EV) / (BAC-AC). Indicates the CPI required throughout the remainder of the project to stay within the stated budget. Estimate at Completion (EAC) = AC + ((BAC-EV)/CPI). A forecast of total costs that will be accrued by project completion based on past cost performance trends. Variance at Completion (VAC) = EAC – BAC. The difference between the new Estimate at Completion and the original Budget at Completion.

•

•

Performance Review

Tasks

Project A Task 1 Task 2 Task 3 Task 4 Task 5 Task 6 Task 7 BAC

$2,975.0 $300.0 $400.0 $250.0 $725.0 $400.0 $350.0 $550.0 Planned Value Earned Value Budget Actual Costs

EAC

2,355.70 350.00 440.00 313.09 257.13 189.80 314.66 491.02

VAC

March -619.30 50.00 40.00

2004

April May $3,000.00

AC

$1,615.00 $350.00 $440.00 $2,000.00 $175.00 $1,500.00 $200.00 $1,000.00 $100.00 $200.00 $150.00 $0.00

EV

$2,004.73 $300.00 $400.00 $139.53 $563.89 $210.53 $222.73 $168.06

TCPI

0.71 0.00 0.00 1.47 0.31 0.63 0.85 0.95

CPI

1.24 0.86 0.91 0.80 2.82 2.11 1.11 1.12

$2,500.00

63.09 -467.87 -210.20 -35.34 -58.98

$500.00

Successfully

Presenting Earned Value

page 8

**How do I get started using Earned Value Management?
**

Identify and Organize all Project Steps First, identify all tasks that need to be accomplished and organize the tasks into subgroups (1). Breaking down activities into the smallest possible steps makes it easier to pinpoint schedule and cost performance problems.

2004

March April

5/8

Tasks

Project A

3/10

May

Total Budget

$2,975.0

Task 1 Task 2

$300.0

Task 3 Task 4

(1) (3)

Status Incomplete Task Completed Task

(2)

$400.0

$250.0

$725.0

Task 5 Task 6

$400.0

$350.0

Task 7

$550.0

Started Task

Allocate the Budget and Schedule the Tasks Each activity in the project should have a planned Budget-at-Completion (BAC). All subsequent earned value calculations will be based on this amount (2). In addition to the BAC, each task should also have a speciﬁc duration (3), which provides the basis for monitoring actual costs and physical progress.

Successfully

Presenting Earned Value

page 9

**How do I get started using Earned Value Management?
**

Update Task Status and Enter Actual Costs As the project progresses, the percent complete for unﬁnished tasks should be updated and monitored (4). Earned Value (EV) is determined by relating this physical progress to the BAC. Along with task status and budget, it is necessary to maintain actual costs accrued for each task in order to calculate cost performance (5).

Tasks

Project A Task 1 Task 2 Task 3 Task 4 Task 5 Task 6 Task 7 Status

% Comp. 59% 3/10

2004

March April May

5/8

Total Budget

$2,975.00

AC

$1,575.00

100%

$300.00

(5)

$350.00

100%

$400.00

$400.00

51%

$250.00

$175.00

(4)

78% $725.00 $200.00 47% $400.00 $100.00

73%

$350.00

$200.00

14%

$550.00

$150.00

Incomplete Task

Completed Task

Started Task

Successfully

Presenting Earned Value

page 10

**How do I get started using Earned Value Management?
**

Use the Data to Make Informed Decisions Now that all tasks have been scheduled, and the BAC, EV, Percent Complete, and AC are known, further analysis can be performed, including schedule and cost variances, performance efﬁciency, and estimates-at-completion.

**Earned Value Report
**

Project / Tasks

Totals for Project Task 1 Task 1-A Task 1-B Task 1-C Task 2 2002 Task 2-A Task 2-B April May Task 2-C 5/9 Task 3 Task 3-A Task 3-B Task 3-C

Earned Value Budget 2004 October November December $4,025.0 $950.0 $300.0 $400.0 $250.0 $1,300.0 Budget Earned Value $2,585.62 $743.50 $235.71 $321.74 $186.05 $836.56 $483.33 CV CPI $109.29 $243.94 $429.74 $1,005.56 1.27 $358.14 ($50.00) 0.86 $480.00 $167.42 $0.00 1.00

**Earned Value and Performance Review
**

Project/ Tasks

Project ABC Task 1 Task 2 Task 3 Task 4

Spending

3/11

March

Total Budget

$2,975.0 $300.0 $400.0

BCWS

$1,739.90 $300.00 $400.00 $127.91 $456.48 $189.47 $159.09 $106.94

ACWP Spending

$1,575.00 $350.00 $400.00 $175.00 October $200.00 $100.00 $200.00 $150.00

BCWP E Value

$2,004.73

PRCNT CMPLT

$725.0 SV $225.0

SPI 1.15 1.00 1.00 1.09 1.24

$350.0 67.4%$1,775.0 $264.85

Contract Review

Project /

$3,000.00$250.0 Tasks $1,500.00

$550.0 $300.00 Final 100.0% $0.00 $800.0 Review $425.0 $400.00 100.0% $0.00

$139.53 $563.89 $210.53 $222.73 $168.06

2004 55.8% 0.80 November $11.62 ($35.47) December

BAC

$4,025.0 $950.0 $300.0

AC

$1,375.00 $725.00 $200.00 $350.00 $175.00 $500.00 $200.00 $100.00 $200.00 $150.00 $150.00 $0.00 $0.00

EV

$2,563.59 $743.50 $235.71 $321.74 $186.05 $836.56 $483.33 $109.29 $243.94 $983.53 $358.14 $480.00 $145.39

%

63.7% 78.3% 78.6% 80.4% 74.4% 64.4% 66.7% 48.6% 69.7% 55.4% 65.1% 60.0% 34.2%

**Totals for Project $725.0
**

$0.00

77.8% 52.6% 63.6% 30.6%

$107.41 $21.06 $63.64 $61.12

$363.89 $110.53 $22.73 $18.06

2.82

$4,000.00

Task 5 Task 6

Task 1

$400.0 $350.0

Summary 1-A Task

Task 1-B

Program Review

Status

2.11 $3,500.00 1.11 1.11 1.12 1.40

$3,000.00

$400.0 $250.0

Task 7

Task 1-C

PV EV BAC AC $3,000.00 $2,000.00 $1,000.00 $0.00 Schedule Variance $500.00 Cost Variance $350.00 $200.00 $50.00 ($100.00)

$550.0

1.57

$2,500.00

Task 2 Task 2-A Task 2-B Task 2-C

Summary

Status

$2,000.00

**$1,300.0 $725.0 $225.0
**

$1,500.00

Completed Task

CPI above 1.3

$350.0

Incomplete Task

Task 3 Task 3-A Task 3-B Task 3-C

Earned Value Budget Spending

CPI from 1 to 1.3

$1,000.00

$1,775.0 $550.0

Program Review

CPI below 1

$500.00 Final Review $0.00

$800.0 $425.0

Contracts review: 11-30-01

Summary

Program Review

Status

Sign Off: _________________

Successfully

Presenting Earned Value

page 11

**Example Reports and Resources
**

On the following pages, several example Earned Value reports are shown. These examples, as well as the charts on the previous pages, were created in Milestones Professional 2004. Visit KIDASA.com to view these examples and more, or to download a trial version of Milestones Professional.

**Earned Value Calculations
**

Project/ Tasks

Project ABC Task 1 Task 2

Earned Value PV $1,500.00 AC Spending $1,000.00 $500.00 $0.00 PV EV BAC AC

3/10

Earned Value = Budget x % Complete Planned Value = Total Budget x % duration to the current date

2005

March April May

5/8 $3,000.00

BAC

$2,975 $300 $400 $250 $725 $400 $350

Planned Value

$1,809 $300 $400 $134 $483 $200 $170

Actual Costs

$1,575.0 $350.0 $400.0 $175.0 $200.0 $100.0 $200.0

Earned Value

$2,005 $300 $400 $140 $564 $211 $223

PRCNT CMPLT 67.4% 100.0% 100.0% 55.8% 77.8% 52.6% 63.6%

Budget $2,500.00 $2,000.00

Task 3 Task 4 Task 5 Task 6

Status

Incomplete Task

Completed Task

Started Task

Successfully

**Presenting Earned Value
**

Schedule Variance = EV - PV Cost Performance Index = EV / AC Cost Variance = EV - AC Schedule Performance Index = EV / PV PRCNT CMPLT 67.4% 100.0% 100.0% 55.8% 77.8% 52.6% 63.6% 30.6%

page 12

**Earned Value and Performance Review
**

Project/ Tasks

Project ABC Task 1 Task 2 Task 3 Task 4 Task 5 Task 6 Task 7

PV EV BAC AC $3,000.00

3/10

2005

March April May

5/8

Total Budget

$2,975.00 $300.00 $400.00 $250.00 $725.00 $400.00 $350.00 $550.00

Planned Value

$1,808.97 $300.00 $400.00 $133.72 $483.33 $200.00 $169.70 $122.22

Actual Costs

$1,575.00 $350.00 $400.00 $175.00 $200.00 $100.00 $200.00 $150.00

Earned Value

$2,004.73 $300.00 $400.00 $139.53 $563.89 $210.53 $222.73 $168.06

SV $195.77 $0.00 $0.00 $5.81 $80.56 $10.53 $53.03 $45.84

CV $429.74 ($50.00) $0.00 ($35.47) $363.89 $110.53 $22.73 $18.06

CPI 1.27 0.86 1.00 0.80 2.82 2.11 1.11 1.12

SPI 1.11 1.00 1.00 1.04 1.17 1.05 1.31 1.38

Summary

$2,000.00 $1,000.00 $0.00

Status

Completed Task

CPI above 1.3

SV CV

$500.00 $350.00 $200.00 $50.00 ($100.00)

Incomplete Task

CPI from 1 to 1.3

Program Review

CPI below 1

Contract Review

Earned Value Report

Project / Tasks

Totals for Project Task 1 Task 1-A Task 1-B Task 1-C Task 2 Task 2-A Task 2-B Task 2-C Task 3 Task 3-A Task 3-B Task 3-C

Earned Value Budget Spending 2005 October November

Summary

Program Review

Budget Actual Costs $1,375.00 $725.00 $200.00 $350.00 $175.00 $500.00 $200.00 $100.00 $200.00 $150.00 $150.00 $0.00 $0.00

Status

Earned Value $2,585.62 $743.50 $235.71 $321.74 $186.05 $836.56 $483.33 $109.29 $243.94 $1,005.56 $358.14 $480.00 $167.42 PRCNT CMPLT 64.2% 78.3% 78.6% 80.4% 74.4% 64.4% 66.7% 48.6% 69.7% 56.7% 65.1% 60.0% 39.4%

**December $4,025.00 $950.00 $300.00 $400.00 $250.00 $1,300.00 $725.00 $225.00 $350.00 $1,775.00 $550.00
**

Final Review

$800.00 $425.00

$4,000.00 $3,000.00 $2,000.00 $1,000.00 $0.00 Contracts review: 11-30-02 Sign Off: _________________

Successfully

Performance Review

Project/ Tasks

Project ABC

**Presenting Earned Value
**

Schedule Variance = EV - PV Cost Performance Index = EV / AC Cost Variance = EV - AC Schedule Performance Index = EV / PV

page 13

2005

March April May $3,000.00

Total Budget

$2,975.0

Planned Value

$1,808.97

Actual Costs

$1,575.00

Earned Value

$2,004.73

PRCNT CMPLT

SV

CV

CPI

SPI

67.4%

$195.77

$429.74

1.27

1.11

Task 1

Budget $2,500.00

$300.0

$300.00

$350.00

$300.00

100.0%

$0.00

($50.00)

0.86

1.00

Task 2

Earned Value $2,000.00

$400.0

$400.00

$400.00

$400.00

100.0%

$0.00

$0.00

1.00

1.00

Task 3

Planned Value $1,500.00

$250.0

$133.72

$175.00

$139.53

55.8%

$5.81

($35.47)

0.80

1.04

Task 4

Actual Cost

$725.0

$483.33

$200.00

$563.89

77.8%

$80.56

$363.89

2.82

1.17

Task 5

$1,000.00

$400.0

$200.00

$100.00

$210.53

52.6%

$10.53

$110.53

2.11

1.05

Task 6

$500.00

$350.0

$169.70

$200.00

$222.73

63.6%

$53.03

$22.73

1.11

1.31

Task 7

$0.00 PV EV BAC AC

Summary Completed Task

$550.0

$122.22

$150.00

$168.06

30.6%

$45.84

$18.06

1.12

1.38

Status Incomplete Task

Program Review CPI above 1.3

CPI from 1 to 1.3 CPI below 1

**Materials for further Earned Value Management research:
**

Fleming, Q., & Koppelman, J. (2000). Earned Value Project Management. 2nd Ed. Pennsylvania: Project Management Institute. Lewis, J. (2000). The Project Manager’s Desk Reference. New York: McGraw-Hill. Portny, S. (2001). Project Management for Dummies. New York: Hungry Minds, Inc. KIDASA.com - Home of KIDASA Software, Inc., makers of Milestones Professional. EarnedValueManagement.com - All about Earned Value. Deﬁnitions, examples, and more. PMI.org - Home of the Project Management Institute, and a variety of PM resources.

Copyright ©2005 KIDASA Software, Inc. All rights reserved. www.kidasa.com. This publication may be distributed freely, as long as it is distributed in its entirety.

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