Earned Value Management Fundamentals

Welcome to the course

Introductions
Before getting started, please use the comments area below to introduce yourself (youre colleagues want to meet you!) Tell us the business sector/industry youre coming from, your company name if you like, your experience with project management so far and if you have ever been involved with the challenging world of Earned Value! What are your expectations from the course?

Lets get started!

The Earned Value Fundamentals is an introduction course to the Earned Value Management world (or the Project Controls world!) We take for granted that you know how to plan a project, develop the WBS and create activities taking into account the resources availability. You also know how to distribute the project budget. Purpose of the course is to understand the Schedule Cost integration and learn how Earned Value will help you make realistic forecasts and get early warning signals that will support your decision making when planning preventive actions.

Enjoy the course!

The Project Management lifecycle

Initiating

Planning

Executing

Monitor & Control

Closing

identify stakeholders

scope WBS activities resources costs communications

coordinate resources

scope schedule costs

lessons learnt dismiss team close project

manage stakeholders

resources reporting

The Project Management lifecycle

Planning

Executing

Monitor & Control

WBS Schedule - Critical Path Method Distribute Budget Cost Profile Allocate Resources Project Baseline

Record Progress / Actuals - Dates - Costs - Resources

Results & Reporting Progress Changes Variances from the Baseline

Planning

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

WBS Schedule - Critical Path Method Distribute Budget Cost Profile Allocate Resources Project Baseline

planned baseline

Planning

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Executing
WBS Critical Path Method Distribute Budget Cost Profile

Record Progress / Actuals

- Dates Allocate Resources - Costs Project Baseline Resources

status date

planned baseline actual

Planning

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Executing
WBS Critical Path Method

Monitor & Cost Profile Distribute Budget

Allocate Resources Project Baseline

Control

Results & Reporting Progress Changes Variances from the Baseline

status date

planned baseline actual

Earned Value Elements

Planning
Project: Project: Replacement of pits and ducts along a 200m pavement.

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Project Baseline: Project Duration: 25w Budgeted Cost: $250.000

planned baseline

Planning
Project: Project: Replacement of pits and ducts along a 200m pavement.

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Project Baseline: Project Duration: 25w Budgeted Cost: $250.000

For training purposes, we shall focus on the first project activity that will guide us through the Earned Value Elements.

planned baseline

Planning
Project: Project: Replacement of pits and ducts along a 200m pavement.

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Project Baseline: Project Duration: 25w Budgeted Cost: $250.000

Activity: Lay 50m of ducts Baseline Duration: 3weeks 15days Baseline Cost: $10.000

Cost profile: Week 1: $3.000 Week 2: $5.000 Week 3: $2.000

$250,000 planned baseline

Planning
Activity: Lay 50m of ducts Baseline Duration: 3weeks 15days Baseline Cost: $10.000 Cost profile: Week 1: $3.000 Week 2: $5.000 Week 3: $2.000 $8.000 $3.000 $10.000 15m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

planned baseline

The schedule has been developed. The baseline is set. We have planned to lay 50m of ducts within 15 days. The budgeted cost is $10.000 and it is cumulatively distributed along the activity duration.

Planning
Activity: Lay 50m of ducts Baseline Duration: 3weeks 15days Baseline Cost: $10.000 Cost profile: Week 1: $3.000 Week 2: $5.000 Week 3: $2.000 Budget At Completion (BAC): $10.000 Distribution over the activity duration Week 1: $3.000 Week 2: $5.000 Week 3: $2.000 $8.000 $3.000 $10.000 15m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

planned baseline

The schedule has been developed. The baseline is set and the BAC has been agreed. We have planned to lay 50m of ducts within 15 days. The baseline cost, is $10.000 and it is cumulatively distributed along the activity duration. The BAC is not standing alone. For each week of the activity a specific amount of work has been planned to be performed.

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

15m

50m 40m

$8.000 $3.000

$10.000 planned baseline Budget At Completion (BAC): $10.000 Period $3.000 $5.000 $2.000 Cumulative $3.000 $8.000 $10.000 Activity Duration: 15d Period Cumulative 5d 5d 5d 5d 10d 15d

Work Planned: 50m of ducts Period Week 1: 15m Week 2: 25m Week 3: 10m Cumulative 15m 40m 50m

The schedule has been developed. The baseline is set and the BAC has been agreed. We have planned to lay 50m of ducts within 15 days. The baseline cost, is $10.000 and it is cumulatively distributed along the activity duration. The BAC is not standing alone. For each week of the activity a specific amount of work has been planned to be performed.

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

15m

50m 40m

$8.000 $3.000

$10.000 planned baseline

One week later we update the project progress

Executing
Activity: Lay 50m of ducts Baseline Duration: 3weeks 15days Baseline Cost: $10.000 Cost profile: Week 1: $3.000 Week 2: $5.000 Week 3: $2.000 $8.000 $3.000 $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

planned baseline

We planned to lay 15meters within the first five days. However, one week later when the progress updated, only 10m were completed. The actual activity cost is so far $3.000.

Executing
Activity: Lay 50m of ducts Baseline Duration: 3weeks 15days Baseline Cost: $10.000 Cost profile: Week 1: $3.000 Week 2: $5.000 Week 3: $2.000 Actual Cost (AC) on Week 1: $3.000 Actual Cost is the cost of work performed by the day the progress updated. Its not necessarily the cost that has been paid to the contractor. $8.000 $3.000 $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

planned baseline

We planned to lay 15meters within the first five days. However, one week later when the progress updated, only 10m were completed. The actual activity cost is so far $3.000.

Executing
Activity: Lay 50m of ducts Baseline Duration: 3weeks 15days Baseline Cost: $10.000 Cost profile: Week 1: $3.000 Week 2: $5.000 Week 3: $2.000 Actual Cost (AC) on Week 1: $3.000 Actual Cost is the cost of work performed by the day the progress updated. Its not necessarily the cost that has been paid to the contractor. $8.000 $3.000 $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

planned baseline

We planned to lay 15meters within the first five days. However, one week later when the progress updated, only 10m were completed. The actual activity cost is so far $3.000. You may also see the AC as Actual Cost of Work Performed (ACWP).
The Actual Cost, or Actual Cost of Work Performed (ACWP) consists of: Actual [Labor + Non labor (equipment and machinery) + Material (the cost of ducts) + Expenses (like training, but expenses do not apply to all the project activities)]

Executing
Activity: Lay 50m of ducts Baseline Duration: 3weeks 15days Baseline Cost: $10.000 Cost profile: Week 1: $3.000 Week 2: $5.000 Week 3: $2.000 Actual Cost (AC) on Week 1: $3.000 Actual Cost is the cost of work performed by the day the progress updated. Its not necessarily the cost that has been paid to the contractor. Work Cost 15m $3.000 10m $3.000 $8.000 $3.000 $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

planned baseline Actual

Week 1

Planned

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

15m 10m 40m

50m

$8.000 $3.000

$10.000 planned baseline

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

15m 10m 40m

50m

$8.000 $3.000

$10.000 planned baseline

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Monitor & Control

How much work should have been done so far? How much did the work cost? How much work has been actually done?
$8.000 $3.000 $10.000 planned baseline 15m 10m 40m 50m

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Monitor & Control

How much work should have been done so far? How much did the work cost? How much work has been actually done?
$8.000 $3.000 $10.000 planned baseline Budget At Completion (BAC): $10.000 Period $3.000 $5.000 $2.000 Cumulative $3.000 $8.000 $10.000 Activity Duration: 15d Period Cumulative 5d 5d 5d 5d 10d 15d 15m 10m 40m 50m

Planned Value Cost (PVC) or Budgeted Cost of Work Scheduled (BCWS) How much work should have been done at the end of week 1? Planned Value is the target against which we are measuring the progress

Work Planned: 50m of ducts Period Week 1: 15m Week 2: 25m Week 3: 10m Cumulative 15m 40m 50m

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Monitor & Control

How much work should have been done so far? How much did the work cost? How much work has been actually done?
$8.000 $3.000 $10.000 planned baseline 15m 10m 40m 50m

Planned Value Cost (PVC) or Budgeted Cost of Work Scheduled (BCWS) How much work should have been done at the end of week 1? Planned Value is the target against which we are measuring the progress

Planned Value Cost at the end of Week 1

Work Planned: 50m of ducts Period Week 1: 15m Week 2: 25m Week 3: 10m Cumulative 15m 40m 50m Budget At Completion (BAC): $10.000 Period $3.000 $5.000 $2.000 Cumulative $3.000 $8.000 $10.000 Activity Duration: 15d Period Cumulative 5d 5d 5d 5d 10d 15d

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Monitor & Control

How much work should have been done so far? How much did the work cost? How much work has been actually done?
$8.000 $3.000 $10.000 planned baseline 15m 10m 40m 50m

PVC = BAC x Planned % Complete We planned to complete 30% of the Budget At Completion ($10.000) at the end of the week 1.

Planned Value Cost at the end of Week 1

Work Planned: 50m of ducts Period Week 1: 15m Week 2: 25m Cumulative 15m 40m 50m Budget At Completion (BAC): $10.000 Period $3.000 $5.000 $2.000 Cumulative $3.000 $8.000 $10.000 Activity Duration: 15d Period Cumulative 5d 5d 5d 5d 10d 15d

PVC = $10.000 x 30% = $3.000

Week 3: 10m

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Monitor & Control

How much work should have been done so far? How much did the work cost? How much work has been actually done?
$8.000 $3.000 $10.000 15m 10m 40m 50m

PVC = $10.000 x 30% = $3.000

planned baseline

PVC = BAC x Planned % Complete We planned to complete 30% of the Budget At Completion ($10.000) at the end of the week 1.

Planned Value Cost at the end of Week 1

Work Planned: 50m of ducts Period Week 1: 15m Week 2: 25m Cumulative 15m 40m 50m Budget At Completion (BAC): $10.000 Period $3.000 $5.000 $2.000 Cumulative $3.000 $8.000 $10.000 Activity Duration: 15d Period Cumulative 5d 5d 5d 5d 10d 15d

PVC = $10.000 x 30% = $3.000

Week 3: 10m

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Monitor & Control

How much work should have been done so far? How much did the work cost? How much work has been actually done?
$8.000 $3.000 $10.000 15m 10m 40m 50m

PVC = $10.000 x 30% = $3.000

planned baseline

Actual Cost (AC) is the Actual Cost of Work Performed until the status date (you may also see ACWP). The Actual Cost of the work at the end of the week1 is $3.000.

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Monitor & Control

How much work should have been done so far? How much did the work cost? How much work has been actually done?
$8.000 $3.000 $10.000 15m 10m 40m 50m

PVC = $10.000 x 30% = $3.000 AC= $3.000

planned baseline

Actual Cost (AC) is the Actual Cost of Work Performed until the status date (you may also see ACWP). The Actual Cost of the work at the end of the week1 is $3.000.

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Monitor & Control

How much work should have been done so far? How much did the work cost? How much work has been actually done?
$8.000 $3.000 $10.000 15m 10m 40m 50m

PVC = $10.000 x 30% = $3.000 AC= $3.000 It doesnt look that bad, right?

planned baseline

Actual Cost (AC) is the Actual Cost of Work Performed until the status date (you may also see ACWP). The Actual Cost of the work at the end of the week1 is $3.000.

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Monitor & Control

How much work should have been done so far? How much did the work cost? How much work has been actually done?
$8.000 $3.000 $10.000 15m 10m 40m 50m

PVC = $10.000 x 30% = $3.000 AC= $3.000

planned baseline

Earned Value (EV) signifies how much work has been actually done. To measure the EV we need to know: BAC Performance % Complete

EV = BAC x Performance % Complete

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Monitor & Control

How much work should have been done so far? How much did the work cost? How much work has been actually done?
$8.000 $3.000 $10.000 15m 10m 40m 50m

PVC = $10.000 x 30% = $3.000 AC= $3.000

planned baseline

Earned Value (EV) signifies how much work has been actually done. To measure the EV we need to know: BAC Performance % Complete

EV = BAC x Performance % Complete

We planned to perform 15m at the end of week 1 which is the 33,33% of the total work. However, we performed only 10m, which the 20% of the total work.

EV = $10.000 x 20% = $2.000 EV = BAC x Performance % Complete

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Monitor & Control

How much work should have been done so far? How much did the work cost? How much work has been actually done?
$8.000 $3.000 $10.000 15m 10m 40m 50m

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

Earned Value (EV) signifies how much work has been actually done. To measure the EV we need to know: BAC Performance % Complete

EV = BAC x Performance % Complete

We planned to perform 15m at the end of week 1 which is the 33,33% of the total work. However, we performed only 10m, which the 20% of the total work.

EV = $10.000 x 20% = $2.000 EV = BAC x Performance % Complete

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Monitor & Control

How much work should have been done so far? How much did the work cost? How much work has been actually done?
$8.000 $3.000 $10.000 15m 10m 40m 50m

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

Earned Value (EV) signifies how much work has been actually done. To measure the EV we need to know: BAC Performance % Complete

EV = BAC x Performance % Complete

We planned to perform 15m at the end of week 1 which is the 33,33% of the total work. However, we performed only 10m, which the 20% of the total work.

EV = $10.000 x 20% = $2.000 EV = BAC x Performance % Complete

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Monitor & Control

How much work should have been done so far? How much did the work cost? How much work has been actually done?
$8.000 $3.000 $10.000 15m 10m 40m 50m

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

Earned Value (EV) signifies how much work has been actually done. To measure the EV we need to know: BAC Performance % Complete

EV = BAC x Performance % Complete

Earned Value explains whether the Actual Cost (AC) has been spent effectively (Performance % Complete) providing the physical results that was estimated to (Planned Value).

EV = BAC x Performance % Complete

Question:
How is the project doing?

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000

Answer:
The project is not doing very well Here are the facts: PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000
$8.000 $3.000 $10.000 15m 10m 40m 50m

AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

EV = BAC x Performance % Complete

Earned Value explains whether the Actual Cost (AC) has been spent effectively (Performance % Complete) providing the physical results that was estimated to (Planned Value).

Earned Value elements within the Project Management lifecycle

Initiating

Planning

Executing

Monitor & Control

Closing

Planned Value Cost

Actual Cost

Earned Value
EV = BAC x Performance % Complete

PVC = BAC x Planned % Complete

Earned Value elements within the Project Management lifecycle

Initiating

Planning

Executing

Monitor & Control

Closing

Planned Value Cost

BCWS: Budgeted Cost of Work Scheduled

Actual Cost
ACWP: Actual Cost of Work Performed

Earned Value
BCWP: Budgeted Cost of Work Performed

Earned Value elements within the Project Management lifecycle Why two terms for the same thing?
Monitor & Control

Initiating

Planning

Executing

Closing

Planned Value Cost

BCWS: Budgeted Cost of Work Scheduled

Actual Cost
ACWP: Actual Cost of Work Performed

Earned Value
BCWP: Budgeted Cost of Work Performed

Earned Value elements within the Project Management lifecycle Why two terms for the same thing?
Monitor & Control

Initiating

Planning

Executing

Closing

New term !

Planned Value Cost

BCWS: Budgeted Cost of Work Scheduled

Actual Cost
ACWP: Actual Cost of Work Performed

Earned Value
BCWP: Budgeted Cost of Work Performed

Earned Value elements within the Project Management lifecycle Why two terms for the same thing?
Monitor & Control

Initiating

Planning

Executing

Closing

New term !

Planned Value Cost

BCWS: Budgeted Cost of Work Scheduled

Actual Cost
ACWP: Actual Cost of Work Performed

Earned Value
BCWP: Budgeted Cost of Work Performed

Old term !

Earned Value elements within the Project Management lifecycle Why two terms for the same thing?
Monitor & Control

Initiating

Planning

Executing

Closing

New term !

Planned Value Cost

BCWS: Budgeted Cost of Work Scheduled

Actual Cost
ACWP: Actual Cost of Work Performed

Earned Value
BCWP: Budgeted Cost of Work Performed

Old term !

Both correct and both in use!

Measuring the Earned Value the Performance % Complete type

EV = BAC x Performance % Complete

Performance % Complete
Earned value is all about measuring the work performed.
The Performance % Complete should provide realistic and tangible information for the projects progress. It is selected during the project planning and can be different for each Work Package. Althouth there are several methods in this course we focus in three methods, proven to be best practices. Performance % Complete Percent Complete Estimates Weighted Milestones Fixed Formula $8.000 $3.000 EV = BAC x Performance % Complete $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

Performance % Complete
Percent Complete Estimates
It's the most commonly used measurement method as it's easy to administer within the already complex project environment. However it is subjective and often relies on the project manger's perspective. Expert judgment, experience and comprehensive understanding of the project scope are the requirements to maximize the benefits of the % complete estimates in the project. $8.000 $3.000 EV = BAC x Performance % Complete $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

Performance % Complete
Percent Complete Estimates
It's the most commonly used measurement method as it's easy to administer within the already complex project environment. However it is subjective and often relies on the project manger's perspective. Expert judgment, experience and comprehensive understanding of the project scope are the requirements to maximize the benefits of the % complete estimates in the project. $8.000 $3.000 EV = BAC x Performance % Complete $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

However, it can be less subjective when tangible measurement is involved; like in our example the meters of the pits and ducts planned to complete per week (or per reporting period).

Performance % Complete Weighted Milestones

The planned work is divided into segments. Each Weighted Milestone represents the percent of the work planned to be achieved within the period. 25% 60% 100%

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned You can use it for work packages that exceed one measurement period. The milestone values should be set before the work starts. EV = BAC x Performance % Complete baseline

The challenge is to agree on the values and make it clear to everyone involved what the values represent.

Performance % Complete Fixed Formula

50/50 It can be used in short duration activities. Once the work starts, the 50% of the work is considered as completed. At the end of it the 100% is completed. 50% 100%

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned Other examples are: 10/90 EV = BAC x Performance % Complete 25/75 0/100 baseline

Forecasting the projects future using EVM

Forecasting the projects future using EVM

it's time to get some meaningful results from the project and try to forecast the future of the project realistically

Forecasting the projects future using EVM

it's time to get some meaningful results from the project and try to forecast the future of the project realistically Estimate To Complete

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000

15m 10m 40m 50m

EV = $10.000 x 20% = $2.000

Question:
How can we estimate the cost left to perform until the completion of the activity?

$8.000 $3.000

$10.000 planned baseline

Answer:
The Estimate To Complete cost ETC:

ETC = BAC AC
ETC = $10.000 $3.000 = $7.000

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000

15m 10m 40m 50m

EV = $10.000 x 20% = $2.000

Question:
How can we estimate the cost left to perform until the completion of the activity?

$8.000 $3.000

$10.000 planned baseline

Answer:
The Estimate To Complete cost ETC:

Why do we Estimate To Complete?

ETC = BAC AC
ETC = $10.000 $3.000 = $7.000

Because the remaining activity cost is not fixed. It may vary depending on several factors, like additional changes that may change the budget. Perhaps we will be able to complete the activity earlier and therefore cost less, or later than planned, or use more resources which causes increased cost.

Forecasting the projects future using EVM

it's time to get some meaningful results from the project and try to forecast the future of the project realistically Estimate At Completion

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000 ETC = $7.000

15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

Question:
So, at the end of the activity how much will it cost?
$8.000 $3.000 $10.000 planned baseline

Answer:
The Estimate At Completion cost EAC:

Why do we Estimate At Completion? Because the variable used to forecast the cost at the completion of the activity/project is the ETC. Therefore, is not a fixed figure and can be adjusted in the future.

ETC = ETC + AC
EAC = $7.000 $3.000 = $10.000

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000 ETC = $7.000 EAC = $10.000
15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

$8.000 $3.000

$10.000 planned baseline

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000 ETC = $7.000 EAC = $10.000
15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

$8.000 $3.000

$10.000 planned baseline

How is Earned Value involved with all this?

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000 ETC = $7.000 EAC = $10.000
15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

$8.000 $3.000

$10.000 planned baseline

Earned Value and Cost Performance

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000 ETC = $7.000 EAC = $10.000
15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

$8.000 $3.000

$10.000 planned baseline

Dont forget that our activity is already underperforming. The ETC and EAC reflect the current status of the activity/project. However, at this point they dont include the cost of delay or underperformance.

Identifying the cost variance between the AC and EV enable us a more realistic picture of the activity performance at the current time period.

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000 ETC = $7.000 EAC = $10.000 CV = $-1.000
$8.000 $3.000 $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

Cost Variance (CV) = EV - AC CV = $2.000 - $3.000 = $-1.000

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000 ETC = $7.000 EAC = $10.000 CV = $-1.000
$8.000 $3.000 $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

Which is the relationship between the AC and the EV? Cost Performance Index (CPI) = EV / AC CPI = $2.000 / $3.000 = 0.67

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000 ETC = $7.000 EAC = $10.000 CV = $-1.000 CPI = 0.67
$8.000 $3.000 $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

Which is the relationship between the AC and the EV? Cost Performance Index (CPI) = EV / AC CPI = $2.000 / $3.000 = 0.67 In simple terms, for each dollar spent, only 0.67 worth paying!

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000 ETC = $7.000 EAC = $10.000 CV = $-1.000 CPI = 0.67
$8.000 $3.000 $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

Earned Value and Schedule Performance

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000 ETC = $7.000 EAC = $10.000 CV = $-1.000 SV = $-1.000 CPI = 0.67
$8.000 $3.000 $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

As with the CV, we want to identify and compare the work planned to perform within a time period with the work accomplished.

The Schedule Variance (SV) will provide us with the right information. It is expressed in in monetary values. SV = EV PV SV = $2.000 - $3.000 = $-1.000

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000 ETC = $7.000 EAC = $10.000 CV = $-1.000 SV = $-1.000 CPI = 0.67
$8.000 $3.000 $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

How the Planned and the Earned Value are related? Schedule Performance Index (SPI) = EV / PV SPI = $2.000 / $3.000 = 0.67

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000 ETC = $7.000 EAC = $10.000 CV = $-1.000 SV = $-1.000 CPI = 0.67 SPI = 0.67
$8.000 $3.000 $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

How the Planned and the Earned Value are related? Schedule Performance Index (SPI) = EV / PV SPI = $2.000 / $3.000 = 0.67

BAC = $10.000 PVC = $3.000 AC = $3.000 EV = $2.000 ETC = $7.000 EAC = $10.000 CV = $-1.000 SV = $-1.000 CPI = 0.67 SPI = 0.67
$8.000 $3.000 $10.000 15m 10m 40m 50m

Project Week
04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

PVC = $10.000 x 30% = $3.000 AC= $3.000 EV = $10.000 x 20% = $2.000

planned baseline

CPI, SPI rule: CPI > 1 more work done than what actually paid for. CPI = 1 you got exactly what you paid for. CPI < 1 less work done than what actually paid for. SPI > 1 - ahead of schedule. The work accomplished is more that the work planned. SPI = 1 - the work accomplished is exactly the work planned. SPI < 1 - behind schedule. The work accomplished is less than planned.

Reporting Earned Value

Reporting Earned Value

Now that we know what Earned Value means, how its used and why it can make a big difference in a project, we need to know how to present and report data.

Reporting Earned Value

Now that we know what Earned Value means, how its used and why it can make a big difference in a project, we need to know how to present and report data. Tables and diagrams help to communicate the message clearly and can be used in meetings for decision making.

Reporting Earned Value

Now that we know what Earned Value means, how its used and why it can make a big difference in a project, we need to know how to present and report data. Tables and diagrams help to communicate the message clearly and can be used in meetings for decision making. The Earned Value data are reported cumulatively. The cumulative data represent a comprehensive project picture as they incorporate the overall project performance up to date.

04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Project Week

50m 15m 40m 10m 35m

Back to our example The first reporting period (week 1) we have the following results: Activity: Lay 50m of ducts BAC: $10.000 PVC AC EV ETC EAC CV SV

$9.000 $8.000 $3.000 Week 1 $3.000 $3.000 $2.000 $7.000 $10.000 $-1.000 $-1.000

$10.000 planned baseline

04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Project Week

50m 15m 40m 10m 35m

$9.000 $8.000 The first reporting period (week 1) we have the following results: Activity: Lay 50m of ducts BAC: $10.000 PVC AC EV ETC EAC CV SV $3.000 Week 1 $3.000 $3.000 $2.000 $7.000 $10.000

$10.000 planned baseline

1.5 1 0.5 0.67 0.67 CPI SPI

W1

$-1.000 $-1.000

04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Project Week

50m 15m 40m 10m 35m

$9.000 $8.000 The second reporting period (week 2) the activity performance is: Activity: Lay 50m of ducts BAC: $10.000 PVC AC EV ETC EAC CV SV $3.000 Week 1 $3.000 $3.000 $2.000 $7.000 $10.000

$10.000 planned baseline

1.5 1 0.5 0.67 0.67 CPI SPI

W1

$-1.000 $-1.000

04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Project Week

50m 15m 40m 10m 35m

$9.000 $8.000 The second reporting period (week 2) the activity performance is: Activity: Lay 50m of ducts BAC: $10.000 PVC AC EV ETC EAC CV SV $3.000 Week 1 $3.000 $3.000 $2.000 $7.000 $10.000 $-1.000 $-1.000

$10.000 planned baseline Week 2 $8.000 $9.000 $7.000 $2.000 $11.000

1.5 1 0.5 0.67 0.67 CPI SPI

W1

$-2.000 $-1.000

04 03 02 01 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Project Week

50m 15m 40m 10m 35m

$9.000 $8.000 The second reporting period (week 2) the activity performance is: Activity: Lay 50m of ducts BAC: $10.000 PVC AC EV ETC EAC CV SV $3.000 Week 1 $3.000 $3.000 $2.000 $7.000 $10.000 $-1.000 $-1.000

$10.000 planned baseline Week 2 $8.000 $9.000 $7.000 $2.000 $11.000

1.5 1 0.5 0.87 0.67 0.78 0.67 CPI SPI

W1 W2

$-2.000 $-1.000

Reporting Earned Value

When reporting Earned Value, consistency is everything! Only when the reporting periods are relevant you can get meaningful reports!

Thanks for attending EVM Fundamentals!

Denise Fotopoulou