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Cadores, Almira Lhee

Rivera, Aira Joy


Robles, Reu
Tagomata, Christopher
• helps provide basis to assess work
progress against a baseline plan
• used to show the past and the current
performance of a project and predict the
future performance
• combines measurements of the project
management triangle: scope, schedule,
and costs
A successful EVM requires
• Good project plan
• Values identified for planned work
• Earning metrics – Performance indicators
1900s - EVM practices first used in manufacturing

1960s - Department of Defense (DoD) adopts EVM; establishes 35


criteria

1970s & 1980s – Cost / Schedule Control Systems Criteria (C/SCSC)


analysis grows

1979 – EVM introduced to Architecture and Engineering professions

1987 – PMI includes EVM into PMBOK Guide


1990s – EVM emerges as PM methodology for managers and executives

1998 –criteria reduced to 32 and adopted as ANSI Standard EIA 748-A

2002 – EVM achieves greater attention due to Sarbanes-Oxley Act of


2002

2005 – EVM becomes part of general federal project risk management

Present – EVM is now recognized worldwide


National
Aeronautics
Space Agency
(NASA)

Large,
engineering, Project
procurement, Management
and construction Institute (PMI)
organizations

Acquisition
Management
Organizations Society of Cost
Estimating and
(UK) using EVM Analysis

Federal Defense
Acquisition Acquisition
Institute University

Association for
the
Advancement of
Cost
Engineering
(AACEi)
• Provides accurate forecasts of project
performance problems
• Improves the planning process
• Fosters a clear definition of the work scope
• Establishes clear responsibility for work effort
• Integrates technical, schedule, and cost
performance
• Provides early warning of potential problems
• Identifies problem areas for immediate and
proactive management attention
• Enables more accurate reporting of cost and
schedule impacts of known problems
• Enhances the ability to assess and integrate
technical, schedule, cost, and risk factors
• Provides consistent and clear communication of
progress at all management levels
• Improves project visibility and accountability
• EVM does not ensure quality
• Without accurate data, EVM is null
• EVM needs context
Simple – spreadsheet based

Intermediate - computer programs with Work


Breakdown Structure, cost, and scheduling

Advanced – complex programs with extensive


capabilities
• Planned Value
• Actual Cost
• Earned Value
• referred to as Budgeted Cost of Work
Scheduled (BCWS).
• total cost of the work scheduled/planned as of
a reporting date.

PV = Hourly Rate x Total Hours Planned or


Scheduled
• AC is the total cost taken to complete the work
as of a reporting date.

AC = Hourly Rate x Total Hours Spent


• EV is the total cost of the work completed /
performed as of a reporting date.

EV = Baselined Cost x Percentage the Project


is Complete
• Cost Performance Index (CPI)
• Cost Variance
• Cost Variance %

• Schedule Performance Index


• Schedule Variance
• Schedule Variance %
• The Cost Performance Index is used to measure
the value of work completed against its actual
cost.

CPI = EV/AC

• CPI < 1.0 – costs are higher than budgeted


• CPI > 1.0 – costs are less than budgeted
• The cost variance indicates how much over- or
under-budget the project is.

CV = EV - AC

• Positive CV – the project is under-budget


• Negative CV – the project is over-budget
• Cost variance % indicates how much over- or
under-budget the project is in terms of
percentage.

CV % = CV / EC
• The Schedule Performance Index measures the
progress achieved against where the progress is
expected at some point.

SPI = EV/PV

• SPI < 1.0 – less work is done than projected


• SPI > 1.0 – more work is completed than planned
• The schedule variance indicates how much
ahead or behind the schedule a project is
running.

SV = EV - PV

• Positive SV – the project is ahead of schedule


• Negative SV – the project is behind of schedule
• Schedule variance % indicates how much ahead
or behind the schedule a project is running in
terms of percentage.

SV % = SV / PV
• Budget at Completion (BAC)
• Estimate to Complete (ETC)
• Estimate at Completion (EAC)
• Variance at Completion (VAC)
• % Completed Planned
• % Completed Actual
• Budget at Completion (BAC) is the total budget
allocated to the project. BAC is generally
plotted over time. For example, periods of
reporting (Monthly, Weekly, etc.).

BAC = Baselined Effort-hours x Hourly Rate


• Estimate to Complete (ETC) is the estimated cost
required to complete the remainder of the
project. It is calculated and applied when the
past estimating assumptions become invalid and
a need for fresh estimates arises.
• Estimate at Completion (EAC) is the estimated
cost of the project at the end of the project.
There are three methods to calculate EAC:

EAC = AC + (BAC – EV)

EAC = AC + ETC

EAC = AC + (BAC – EV) / CPI


• Variance at Completion (VAC) is the variance on
the total budget at the end of the project. This
is the difference between what the project was
originally expected (baselined) to cost versus
what it is now expected to cost.

VAC = BAC - EAC


• The percentage of work which was planned to
be completed by the Reporting Date.

% Completed Planned = PV / BAC


• The percentage of work which was actually
completed by the Reporting Date. It is
calculated using the following formula:

% Completed Actual = AC / EAC


• To illustrate the concept of EVM and all the
formulas, assume a project that has exactly one
task. The task was baselined at 8 hours, but 11
hours have been spent and the estimate to
complete is 1 additional hour. The task would
have been completed already. Assume an
Hourly Rate of Php 100 per hour.
• PV = Hourly Rate x Total Hours Planned or Scheduled
• PV = Php 100 x 8 hours = Php 800

• AC = Hourly Rate x Total Hours Spent


• AC = Php 100 * 11 hours = Php 1100

• EV = Baselined Cost x % Complete Actual


• EV = baseline of Php 800 * 91.7% complete = Php 734
• (NOTE % Complete Actual (below) to get the 91.7%)

• BAC = Baselined Effort-hours x Hourly Rate


• BAC = 8 hours * Php 100 = Php 800

• EAC = AC + ETC
• EAC = 1100 + 100 = Php 1200
• EAC = AC + ETC
• EAC = 1100 + 100 = Php 1200

• VAC = BAC – EAC


• VAC = Php 800 – Php 1200 = –Php 400

• % Completed Planned = PV / BAC


• % Complete Planned = Php 800 PV / Php 800 BAC = 100%

• % Completed Actual = AC / EAC


• % Complete Actual = Php 1100 AC / Php 1200 EAC = 91.7%
• SV = EV – PV
• SV = Php 734 EV – Php 800 PV = –Php 66

• SPI = EV / PV
• SPI = Php 734 EV / Php 800 PV = 0.91

• CV = EV – AC
• CV = (Php 734 EV - Php 1100 AC) = –Php 366*
• * indicates a cost overrun

• CPI = EV / AC
• CPI = Php 734 EV / Php 1100 AC = 0.66*
• *indicates over-budget

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