Project Monitoring and Control

(Earned Value Approach)

Introduction
Monitoring is collection, recording, and reporting of
information

Control uses monitored information to align actual

performance with plan

Making sure project is achieving its goals within time,

specification, and budget
Introduction
Earned Value Approach
Developed by the United State Department of Defense

They required all defense contractor to use it in updating

the projects.

This method is really valued more for its simplicity

rather than its power
Activity Information Planning
Information
Activity 100 piles
Duration 1 year
Start Date 6 months from project start
Total Cost $1,000,000
Update Time 12 moths from project start

Updating Status
Piles Completed 40
Money Spent $600,000
 100 piles
Over Budget 1 year
Behind Schedule $1,000,000
 $10,000/pile

40 piles
$600,000
 $15,000/pile
Activity

6 12 18 Time
Earned Value Approach

• Actual Cost of Work Performed (ACWP)

The amount of money that I actually spend on the work

that I accomplished
Earned Value Approach

• Budget Cost of Work Scheduled (BCWS)

The amount of money I expected to spend on the work I

planned to do
Earned Value Approach

• Budgeted Cost of Work Performed (BCWP)

The amount of money I expected to spend on the work

that I accomplished

Also called the Earned Value

BCWP = Budget * % Complete

Cost Variance (CV)

CV =
BCWP –ACWP

+ve : Profit ( Surplus)

-ve : Lose (Deficit )
Zero : On Budget (on Plan )

Unit  Money ($)

Cost Performance Index (CPI)
Schedule Variance (SV)

SV =
BCWP – BCWS

+ve : Ahead of schedule

-ve : Behind schedule
Zero : On schedule (on Plan )

Unit  Money ($)

Schedule Performance Index (SPI)
Estimate Cost To Complete (ECTC)

How much more money do you need to finish the

remaining work
Estimate At Completion (EAC)

Means when the work is finished how much it will

expected to cost.
1. EAC = BAC
2. EAC = BAC/CPI
3. EAC=ACWP+BAC-EV
4. EAC = ACWP + new ECTC
 100 piles
1 year
Example -Revisited $1,000,000
 $10,000/pile

Over Budget
40 piles Behind Schedule
$600,000
 $15,000/pile
Activity

6 12 18 Time
ACWP = $600,000
BCWS = 50 × 10,000 = $500,000
BCWP = 40 × 10,000 = $ 400,000
CV =
400,000 – 600,000 = -200,000
 Over-Budget
SV =
400,000 – 500,000 = -100,000
Behind Schedule
How many piles do I have left to complete?
60 piles

ECTC =
60 × 15,000 = $900,000

EAC =
600,000 + 900,000 = $1,500,000

Variance = 1,000,000 – 1,500,000 = -500,000

Example

You are the project manager of a project to build

fancy birdhouses. You are to build two birdhouses a
month for 12 months. Each birdhouse is planned to
cost $100. Your project is scheduled to last for 12
months. It is the beginning of month 10. You have
built 20 birdhouses and your CPI is 0.9091
1. How is the project performing?

2. What is the actual cost of the project right now?

3. Assuming that the COST variance experienced so far in

the project will continue, how much more money will it
take to complete the project?
4. If the variance experienced so far were to stop, what is
the project’s estimate at completion?

5. Senior management wants to the percentage of the

project that is complete. What should you report?
6. Imagine if instead of 10 months and costing $2200, the
project was in month three and costing $4000. What
formula might you use for BAC?