Earned Value Management Tutorial

Earned Value Management Tutorial
Module 1: Introduction to Earned Value

Management
Prepared by:
Module1: Introduction to Earned Value
Welcome to Module 1. The objective of this module is to introduce you to

Earned Value and lay the blueprint for the succeeding modules.
This module will include the following topics:
• Earned Value Management defined
• The differences between Traditional Management and Earned Value

Management
• How Earned Value Management fits into a Program and Project environment
• The framework necessary for proper Earned Value implementation
Module 1 - Introduction 1
Prepared by: Booz Allen Hamilton
What is Earned Value Management?
Earned Value Management (EVM) is a systematic approach to the integration

and measurement of cost, schedule, and technical (scope) accomplishments
on a project or task. It provides both the government and contractors the
ability to examine detailed schedule information, critical program and
technical milestones, and cost data.
Earned Value Management is intended to provide data from a contractor’s

management system to the government in standard data elements that…
– Relate time-phased budgets to contract tasks
– Integrate cost, schedule, and technical performance
– Indicate work progress objectively
– Are valid, timely and auditable
– Are from the internal system the contractor uses to manage
– Are at a practical level of summarization
Why use Earned Value Management?
By using Earned Value and implementing an Earned Value Management

System (EVMS), the following questions can be answered objectively:
• Where have we been?
• Where are we now?
• Where are we going?
Why use Earned Value? For one, it is mandated by some key DOE directives
and guidance that Earned Value will be implemented. The following pages
will discuss these.
DOE guidance for Earned Value
A memorandum from the Deputy Secretary of Energy, dated September 19,

2001….
“I intend to continue the direction contained in DOE Order 413.3. The

responsibilities contained in the Order require that you know what is going on
with your projects and that you assist your program managers and project
managers in resolving issues and problems. The quarterly performance
reviews, monthly status updates utilizing the Earned Value Management
System as a metric, and periodic independent reviews are all sources for
project information that allow us the opportunity to intercede before projects
get off track.”
Now let’s look at the DOE Order 413.3
DOE guidance for Earned Value
Current Department of Energy policy, DOE Order 413.3, Program and Project
Management for the Acquisition of Capital Assets, states the requirements
for contractor’s project management system
“ The industry standard for project control systems described in American

National Standards Institute (ANSI) EIA-748, Earned Value Management
Systems, must be implemented on all projects with a total project cost (TPC)
greater than $20M for control of project performance during the project
execution phase.”
Finally, below let’s look at some Best Practice guidance currently in the DOE.
The Office of Field Management has issued a series of 33 Good Practice

Guides. Though they are not official guidance, each guide describes the
good practices used throughout DOE and industry for specific topic including
Earned Value Management, and provides examples of performance
objectives, criteria, and measures.
Earned Value Management History
With the understanding of what Earned Value is and why it used, let’s take a
brief look at the history of Earned Value.
1960s - Earned value-based performance management began in the 60s,

based initially on Department of Defense (DOD) Cost/Schedule Control
Systems Criteria (C/SCSC).
– Earned Value was used as an objective measure for progress, i.e., physical
accomplishment
1970s-80s – The DOD continued the use of Earned Value in response to

bearing cost and schedule risk in cost-plus contracting.
– Contractors pushing high tech, newly developed weaponry
– Military having critical schedule needs (“Arms Race”)
1990s – Policy moved Earned Value into all Federal agencies

– OMB Circular: A-11, NASA Policy Directive 9501.3, DOD 5000.2R, and DOE
Order 413.3 to name a few
Traditional Management vs. Earned Value Management
To better understand Earned Value Management, let’s take a look at how

earned value management compares with traditional management.
There is an important and fundamental difference between the data available

for analysis in a traditional management environment as compared to an
environment using earned value.
Following pages will discuss and contrast the different between the two
management approaches.
Traditional Management
In Traditional management, there are two data sources, the budget (or planned)
expenditures and the actual expenditures. The comparison of budget versus
actual expenditures merely indicates what was planned to be spent versus
what was actually spent at any given time. But how much has been produced?
As you can see, with this approach there is no way to determine the physical
amount of work performed. It does not indicate anything about what has
actually been produced for the amount of money spent nor whether it is being
produced at the rate, or according to the schedule, originally planned. In other
words, it does not relate the true cost performance of the project.
70
As the graph shows,
60
this comparison
50
only represents the
40
relationship of what 30
was budgeted 20
(planned) versus 10
Time Now
what was actually 0

J F M A M J J A S O N D
spent.
Budget 5 10 15 20 25 30 35 40 45 50 55 60
Actuals 10 20 30 40 50 60
Earned Value Management
In Earned Value Management, unlike in traditional management, there are

three data sources:
– the budget (or planned) value of work scheduled
– the actual value of work completed
– the “earned value” of the physical work completed
Earned Value takes these three data sources and is able to compare the
budgeted value of work scheduled and compare it to the “earned value of
physical work completed” and the actual value of work completed.
Let’s take a closer look at how earned value appears in a graph.
Notice the three lines on the graph below. These lines correspond to the three
components of earned value: budget (in red), actual expenditures (in blue),
and the earned value of the production (in black). Note how the budget line is
below both the actual expenditures and the earned value lines. What does
this indicate?
First, it is obvious that the project is expending more (blue line) than it was
budgeted to spend, to date 150
(red line). Given the 125
progression of each line, it 100
is also apparent that this 75
50
trend has occurred since
25
the beginning of the Time Now
0
project. J F M A M J J A S O N D
Budget 5 10 15 20 25 30 35 40 45 50 55 60
But what else can be Actuals 10 20 30 40 50 60
interpreted from the Earned 8 15 25 30 35 45
Forecast 70 80 90 100 110 120
graph? Let’s take a closer
look on the next page.
In addition to tracking budget and actual expenditures, the graph indicates

what has been completed or “earned”.
By comparing the budget line (in red) to the earned value line (in black), it is
immediately apparent that the project is producing more than it was budgeted
to produce to date. Additionally, by comparing the actual expenditures (in
blue) to the earned value line (in black), it is immediately apparent that the
project is spending more then it was budget to date. So while the project is
expending more (blue line) than budgeted (red line), it is also producing more
(black line) than budgeted.
So what conclusions can be drawn from this graph? Let’s find out on the next
150
page.
125
100
75
50
25
Time Now
0
Budget 5 10 15 20 25 30 35 40 45 50 55 60
Actuals 10 20 30 40 50 60
Earned 8 15 25 30 35 45
Forecast 70 80 90 100 110 120 Module 1 - Introduction 11
There are two conclusions the earned value data will immediately let you make;
they deal with schedule and cost variances.
Schedule Variance - the project is experiencing a schedule variance of 15. This

is derived from comparing the Earned (45) to the Budget (30). Another way
of stating this is that the project is ahead of schedule in comparison to what
was supposed to be done in the frame time measured.
150
125
100
75
50
25
Time Now
0
Budget 5 10 15 20 25 30 35 40 45 50 55 60
Actuals 10 20 30 40 50 60
Earned 8 15 25 30 35 45
Forecast 70 80 90 100 110 120
Cost Variance - the project is experiencing a cost variance of -15. This is

derived from comparing the Earned (45) to the Actual expenditures (60).
Another way of stating is that the project is experiencing an overrun of 15.
This cost variance is very important because history tells us that overruns in
cost do not correct themselves and need management intervention.
Along with the schedule and cost results discussed, earned value management
enables you to forecast the final results of the project (blue dashed line).
150
125
100
75
50
25
Time Now
0
Budget 5 10 15 20 25 30 35 40 45 50 55 60
Actuals 10 20 30 40 50 60
Earned 8 15 25 30 35 45
Forecast 70 80 90 100 110 120
Summarizing Traditional Management vs. Earned Value
Management
In summarizing, Traditional management provides you with…
• How much money and time a particular job is likely to require prior to starting
and once stated, how much money was spent at any given time.
While Earned Value Management provides you with…
• How much money and time a particular job is likely to require prior to starting
and once stated, how much money was spent at any given time.
Plus
• Once started, what work has been accomplished to date for the funds
expended (what you got for what you spent)
• Once started, what the total job will cost at completion, and how long it will
take to complete
Earned Value in a Management Environment
Understanding how Earned Value fits into the program and project
management environment is also essential.
On the following page we will discuss and define items such as project vs.
program, project management, program management and the relationship
between them.
What is Program/Project Management?
Program/Project Management is the application of knowledge, skills, tools,

and techniques to meet or exceed stakeholder needs and expectations.
Program/Project Management requires the ability to get the job done:

– On Time!
– Within Budget!
– According to Specifications!
– With a High Level of Customer Satisfaction
Scope
These requirements are know as the
“Triple Constraint”
So how do projects and programs differ?

Take a look on the next page.
Quality
Time Cost/Resources
What is a Project vs. Program
The Characteristics of a Project are:

• Temporary endeavor undertaken to create a unique product or service
• Having a definite beginning and a definite end
The Characteristics of a Program are:

• A group of projects
• Managed in a corresponding way
• To obtain benefits not available from managing them individually
Earned Value Management vs Program/Project Management
Earned Value is a Program/Project management technique used to objectively

evaluate cost and schedule efficiency, thereby facilitating better management
of customer needs and expectations.
Earned Value Management is Program Management

a subset of Program/Project Project Management
Management. Budgeting
As this hierarchy indicates, Cost Proposals/Negotiations
Earned Value Management is Cost Collection
a component of Project Change Control
Management, which in turn is Earned Value Management
a component of Program Forecasting
Management. While many Funding
components comprise Resource Management
Program and Project Reporting
Management, this tutorial Risk Management
focuses on the Earned Value Scheduling
Management component.
Framework for an Earned Value Management System (EVMS)
So far, we have discussed what Earned Value is, why to use it, and how it fits
into a program and project management environment. Next, we need to
discuss the framework needed to implement earned value.
The EVMS framework can be divided into three phases:
1. Inputs - what is needed to implement Earned Value
1. Earned Value Methods – formulas, metrics and performance measurements

used
1. Outputs – reporting requirements (structure, time-phases, details)
On the following pages these three phases for developing an Earned Value
Management System (EVMS) will be discussed in more detail.
Inputs needed for Earned Value Management System (EVMS)
As you recall, the first phase of Earned Value is inputs. The inputs required for
an EVMS include:
• Work Breakdown Structure (WBS)
• Organizational Breakdown Structure (OBS)
• Project Schedule WBS/OBS
• Time-phased Baseline Budget Project
Schedule
• Cost/Resource Control Plan Resource Planning
Define/Assign
• Change Control Plan Schedule/Budget
Performance Measurement
Establish Baseline
Early Warning & Detection
Earned Value
These Items are covered in Management
System
Informed Management
Decisions
Modules 2 through 4 and Corrective Actions

Recovering Planning
Module 8 Accounting
System
$$$
If any of these items are not completed or are not completed appropriately, the
use of Earned Value will be compromised and your outputs will not properly
represent the program/project current and future status.
Earned Value Method needed for Earned Value Management System
(EVMS)
The second phase of Earned Value is the earned value method. The Earned
Value method required for an EVMS include:
• Planned Value (PV), Earned Value (EV) Actual Cost (AC)
• Metrics and Performance Measurements
• Forecasting
WBS/OBS
• Integrated Baseline Review Project
Schedule
Resource Planning
Define/Assign
Schedule/Budget
Establish Baseline
These Items are covered in Early Warning & Detection
Earned Value
Informed Management
Modules 5 through 7 Management
System
Decisions
Corrective Actions
Recovering Planning
Accounting
System
$$$
Once again, if any of these items are not completed or are not completed
appropriately, the use of Earned Value will be compromised and your
outputs will not properly represent the program/project current and future
status.
Outputs needed for Earned Value Management System (EVMS)
The last phase of Earned Value is the outputs. The outputs required for an
EVMS include:
• Reporting requirements
• Proper Analysis of Reports WBS/OBS
• Correct Action taken Project
Schedule
Resource Planning
Define/Assign
Schedule/Budget
Establish Baseline
Early Warning & Detection
Earned Value
These Items are covered in Management
System
Informed Management
Decisions
Modules 9,10 & 12 Corrective Actions

Recovering Planning
Accounting
System
$$$
Even if the first two phases are completed appropriately, improper analysis of
the outputs could cause inappropriate or inadequate actions to be taken
against the program/project and could either create problems that otherwise
would not exist or fail to fix the real problem that does exist.
Review of Module 1
“You cannot manage what you cannot measure…and what gets measured
gets done.”
--- Bill Hewlett, Hewlett Packard
Reviewing the major items of this module:

• Earned Value Management (EVM) is a systematic approach to the
integration and measurement of cost, schedule, and technical (scope)
accomplishments on a project or task
• DOE Order 413.3 is the approved policy
• In comparing Earned Value Management to Traditional Management,
Traditional Management does not allow for analysis of the physical amount
of work performed. Earned Value Management allows for both schedule
and cost analysis against physical amount of work performed
• Earned Value Management is a subset of Program/Project Management
• EVMS can be divided into three phases (Inputs, Earned Value method,
outputs) and all three most be completed appropriately for proper
management of the program/project
Summary of Module 1
At this point, we have examined the basics of earned value. As explored

previously, the following modules address in depth the components that
comprise earned value to help you incorporate earned value into your
projects.
If you have a firm grasp of the concepts covered in this module, you are ready
to progress to the next modules. Otherwise, review this module again to
ensure you have a solid understanding of the basics of the Earned Value
Management System.
This concludes Module 1.
Module 2: Work Breakdown Structure
Prepared by:
Module 2: Work Breakdown Structure
Welcome to Module 2. The objective of this module is to introduce you to Work

Breakdown Structure (WBS) and other supporting documents.
This module will include defining and illustrating the following topics:
• Work Breakdown Structure
• WBS dictionary
• Organizational Breakdown Structure (OBS)
• Responsibility Assignment Matrix (RAM)
Module 2 – Work Breakdown Structure 1

What is a Work Breakdown Structure?
Planning a project using earned value management is no different than the

initial planning necessary to implement any given project. There are basic
items that you need to know and understand as a project manager:
– What makes up my entire project (Scope)?

• What is the agreed upon work scope and what is additional work?
– What are my start and completion dates (Schedule)?
– How much is the project going to cost (Cost)?
Over the years, it was determined that project managers needed a tool to help
capture and control their project scope. This led to the development of a
Work Breakdown Structure (WBS).
On the following pages we will define and discuss a WBS.

The Work Breakdown Structure (WBS) is a tool that defines a project and
groups the project’s discrete work elements in a way that helps organize and
define the total work scope of the project. A WBS element may be a product,
data, a service, or any combination. WBS also provides the necessary
framework for detailed cost estimating and control along with providing
guidance for schedule development and control. Additionally the WBS is a
dynamic tool and can be revised and updated as BEST Management
Books
needed by the project manager. 1.
Each descending level of the

Project Management
WBS represents an increased - An Introduction
1.1
level of detailed definition of the

project work. As you can see in Writing Editing Publishing
Text Book Text Book
this WBS for developing the Text Book
1.1.1 1.1.2 1.1.3
BEST Management Book, the

work is broken down into all the Chapter 1
1.1.1.1
Chapter 2
1.1.1.2
Chapter 3
1.1.1.3
Editing
Chapter 1
1.1.2.1
Editing
Chapter 2
1.1.2.2
Editing
Chapter 3
1.1.2.3
discrete elements of work, the

total sum of which represents Project
Selection
Project
Organization
Project
Planning
Budget &
Cost
Scheduling
1.1.1.2.2
Project
Controls
Auditing
1.1.1.3.1
Administrative
Closeout
all the work and products 1.1.1.1.1 1.1.1.1.2 1.1.1.1.3 1.1.1.2.1 1.1.1.2.3 1.1.1.3.2
necessary to produce the book. Module 2 – Work Breakdown Structure 3

After reviewing the WBS on the previous page, an important point needs to be
reviewed. Although a WBS can be depicted so as to look like an
organizational chart, it IS NOT an organizational chart.
BEST Management
Books
1.
Remember the WBS defines a Project Management

- An Introduction
1.1
project and groups the project
elements for managing a Writing Editing Publishing
project. An organizational chart Text Book

1.1.1
Text Book
1.1.2
Text Book
1.1.3
describes the project team that

Chapter 1 Chapter 2 Editing Editing Editing
will accomplish the project. 1.1.1.1 1.1.1.2
Chapter 3
1.1.1.3 Chapter 1
1.1.2.1
Chapter 2
1.1.2.2
Chapter 3
1.1.2.3
Project Project Project Budget & Scheduling Project Auditing Administrative

Selection Organization Planning Cost 1.1.1.2.2 Controls 1.1.1.3.1 Closeout
1.1.1.1.1 1.1.1.1.2 1.1.1.1.3 1.1.1.2.1 1.1.1.2.3 1.1.1.3.2

Why is a Work Breakdown Structure needed?
Not all projects have a WBS, and it is true that some of these projects have been
successful. So why is a WBS needed? We have already looked at a few
reasons, but in review, the WBS:
– Provides a framework for organizing and managing the approved project
scope
– Helps ensure you have defined all the work that makes up the project
– Provides a framework for planning and controlling cost and schedule
information
– It’s better to be deliberate about planning than rely on luck!
Additionally, when you work for a company or organization that has many
projects being performed simultaneously, each of the projects is competing for
the limited resources available. The WBS enables you to review project
details and distinguish one project’s needs from others within the company or
organization. Why is distinguishing one project from another important? It
enables you to identify resource requirements and allocate resources more
effectively.
Now let’s look at preparing a WBS. Module 2 – Work Breakdown Structure 5

Preparing a WBS
In preparing a WBS there are a number of steps that need to be taken to make
sure the WBS developed will help manage your project. Below and on the
following pages we will discuss these steps.
1. Identify final project products necessary for achieving project success. The
WBS should assist the project manager in developing a clear vision of the
end product. You need to answer the following question:
– What must be delivered to achieve project success?
• You may need to review the project scope documents for guidance.
2. Identify the major deliverables necessary for project success.

– These are items that by themselves do not satisfy the project need but
combined make up a successful project
– Examples: a design completion, generator delivery, or acceptance
test completion
– In the DOE, these could be Critical Decisions (see DOE Order 413.3)
Preparing a WBS
3. Incorporate additional levels of detail until management requirements for

managing and controlling the project are met.
– Remember that each project is different, thus each WBS will be
different
– WBS’s from previous projects can be used as templates, but
remember that the management philosophy and the level of details
may be different from project to project
– Understand your controlling and reporting requirements
• Projects have different requirements; make sure you take these
into consideration when developing low level details
4. Review and refine the WBS until the stakeholders agree with the level of
project planning and reporting.
– Remember that no matter how detailed a WBS is, there are planning
and reporting restrictions a WBS creates. On the following pages, we
will look at examples of these restrictions.

Preparing a WBS
Let’s use the BEST Management Books’ WBS we looked at earlier. Assume
that the WBS was only planned down to the chapters level (see graph
below, left), but after the first month of work, the stakeholder wants reporting
at the subchapter level (see graph below, right). Without restructuring the
WBS and changing the other supporting systems, like cost tracking and
reporting, it is impossible for the project manager to meet the stakeholder’s
request.
Current Project WBS Project WBS Needed
Writing Writing
Text Book Text Book
1.1.1 1.1.1
Chapter 1 Chapter 2 Chapter 1 Chapter 2

1.1.1.1 1.1.1.2 1.1.1.1 1.1.1.2
Project Project Project Budget & Scheduling

Scheduling Project
Not Planned to this level Selection
1.1.1.1.1
Organization
Organization
1.1.1.1.2
Planning
1.1.1.1.3
Cost
1.1.1.2.1
1.1.1.2.2 Controls
1.1.1.2.3

Preparing a WBS
Now let’s reverse the situation. Assume WBS was planned down to the
subchapter level (see graph below, left), but after the first month of work, the
stakeholder wants reporting at the chapter level (see graph below, right). Is
there any restructuring needed to the WBS? The answer is “No”. Since you
planned the work at a level below what is now the stakeholder’s
requirement, you can “roll-up” and meet the stakeholder’s request.
Do you still see a problem with the project WBS? Let’s take a look.

Writing Writing
Text Book Text Book
1.1.1 1.1.1

1.1.1.1 1.1.1.2 1.1.1.1 1.1.1.2
.
Project
Selection
Project
Organization
Organization
Project
Planning
Budget &
Cost
Scheduling
Scheduling
1.1.1.2.2
Project
Controls
1.1.1.1.1 1.1.1.1.2 1.1.1.1.3 1.1.1.2.1 1.1.1.2.3
Preparing a WBS
Actually, there is not a problem with the WBS structure, but a problem with the
idea of time and cost. The project manager spent time and resources to
define the WBS down to a level that he determined was appropriate. The
only benefit could be that the project manager wishes to manage the
project at the lower level and will roll-up reporting for the stakeholder.
In review, always get stakeholders to agree with the level of project planning
and reporting.

Writing Writing
Text Book Text Book
1.1.1 1.1.1

1.1.1.1 1.1.1.2 1.1.1.1 1.1.1.2
Project Project Project Budget & Scheduling

Scheduling Project
Selection Organization
Organization Planning Cost 1.1.1.2.2 Controls
1.1.1.1.1 1.1.1.1.2 1.1.1.1.3 1.1.1.2.1 1.1.1.2.3
Preparing a WBS
In developing a WBS, one must realize that there are multiple ways to develop
a WBS for any given project. Some ways might be better than others, but
the two most important item to remember are that the WBS must contain all
approved scope and the Project Manager must develop the WBS to reflect
the way he/she intends to manage the project.
Other items to consider when developing a WBS are:

• Reporting requirements
• Size of project
• Resource executing the work (contractors vs. in-house)
• Complexity of the project
On the following two pages are examples of alternative WBS structures for
the BEST Management Books project.

Preparing a WBS
This WBS structure is designed to control scope

by chapters, unlike the original WBS which
was developed to control scope by writing
and editing.

Preparing a WBS
This WBS structure is taking into consideration

that the writing and editing will be executed
by a contractor. It still requires the contractor
to control scope by writing and editing by
chapter.

Building a WBS
Armed with the basics of the WBS, it is time to examine them in more detail and
to begin to understand how to build one. To do this, let’s look at building a
WBS for the construction of a single family home. First, take a moment to
familiarize yourself with some background information about the construction
company, which appears on the next page.

WBS: Structure
The ACME Housing Corporation, which you own, has been contracted to build
its first house. You want to be able to manage your projects effectively and
efficiently, so you charge your project managers to develop an appropriate
WBS. You decide to manage the project by the individual tasks necessary to
complete the house.
You hope that this is the first of many houses that ACME will build, so you start
the WBS with ACME in the highest position, or Level 1. Accordingly, Level 1
is given a WBS code of 1. You assign the WBS code of 1 to the highest level
because all future projects (houses) will be summarized at Level 1.
NOTE: For ease of explanation, our

example will assume the following:
• Design is complete Level 1 
• All permits issued
• All Material ordered
• Inspection happens
WBS: Structure
With Level 1 established, you can begin to complete the WBS. But what should
the next level be?
The logical next level for ACME is the project level. Level 2 is the level for each
individual project, or house, that ACME undertakes. As the chart shows
below, Level 2 is identified at the project level: House.
Appropriately, the code for Level 2 corresponds to Level 1. In this case, the
code is 1.1.
Level 1 
Level 2 

WBS: Structure
Now the WBS for the housing project is complete, right? Actually, no, the WBS
is not complete. At this point you determine that you want to divide the work
into the major elements needed to build a house. You choose to divide Level
3 into six elements: concrete, framing, plumbing, electrical, interior and
roofing. You realize that these are both major deliverables and milestones for
managing the project. They also enable you to get to your goal of managing
the project by task.
Notice the WBS codes at level 3. Each is unique to the project and starts with
the WBS code from the level above (11.11.1.1). Now lets look and see
if another level is needed.
Level 1 
Level 2 
Level 3 
WBS: Structure
The ACME WBS is taking shape, but it does not quite define the project at a
level that shows needed tasks for completion. To do this, one more level
needs to be included.
Level 4 of the WBS will enable us to manage
the project as desired. All of our contractors
fit into specific elements at level 4, and so
do all specific departments. As with the  Level 1
previous Levels, note the WBS codes that
have been assigned to the tasks and their
 Level 2
relationship to the previous Level.
Level 3 
Level 4 

WBS: Structure
What do you think? Is the WBS complete? Does it enable the manager to
manage at the task level?
After a review to make sure that only approved scope is included, our WBS is
complete. It does include the necessary components to manage the project
by task.

Work Breakdown Structure (WBS) Tree
1 ACME Housing Corporation

The graphical structure of the WBS is an easy 1.1 New Home Construction
1.1.1 Concrete
way to identify the project components and 1.1.1.1 Pour Foundation
relationships of those components; 1.1.1.2 Install Patio
1.1.1.3 Pour Stairway
however, the WBS can be displayed in
1.1.2 Framing
another format as well: the Tree format. 1.1.2.1 Frame Exterior Walls
Both formats are acceptable. The graphical 1.1.2.2 Frame Interior Walls
1.1.2.3 Install Roofing Trusses
format is at times easier to understand, but 1.1.3 Plumbing
can take up considerable space in a report. 1.1.3.1 Install Water Lines
The tree is not as easy to understand but is 1.1.3.2 Install Gas Lines
1.1.3.3 Install B/K Fixtures
more easily incorporated into a report 1.1.4 Electrical
format. 1.1.4.1 Install Wiring
1.1.4.2 Install Outlets/Switches
Note the WBS codes and the structure of the 1.1.4.3 Install Fixtures
Levels in the Tree format mirror the 1.1.5 Interior
graphical format. The content has not 1.1.5.1 Install Drywall
1.1.5.2 Install Carpets
changed; only the way the content is 1.1.5.3 Install Painting
presented has changed. 1.1.6 Roofing
1.1.6.1 Install Felt
1.1.6.2 Install Shingles
1.1.6.3 Install Vents
WBS and Earned Value
Now that you understand the WBS and how to assemble one, let’s examine
how it relates to earned value.
In Module 1, we discussed that in implementing earned value, a project
manager must have control of the project’s “triple constraint” (scope,
schedule and cost). Unlike traditional management, which tracks two
components (budget and expenditures), earned value considers three and
provides a more robust understanding of a project’s overall progress and
health.
The WBS is the most important item in defining and controlling the project
scope. How does it control the scope? If the WBS is not developed correctly
and does not capture all the project scope and only the project scope, then
the “earned value” system built using the WBS will be inaccurate. The project
manager will lose control of the project before it even begins.
Now that you have your WBS, let’s take a look on the next page at the other
item needed to properly organize your project.

WBS Dictionary
Once the WBS is complete, the WBS dictionary needs to be the next item
developed. The WBS dictionary is a narrative documentation of the effort
needed to accomplish all work defined in the WBS. The WBS dictionary is
developed for the lowest level element in the WBS only.
To better understand how a WBS and a WBS dictionary work, let’s compare it
to a book and the book’s table of contents:
– The WBS is the table of contents for the project. It captures the
contents in an organized fashion (chapters, subchapter).
– The WBS dictionary is the book itself. It tells the story. In our case the
story is what work will be accomplished and what outputs will be
produced in each of the WBS elements. The total of these descriptions
is how a house will be built and what is needed to build the house.
The WBS dictionary will often lead to the development of the statements of
work (SOW) for the project. SOWs will be discussed in later modules.

Organization Breakdown Structure (OBS)
Now that our WBS is developed, the appropriate resources and responsibilities
need to assigned. The first step in doing this is developing the
Organizational Breakdown Structure (OBS) for the project. The OBS
indicates the organizational relationships and is used as the framework for
assigning work responsibilities. Below is an example of the OBS for the
ACME house building project. The OBS is structured by Responsible
Department and then by Performing Department at the lowest level. This
Performing Department level is were the responsibility and resource needed
to accomplish the project will be assigned.
PROJECT OFFICE
RESP DEPT
B. Smithers
CIVIL STRUCTURAL ELECTICAL PLUMBING

With the relationships RESP DEPT RESP DEPT RESP DEPT RESP DEPT
R. Kelly P. Tate J. Sims R. Lee
and responsibilities
defined, the second CONCRETE
PERF DEPT 6010
CARPENTRY
PERF DEPT 5010
WIRING
PERF DEPT 4010
WATER/SEWER
PERF DEPT 3010
and final step is to M. Manning R. Sites S. Johnson K. Wells
MASONRY ROOFING HOOKUP/TIE-IN GAS

merge the WBS and PERF DEPT 6020 PERF DEPT 5020 PERF DEPT 4020 PERF DEPT 3020
T. Greams Y. Taylor P. Ottis R. Oriely
OBS. Take a look on
TEST DRYWALL
the next page. PERF DEPT 6030 PERF DEPT 5030
K. Neumann D. Smith
Responsibility Assignment Matrix (RAM)
Merging the WBS and OBS, the project manager creates a Responsibility
Assignment Matrix (RAM). The RAM displays the lowest level of both the
WBS and the OBS. The integration identifies specific responsibility for
specific project tasks. It is at this
point that the project manager
develops control accounts or work
package. Control accounts and
work packages will be discussed
in Module 4. Lets look at what the
RAM may look like on the ACME
house construction project on the
next page.
PERF DEPT 3010
PERF DEPT 3020

WATER/SEW ER
R. Oriely
PLUMBING
RESP DEPT
K. Wells
GAS
R. Lee
PERF DEPT 4010
PERF DEPT 4020

HOOKUP/TIE-IN
S. Johnson
Responsibility
RESP DEPT
ELECTICAL
WIRING
P. Ottis
J. Sims
PROJ ECT OFFICE
B. Smithers
RESP DEPT
Assignment Matrix
PERF DEPT 5010
PERF DEPT 5020
PERF DEPT 5030

CARPENTRY
STRUCTURAL
DRYWALL
ROOFING
D. Smith
Y. Taylor
R. Sites
RESP DEPT
P. Tate
PERF DEPT 6010
PERF DEPT 6020
PERF DEPT 6030

K. Neumann
CONCRETE
M. Manning
MASONRY
T. Greams
RESP DEPT
TEST
R. Kelly
CIVIL

Below is part of the RAM for the ACME housing project.

– The lowest level of the WBS appears across the top
– The lowest level of the OBS appears on the vertical axis
An “X” appears at the intersection of the WBS task and OBS personnel. The “X”
defines the specific performing department (from the OBS) assigned to
complete a task (from the WBS).
CONCRETE FRAMING PLUMBING
1.1.1 1.1.2 1.1.3
Frame Frame Install Install
Pour Pour Exterior Interior Roofing Water Install Gas Install B/K
Foundation Install Patio Stairway Walls Walls Trusse Lines Lines Fixtures
Performing Dept. Manager 1.1.1.1 1.1.1.2 1.1.1.3 1.1.2.1 1.1.2.2 1.1.2.3 1.1.3.1 1.1.3.2 1.1.3.3
CONCRETE
DEPT 6010 Manning X X X
MASONRY
DEPT 6020 Greams X
TEST
DEPT 6030 Neumann X X X
CARPENTRY
DEPT 5010 Sites X X X
ROOFING
DEPT 5020 Taylor X
DRYWALL
DEPT 5030 Smith X
WIRING
DEPT 4010 Johnson
HOOKUP/TIE-IN
DEPT 4020 Ottis
WATER/SEWER
DEPT 3010 Wells X X
GAS
DEPT 3020 Oriely X X
To better understand the RAM, consider the ACME housing project.

The OBS specifies Mr. Sites and the carpentry department as responsible for
framing the exterior walls. Therefore, in the RAM, an X appears at the cross-
section between the task, framing the exterior walls, and the responsible party,
Mr. Sites. Additionally, Mr. Sites is also responsible for framing the interior
walls and installing the roofing trusses.
1.1.1 1.1.2 1.1.3
CONCRETE
DEPT 6010 Manning X X X
MASONRY
DEPT 6020 Greams X
TEST
DEPT 6030 Neumann X X X
CARPENTRY
DEPT 5010 Sites X X X
ROOFING
DEPT 5020 Taylor X
DRYWALL
DEPT 5030 Smith X
WIRING
DEPT 4010 Johnson
HOOKUP/TIE-IN
DEPT 4020 Ottis
WATER/SEWER
DEPT 3010 Wells X X
GAS
DEPT 3020 Oriely X X

Alternatively, hours and dollars may be used in the RAM rather than an “X”.
Using our ACME House example, the “X” was replaced with the hours
needed to complete the task. Now we see that Mr. Sites has 300 hours to
frame the exterior walls, 250 hours to frame the interior walls and 175 hours
to install the roofing trusses.
1.1.1 1.1.2 1.1.3
CONCRETE
DEPT 6010 Manning 200 125 85
MASONRY
DEPT 6020 Greams 50
TEST
DEPT 6030 Neumann 20 10 5
CARPENTRY
DEPT 5010 Sites 300 250 175
ROOFING
DEPT 5020 Taylor 100
DRYWALL
DEPT 5030 Smith 275
WIRING
DEPT 4010 Johnson
HOOKUP/TIE-IN
DEPT 4020 Ottis
WATER/SEWER
DEPT 3010 Wells 100 15
GAS
DEPT 3020 Oriely 125 25
Review of Module 2
Take some time to review the major items of this module:

• The Work Breakdown Structure (WBS) is a tool that defines a project and
groups the projects elements in a way that helps organize and define the
total work scope of the project
• In preparing a WBS there are a number of steps that need to be taken
including:
– identifying the final project product
– identifying the major deliverables
– incorporating the appropriate levels of detail
– obtaining stakeholder agreement
• WBS Dictionary is a narrative description of the lowest level for each WBS
element
• Organizational Breakdown Structure (OBS) indicates the organizational
relationships and is used as the framework for assigning work
responsibilities
• Responsibility Assignment Matrix (RAM) merges the WBS and OBS to
identify the specific responsibility for specific project tasks
Summary of Module 2
At this point we have examined the WBS, OBS and RAM. These items are the
start for laying the groundwork for developing an earned value management
system (EVMS). In the next module you will examine these item in more
detail by looking at the development of control accounts, work packages
and the cost estimate.
If you have a firm grasp of the concepts covered in this module, feel free to
progress to the next module. Otherwise, review this module to ensure you
have a solid understanding of the basics for developing a WBS, OBS and
RAM

Module 3: Project Scheduling
Prepared by:
Module 3: Project Scheduling

Project Scheduling.
The Topics that will be addressed in this Module include:
• Define Planning vs. Scheduling
• Define and Illustrate Basic Scheduling Concepts
• Define Logic Relationships and Critical Path
• Define and Illustrate Different Schedule Formats
Module 3 – Project Scheduling 1

Review of Previous Modules
Let’s quickly review what has been covered in the previous modules.
• In Module 1 we introduced you to earned value and the requirements for

properly implementing an earned value management system (EVMS).
• In Module 2 we discussed
– the first steps in the planning process
– development of the work breakdown structure (WBS)
– organizational breakdown structure (OBS)
– the integration of WBS and OBS in creating the responsibility assignment matrix
(RAM)
• The next step in this process is to develop the project schedule. So the first
question we need to ask is what is scheduling?

What is Scheduling?
There are multiple ways of defining scheduling. Scheduling is:
…Forming a network of activities and event relationships that portrays the sequential
relations between the tasks in a project…
…Planned completion of a project based on the logical arrangement of activities,
resources…
…Placing the project and its activities in a workable sequenced timetable…
…A detailed outline of activities/tasks with respect to time…
While scheduling is all of these things, the main thing to remember is that
scheduling is the development of planned dates
for performing project activities and meeting milestones.
By looking at the aforementioned definitions of scheduling, do you see a

difference between planning and scheduling? Let’s take a look on the next
page.
Planning vs. Scheduling
“I keep six honest serving men (they taught me all I knew); their names
are What and Why and When and How and Where and Who.”
--- Rudyard Kipling
Planning involves making decisions with the objective of influencing the future.
Another way to consider planning is as the “thinking” phase. Defining
activities, their logical sequence, and their relationship to each other are all
planning functions. In planning you answer the following questions:
What will be performed?

• This question is answered by determining the final project product necessary
for achieving project success. This is done in the initiation phase before the
development of your WBS.
How will it be performed?

• This question is answered by determining the processes, procedures, and
methodologies used to complete the project.
Where will it be performed?

• This answer varies for each type of project. For example, if it’s a
construction project, the “where” will be the physical location of the building
or road etc. If the project is a software development project, the answer
could be the physical location of the project team or the final location of the
project software.
Who will perform the work?

• This question is answered by determining if the work will be contracted or
will use in-house resources. Then, the question will be examined in even
more detail: if a contractor, what type of contractor, and if company resource,
what department and who in each department?
In what sequence?
• This question involves determining the order in which activities will be
performed to complete the project.

With five main questions answered, only one last question remains: when. This
question involves scheduling.
Scheduling determines the timing of operations in the project. The schedule

will determine the specific start and completion dates for the project and all
project activities. Another way to look at scheduling is to consider it the
“action” or “doing it” phase. In scheduling you answer the question:
When will the work be performed?

• Scheduling includes the project start and completion dates, project
deliverables and milestones dates, and the start and completion dates for all
activities needed to successfully complete the project.
Equipped with an understanding of the difference between planning and

scheduling, let’s look on the next page at the scheduling requirement needed
in an earned value management system (EVMS).

Project Scheduling
To satisfy the earned value management system (EVMS) criteria, the schedule
must:
• Include logical ties for all activities

• Include all key milestones and deliverables
• Reflect the agreed to project baseline
• Integrate with the cost baseline
We will discuss the last two bullet points in Module 5.
On the following pages, we will discuss the process for developing a project
schedule, including how to ensure it is logical and how to ensure that it
includes all key milestones and deliverables.

Project Scheduling
Project scheduling in the earned value management system involves a clear,

five step process. This process aids managers in determining the project
schedule and, eventually, the project schedule baseline. The process steps
are:
1. Develop the list of project activities
2. Sequence the list of project activities
3. Determine the relationships between activities
4. Establish the duration for each activities
5. Determine the project duration (start and completion dates)
For the purpose of explaining the process in detail, we will use the smaller
BEST Management Books project from Module 2 instead of the ACME
House Building project. At the end of the process will will look at the
outcome of using this process on the ACME House Building project.

Scheduling - Step 1. Develop a List of Project Activities
Developing a list of project activities is as simple as it sounds: list all activities

that are needed to complete the project. Do not order or rank them yet, as
this step comes later. This list needs to be as complete as possible. You
can add and subtract activities throughout the process, but the more
complete the list is now, the easier the process will be.
BEST Management
Using the BEST Management Book example Books
1.
from Module 2, we will use the lowest level of

BEST’s WBS as our activity list. The list for this Project Management
example is relatively short; however, the list for - An Introduction
1.1
your projects will most likely reflect more

detailed activities for each task. Writing Editing Publishing
Text Book Text Book Text Book
1.1.1 1.1.2 1.1.3
Let’s take a look at our activity

list on the following page. Chapter 1
1.1.1.1
Chapter 2
1.1.1.2
Chapter 3
1.1.1.3
Editing
Chapter 1
Editing
Chapter 2
Editing
Chapter 3
1.1.2.1 1.1.2.2 1.1.2.3

Selection Organization Planning Cost 1.1.1.2.2 Controls 1.1.1.3.1 Closeout
1.1.1.1.1 1.1.1.1.2 1.1.1.1.3 1.1.1.2.1 1.1.1.2.3 1.1.1.3.2

Scheduling – Step 1. Develop a List of Project Activities
Here is the initial list of activities for the BEST Project Management book.
There are two things to remember at this stage of the process.
1. The activity list is not a complete list; additions and subtractions will be
made from it.
2. As you develop your list, you may see the need to update the WBS.
Remember the WBS is a dynamic tool, revisions may be needed and
should be expected as the scheduling of activities progresses.
WBS Activity List
1.1 Start Development of Project Management Book
For this example, we will assume
1.1.1.1.1 Writing Project Selection section for Chapter 1 that this is a complete list of
1.1.1.1.2 Writing Project Organization section for Chapter 1
1.1.1.1.3 Writing Project Planning section for Chapter 1
activities, and no revision to the
1.1.1.2.1 Writing Budget and Cost section for Chapter 2 WBS is needed.
1.1.1.2.2 Writing Scheduling section for Chapter 2
1.1.1.2.3 Writing Project Controls section for Chapter 2
1.1.1.3.1 Writing Auditing section for Chapter 3
1.1.1.3.2 Writing Administrative Closeout section for Chapter 3
1.1.2.1 Editing Chapter 1
1.1.3 Publishing Project Management Book
1.1 Finished Development of the Project Management Book
Scheduling – Step 2. Sequence the List of Project Activities
With the activity list complete, we need to “sequence” or develop “logic”

between activities. To complete this process we need the WBS activities list
and a pencil.
A pencil? Why a pencil?
This process requires the project manager, subject matter experts (SME), and
other project team members who are familiar with the nature of the specific
activities to meet, discuss and develop the sequencing of the project
activities. This process is known as “a pencil to paper” process.
Continuing to use our BEST Management book example, we will take a look at
this sequencing process on the next page.

Scheduling – Step 2. Sequence the List of Project Activities
1. Start with the WBS… …2. Develop the Activity List….

BEST Management
Books
1.
WBS Activity List

1.1 Start Development of Project Management Book
Project Management 1.1.1.1.1 Writing Project Selection section for Chapter 1
- An Introduction
1.1 1.1.1.1.2 Writing Project Organization section for Chapter 1
1.1.1.1.3 Writing Project Planning section for Chapter 1
1.1.1.2.1 Writing Budget and Cost section for Chapter 2
Writing Editing Publishing 1.1.1.2.2 Writing Scheduling section for Chapter 2
Text Book Text Book Text Book
1.1.1 1.1.2 1.1.3
1.1.1.3.1 Writing Auditing section for Chapter 3
Chapter 1 Chapter 2 Chapter 3 Editing Editing Editing 1.1.2.1 Editing Chapter 1
1.1.1.1 1.1.1.2 1.1.1.3 Chapter 1 Chapter 2 Chapter 3
1.1.2.1 1.1.2.2 1.1.2.3 1.1.2.2 Editing Chapter 2
1.1.3 Publishing Project Management Book
Selection Organization Planning Cost 1.1.1.2.2 Controls 1.1.1.3.1 Closeout 1.1 Finished Development of the Project Management Book
1.1.1.1.1 1.1.1.1.2 1.1.1.1.3 1.1.1.2.1 1.1.1.2.3 1.1.1.3.2
Writing Project Writing Project

Organization section for Planning section for Editing Chapter 1
Chapter 1 Chapter 1
Publishing Project
Management Book
Writing Project
Selection section for
Chapter 1
Writing Budget and

Writing Scheduling Writing Project Controls
Cost section for Editing Chapter 2
section for Chapter 2 section for Chapter 2
Chapter 2
3. …Use the WBS and Activity List to

develop the project activity sequence Writing Auditing section
Writing Administrative
or logic… for Chapter 3

Closeout section for
Chapter 3
Editing Chapter 3

Scheduling - Step 3. Determine the Relationship Between Project
Activities
Once the sequence has been established, you need to determine the direct
relationship between each activity. But how does sequencing differ from
identifying the relationships of tasks and activities?
Sequencing is the order of how things will happen. First, second, third, etc. . .
Identifying direct relationships provides greater understanding to the project

tasks and schedule. By identifying the relationships between activities in
scheduling, you identify the sequence plus dependencies of tasks. There are
4 types of scheduling dependencies:
• FS – Finish to Start
• SS – Start to Start
• FF – Finish to Finish
• SF – Start to Finish

Scheduling - Step 3. Determine the Relationship Between Project
Activities
There are two methods for developing project

• FS – Finish to Start sequence and relationships:
• SS – Start to Start Precedence Diagramming Method (PDM)
• FF – Finish to Finish Arrow Diagramming Method (ADM).
• SF – Start to Finish
We will use PDM in this module but will not
explore these scheduling methods in detail.
Let’s take a closer look at the first three scheduling dependencies. We will not
discuss the last dependence, as it is never used.

Types of Scheduling Dependencies
The first type of relationship is called Finish to Start (FS). This means that activity
“A” must finish before activity “B” can start.
Let’s look at this relationship using the BEST Management Books example:
Finish-To-Start
Writing Project Writing the

Organization FS Project Planning
section for section for
Chapter 1 Chapter 1
You must “Finish” writing the Project Organization section of Chapter 1 before
you can “Start” writing the Project Planning section for Chapter 1.

The second type of relationship is Start to Start (SS). This means that activity “B”
can start as soon as activity “A” starts.
Start-To-Start
Start BEST
Management
Books Project
SS Writing Project
Selection section
for Chapter 1
You can “Start” writing the Project Selection section for Chapter 1 as soon as
you “Start” the BEST Management Books Project.
. Prepared by: Booz Allen Hamilton
The third type of relationship is Finish to Finish (FF). This means that activity
“B” cannot finish until activity “A” finishes.
Finish-To-Finish
FF
Editing Chapter 3
Finish BEST
Management
Books Project
You cannot “Finish” the project, Finish BEST Management Book Project,
until you “Finish” Editing Chapter 3.
Step 3. Determine the Relationship Between Project Activities
Using the relationships we have just described, the BEST Management Books
project activities and the logical relationships among them is diagrammed
below. This is formally known as a Network Diagram.
Start BEST
Finish BEST
Management Book
Management Book
Project
Project
Writing Project FS Writing Project FS
Organization Section Planning Section for Editing Chapter 1 FF
SS FS
for Chapter 1 Chapter 1
FS
Publishing Project
Writing Project Management Book
Selection Section for
FS
Chapter 1
FS Writing Budget and FS Writing Project FS Writing Project FS

Cost Section for Scheduling Section Controls Section for Editing Chapter 2 FS
Chapter 2 for Chapter 2 Chapter 2
FS
FS
Writing Auditing FS Writing Administrative FS

Section for Closeout Section for Editing Chapter 3
Chapter 3 Chapter 3
With the relationships defined, we now need to establish the duration for each
activity. Let’s take a look on the next page.

Project Scheduling - Step 4. Establish the Duration for Each Activity
Now that you have the project network diagram, it is time to determine the
duration for each project activity. Once again, just like the sequencing
process: you need to enlist the help of the people or group of people familiar
with the nature of the project.
Establishing the duration of each project activity involves determining the work
periods needed to complete each identified activity. Work periods can be
– hours
– days
– weeks
– months, etc..
Regardless of the exact work period chosen, the period must be consistent for
all activities in the schedule. The project manager and team member(s)
must decide which work period is right for the project.

Methods for Determining Activity Duration
Two major duration estimating tools can help project managers estimate the
activity duration: the PERT and CPM.
Three time estimates can be applied to any activity:

– Optimistic (O)
– Pessimistic (P)
– Most Likely (M)
PERT uses the distribution’s Critical Path Method (CPM)

mean to determine individual requires only a one time
activity duration. Specifically, the estimate per activity. This
PERT formula is method uses only a Most Likely
(P + 4M + O) / 6 time estimate.
Let’s consider an example on the next page to understand better.

Methods for Determining Activity Duration: an Example
For the activity “Editing Chapter 1,” the following estimates are determined:
– (O) Optimistic estimate = 6 days
– (P) Pessimistic estimate = 18 days
– (M) Most Likely = 9 days
Using PERT, the following estimate is derived: (18 + 36 + 6) / 6 = 10 days.
Using CPM, the estimate is 9 days.
Legend
Time Estimates
• Optimistic (O)
• Pessimistic (P)
• Most Likely (M)
CPM = Most Likely time estimate

PERT = the distribution’s mean: (P + 4M + O) / 6

Project Scheduling - Step 4. Establish the Duration for Each Activity
Now let’s look at the duration estimate for the activities in the BEST
Management Books project. For the purposes of this tutorial, it does not
matter which duration estimating method was used.
WBS Activity Description Duration
1.1 Start Development of Project Management Book 0 wks
Here is a list of the activities in 1.1.1.1.1
1.1.1.1.2
Writing Project Selection section for Chapter 1
Writing Project Organization section for Chapter 1
8 wks
10 wks
the BEST Management Books 1.1.1.1.3 Writing Project Planning section for Chapter 1 9 wks
1.1.1.2.1 Writing Budget and Cost section for Chapter 2 9 wks
Project. The durations for each 1.1.1.2.2 Writing Scheduling section for Chapter 2 5 wks
activity have been determined. 1.1.1.2.3
1.1.1.3.1.
Writing Project Controls section for Chapter 2
Writing Auditing section for Chapter 3
7 wks
2 wks
From looking at the chart, what 1.1.1.3.2 Writing Administrative Closeout section for Chapter 3 1 wk
1.1.2.1 Editing Chapter 1 8 wks
is the work period chosen by the 1.1.2.2 Editing Chapter 2 8 wks
project manager? 1.1.2.3 Editing Chapter 3 4 wks
1.1.3 Publishing Project Management Book 4 wks
1.1 Finish Development of the Project Management Book 0 wks
The work period is weeks (wks). Remember the selected work period must
be consistent for all activities.
Scheduling – Quick Review
At this point, you have covered a good bit of information. Take some time now
to review what you have learned before you continue with the module.
So far in this module, we have covered four of the five steps related to project
scheduling:
1. Developing the list of project activities

2. Sequencing the list of project activities
3. Determining the relationship between each activity
4. Establishing the duration for each activity
The final step in this process is to determine the project duration (start and
completion dates) and the start and finish dates for each individual activity.
Take a closer look at this step on the following page.

Project Scheduling – Step 5. Determine Project Duration
Usually the project duration and activity start and completion dates are mapped
in a typical scheduling software application. The activities are placed in the
software tool, and the relationships are identified. The software calculates
the dates.
To better understand how the software calculates the dates, we will take a look
at the process known as Forward and Backward Pass.
The Forward Pass determines the The Backward Pass determines the
early start (ES) and the early finish late start (LS) and late finish (LF) of
(EF) of each activity. each activity.
Together, these processes give the total project duration, including the start
and finish dates for each activity. Additionally, the process will determine the
• critical path, which tells you the activities that cannot slip without increasing
the total duration of the project or moving the project completion date, and
• float, which tells you how much certain activities can slip without impacting
the total project duration.
We will look at critical path and float later in the module.

To start this process, let’s look at the Forward Pass.

The Forward Pass calculates the earliest date that each activity can start and
finish according to the logical sequence of work and the duration of each
activity. The Forward Pass yields the project duration.
Project Network Diagram

To start this process, a Project Network
Start BEST
Diagram and a chart will help estimate the Management Book
Project
Writing Project
appropriate dates. SS Organization Section
for Chapter 1
FS
Writing Project
Chart Selection Section for
Chapter 1
WBS Activity Duration ES EF LS LF
FS Writing Budget and

Cost Section for
Chapter 2

To begin the Forward Pass process, determine a project start date. Looking at
the BEST project, we will use January 1 as the project start date.
Start BEST
Management Book
The first activity that appears in the Network Diagram Project
is “Start BEST Management Books project.” SS

Writing Project
Organization Section
for Chapter 1
FS
Accordingly, the information appears in the Writing Project
corresponding chart. Selection Section for
Chapter 1
FS Writing Budget and

Cost Section for
Chapter 2
1.1 Start Development of Project Management Book 0 wks 1/1 1/1
The early start (ES) is 1/1 since this is the First activity and the start date for
the project is 1/1. The early finish (EF) for this activity is also 1/1 since it is a
milestone and a milestone has no duration.

Using the Network Diagram, the next activity is “Writing Project Selection
section of Chapter 1.” This activity is start to start (SS) with the previous
activity, thus its early start date is 1/1 (see chart). The early finish is
determine by the duration of the activity itself. This activity has a duration of
8 weeks, which translates to a early finish date of 2/25.
Start BEST
Management Book
Project
Writing Project
SS Organization Section
for Chapter 1
FS
Writing Project
Chapter 1
WBS Activity Duration ES EF LS LF FS Writing Budget and

1.1 Start Development of Project Management Book 0 wks 1/1 1/1 Cost Section for
Chapter 2
1.1.1.1.1 Writing Project Selection section for Chapter 1 8 wks 1/1 2/25

The next activity is “Writing the Project Organizational section of Chapter 1.” It
is finish to start (FS) with the previous activity. With the FS relationship in
mind, what is the early start date for this activity?
Start BEST
Management Book
Because you must finish writing the Project Project
Writing Project
Selection section before you start writing the SS Organization Section
for Chapter 1
FS
Project Organizational section, the early start Writing Project
date for the current activity is 2/26. The early Chapter 1
finish is once again calculated by using the FS Writing Budget and

Cost Section for
Chapter 2
duration of the activity, giving you a early
completion of 5/6.
1.1.1.1.2 Writing Project Organization section for Chapter 1 10 wks 2/26 5/6
Let’s look at one more.

The next activity is “Writing the Project Budget and Cost section of Chapter 2.”
It is finish to start (FS). Can you determine the activity that must finish,
before this activity can start?
Start BEST
Management Book
It is finish to start (FS) with Writing the Project Selection Project
Writing Project
SS
section: because you must finish writing the project FS
Organization Section
for Chapter 1
selection section before you start writing the project Writing Project
budget and cost section (same as Writing Project Chapter 1
Writing Budget and

Selection section), the early start date is also 2/26. The FS
Cost Section for
Chapter 2
early finish is once again calculated by using the duration
of the activity, giving you an early completion of 4/29.
1.1.1.2.1 Writing Budget and Cost section for Chapter 2 9 wks 2/26 4/29
This process is used to determine each activity’s ES and EF. On the page next
is the completed Forward Pass.
By looking at the chart below, can you determine the project duration, start and
completion dates?
1.1.1.1.3 Writing Project Planning section for Chapter 1 9 wks 5/7 7/8
1.1.1.2.2 Writing Scheduling section for Chapter 2 5 wks 4/30 6/3
1.1.1.2.3 Writing Project Controls section for Chapter 2 7 wks 6/4 7/22
1.1.1.3.1. Writing Auditing section for Chapter 3 2 wks 7/23 8/5
1.1.1.3.2 Writing Administrative Closeout section for Chapter 3 1 wk 8/6 8/12
1.1.2.1 Editing Chapter 1 8 wks 7/9 9/2
1.1.3 Publishing Project Management Book 4 wks 9/17 10/14
1.1 Finish Development of the Project Management Book 0 wks 10/14 10/14
Project Duration: 41 weeks or 205 days.

Project Start: January 1
Project Completion: October 14

With the Forward Pass complete, let’s look at the Backward Pass. The
Backward Pass calculates the latest date that each activity can start and
finish in order to meet the project end date.
Again, using the BEST Management Books example, let’s now address the
Backward Pass. The chart below contains the Forward Pass information.
Unlike the Forward
Pass, which started 1.1WBS Start Development of Project Activity
Management Book
Duration
0 wks
ES
1/1
EF
1/1
LS LF
with the first activity, 1.1.1.1.1 Writing Project Selection section for Chapter 1
1.1.1.1.2 Writing Project Organization section for Chapter 1
8 wks
10 wks
1/1
2/26
2/25
5/6
1.1.1.2.1 Writing Budget and Cost section for Chapter 2
the Backward Pass 1.1.1.1.3 Writing Project Planning section for Chapter 1 9 wks
9 wks
2/26
5/7
4/29
7/8
will start at the 1.1.1.2.2 Writing Scheduling section for Chapter 2
5 wks
7 wks
4/30
6/4
6/3
7/22
bottom of the chart 1.1.1.3.1. Writing Auditing section for Chapter 3
2 wks
1 wk
7/23
8/6
8/5
8/12
with the last activity 1.1.2.1
1.1.2.2
Editing Chapter 1
Editing Chapter 2
8 wks
8 wks
7/9
7/23
9/2
9/16
and work 1.1.2.3
1.1.3
Editing Chapter 3
Publishing Project Management Book
4 wks
4 wks
8/13
9/17
9/9
10/14
backwards. 1.1 Finish Development of the Project Management Book 0 wks 10/14 10/14
Start at the end and go backwards

The process works the same as the Forward Pass but in the opposite direction.
Once again using the Network Diagram, the last activity is “Finish the
Development of the Project Management Book” (see below). The late finish
(LF) and the late start (LS) will be the same as the early start (ES) and early
finish (EF) since it is the final activity. Finish BEST
Management Book
Project
Editing Chapter 1 FF
FS
Publishing Project
WBS Activity Duration ES EF LS LF Management Book
1.1 Start Development of Project Management Book 0 wks 1/1 1/1 FS
Editing Chapter 2 FS
1.1.1.2.2 Writing Scheduling section for Chapter 2 5 wks 4/30 6/3 FS
1.1.1.3.2 Writing Administrative Closeout section for Chapter 3 1 wk 8/6 8/12 Editing Chapter 3
1.1.3 Publishing Project Management Book 4 wks 9/17 10/14 9/17 10/14
1.1 Finish Development of the Project Management Book 0 wks 10/14 10/14 10/14 10/14
The next activity is “Publishing Project Management Book,” and it is finish to

finish (FF) with the “Finish Development” activity. Thus, the LF and LS are
also the same as the ES and EF.
Looking at the Network Diagram on the previous page, you see that there are
three activities that have a relationship with Publishing Project Management
Book:
– Editing Chapter 1
Also note that the relationships are all finish to start (FS). With this in mind,
what is the LF and LS for each activity?
1.1.1.2.2 Writing Scheduling section for Chapter 2 5 wks 4/30 6/3
1.1.1.3.2 Writing Administrative Closeout section for Chapter 3 1 wk 8/6 8/12
1.1.2.1 Editing Chapter 1 8 wks 7/9 9/2 7/23 9/16
Because “Publishing
Project Management 1.1 Start Development of Project Management Book 0 wks 1/1 1/1
Book” has an LS of 1.1.1.1.2
1.1.1.2.1
Writing Project Organization section for Chapter 1
Writing Budget and Cost section for Chapter 2
10 wks
9 wks
2/26
2/26
5/6
4/29
9/17 and all three 1.1.1.2.2 Writing Scheduling section for Chapter 2 5 wks 4/30 6/3
activities are finish to 1.1.1.3.1.
1.1.1.3.2
Writing Auditing section for Chapter 3
Writing Administrative Closeout section for Chapter 3
2 wks
1 wk
7/23
8/6
8/5
8/12
start (FS), the late 1.1.2.1
1.1.2.2
Editing Chapter 1
Editing Chapter 2
8 wks
8 wks
7/9
7/23
9/2
9/16
7/23
7/23
9/16
9/16
finish (LF) for each 1.1.3 Publishing Project Management Book 4 wks 9/17 10/14 9/17 10/14
must be 9/16.
How do you determine the late start (LS) for each activity? Subtract the
duration for each activity from LF, as shown in the chart.

Here is the completed list of all the activities, including the early starts (ES),
early finishes (FS), late starts (LS) and late finishes (LF). What can you
determine about the project from this data?

1.1 Start Development of Project Management Book 0 wks 1/1 1/1 1/1 1/1
1.1.1.1.1 Writing Project Selection section for Chapter 1 8 wks 1/1 2/25 1/1 2/25
1.1.1.1.2 Writing Project Organization section for Chapter 1 10 wks 2/26 5/6 3/12 5/20
1.1.1.2.1 Writing Budget and Cost section for Chapter 2 9 wks 2/26 4/29 2/26 4/29
1.1.1.1.3 Writing Project Planning section for Chapter 1 9 wks 5/7 7/8 5/21 7/22
1.1.1.2.2 Writing Scheduling section for Chapter 2 5 wks 4/30 6/3 4/30 6/3
1.1.1.2.3 Writing Project Controls section for Chapter 2 7 wks 6/4 7/22 6/4 7/22
1.1.1.3.1. Writing Auditing section for Chapter 3 2 wks 7/23 8/5 7/30 8/12
1.1.1.3.2 Writing Administrative Closeout section for Chapter 3 1 wk 8/6 8/12 8/13 8/19
Take a look on the next page.

From the Forward Pass information, we know the Project duration, Project
Start, and Completion date.

Now it is time to use the information from the Backward Pass to determine the
project’s critical path.

The Critical Path tells you the activities that cannot slip a day without increasing
the total duration of the project or moving the project completion date. The
critical path is the longest path of logically related activities through the
network which cannot slip without impacting the total project duration.
Let’s look at calculating the critical path on the following page.

The Critical Path is calculated as follows:
Late Finish date (LF) - Early Finish date (EF)
• If the difference is Zero, then the activity is on the critical path.
• If the result is a number greater the zero, then the activity is not on the
critical path and has float.

To better understand critical path, look at the chart. Note a column was
added to calculate float and determine the critical path. From reviewing
the chart, what activities are on the critical path?
WBS Activity Duration ES EF LS LF Float
1.1 Start Development of Project Management Book 0 wks 1/1 1/1 1/1 1/1 0
1.1.1.1.1 Writing Project Selection section for Chapter 1 8 wks 1/1 2/25 1/1 2/25 0
1.1.1.1.2 Writing Project Organization section for Chapter 1 10 wks 2/26 5/6 3/12 5/20 14
1.1.1.2.1 Writing Budget and Cost section for Chapter 2 9 wks 2/26 4/29 2/26 4/29 0
1.1.1.1.3 Writing Project Planning section for Chapter 1 9 wks 5/7 7/8 5/21 7/22 14
1.1.1.2.2 Writing Scheduling section for Chapter 2 5 wks 4/30 6/3 4/30 6/3 0
1.1.1.2.3 Writing Project Controls section for Chapter 2 7 wks 6/4 7/22 6/4 7/22 0
1.1.1.3.1. Writing Auditing section for Chapter 3 2 wks 7/23 8/5 7/30 8/12 7
1.1.1.3.2 Writing Administrative Closeout section for Chapter 3 1 wk 8/6 8/12 8/13 8/19 7
1.1.2.1 Editing Chapter 1 8 wks 7/9 9/2 7/23 9/16 14
1.1.3 Publishing Project Management Book 4 wks 9/17 10/14 9/17 10/14 0
1.1 Finish Development of the Project Management Book 0 wks 10/14 10/14 10/14 10/14 0
All the activities with zero float are on the Critical Path!!!! But what exactly
does this mean? Take a look on the next page.

The Critical Path tells management the activities that are critical or essential in
completing the project on time. It is also important for management to look
at activities with minor float because any delays in those activities could
cause them to be on the critical path.
WBS Activity Duration ES EF LS LF Float
1.1 Start Development of Project Management Book 0 wks 1/1 1/1 1/1 1/1 0
1.1.1.1.1 Writing Project Selection section for Chapter 1 8 wks 1/1 2/25 1/1 2/25 0
1.1.1.1.2 Writing Project Organization section for Chapter 1 10 wks 2/26 5/6 3/12 5/20 14
1.1.1.2.1 Writing Budget and Cost section for Chapter 2 9 wks 2/26 4/29 2/26 4/29 0
1.1.1.1.3 Writing Project Planning section for Chapter 1 9 wks 5/7 7/8 5/21 7/22 14
1.1.1.2.2 Writing Scheduling section for Chapter 2 5 wks 4/30 6/3 4/30 6/3 0
1.1.1.2.3 Writing Project Controls section for Chapter 2 7 wks 6/4 7/22 6/4 7/22 0
1.1.1.3.1. Writing Auditing section for Chapter 3 2 wks 7/23 8/5 7/30 8/12 7
1.1.1.3.2 Writing Administrative Closeout section for Chapter 3 1 wk 8/6 8/12 8/13 8/19 7
1.1.3 Publishing Project Management Book 4 wks 9/17 10/14 9/17 10/14 0
1.1 Finish Development of the Project Management Book 0 wks 10/14 10/14 10/14 10/14 0
Lets look at the table above in a PERT chart format.

Below is the PERT chart layout of the project. The boxes in red indicate those
activities on the critical path. The blue boxes are for all other activities.
Notice the information in the boxes, it shows the activity name, duration,
early start and finish, and late start and finish. See the legend below for
details.
Writing
WritingProject
Project
Organization
Organizationsection
section Duration
for Chapter 1
Start Development Early Start 10 wks
10 wks Early Finish
of Project
Management Book 2/26/2002 5/6/2002
2/26/2002 5/6/2002
0 days 3/12/2002 5/20/2002
3/12/2002 5/20/2002
1/1/2002 1/1/2002 Late Start Late Finish
1/1/2002 1/1/2002
W riting Project W riting Project W riting Project

Publishing Project
Selection section Organization section Planning section for Editing Chapter 1
Management Book
for Chapter 1 for Chapter 1 Chapter 1 8 wks
4 wks
8 wks 10 wks 9 wks 7/9/2002 9/2/2002
9/17/2002 10/14/2002
1/1/2002 2/25/2002 2/26/2002 5/6/2002 5/7/2002 7/8/2002 7/23/2002 9/16/2002
9/17/2002 10/14/2002
1/1/2002 2/25/2002 3/12/2002 5/20/2002 5/21/2002 7/22/2002
W riting
W riting Budget and W riting Project Finish Development
W riting Scheduling W riting Auditing Administr ative
Cost section for Controls section for Editing Chapter 3 of the Project
section for Chapter 2 section for Chapter 3 Closeout section
Chapter 2 Chapter 2 4 wks Management Book
5 wks 2 wks for Chapter 3
9 wks 7 wks 8/13/2002 9/9/2002 0 days
4/30/2002 6/3/2002 7/23/2002 8/5/2002 1 wk
2/26/2002 4/29/2002 6/4/2002 7/22/2002 8/20/2002 9/16/2002 10/14/2002 10/14/2002
4/30/2002 6/3/2002 7/30/2002 8/12/2002 8/6/2002 8/12/2002
2/26/2002 4/29/2002 6/4/2002 7/22/2002 10/14/2002 10/14/2002
8/13/2002 8/19/2002
Editing Chapter 2
8 wks
7/23/2002 9/16/2002
7/23/2002 9/16/2002

Now that we have covered the entire process with the BEST Management
project in detail, lets apply it to the ACME House Building project from
Module 2. It reveals the following information:
Activity Duration ES EF LS LF Float
Start House Construction 0 days 1/15 1/15 1/15 1/15 0
Pour foundation 6 days 1/15 1/22 1/15 1/22 0
Install Patio 6 days 1/23 1/30 3/21 3/28 57
Pour stairway 2 days 1/31 2/1 3/29 4/1 59
Concrete Complete 0 days 2/1 2/1 4/1 4/1 59
Frame exterior walls 13 days 1/23 2/8 1/23 2/8 0
Frame interior walls 7 days 2/11 2/19 2/11 2/19 0
Project Duration: Install roofing trusses 4 days 2/20 2/25 2/20 2/25 0
Framing Complete 0 days 2/25 2/25 2/26 2/26 1
55 days Install waterlines 7 days 2/20 2/28 2/25 3/5 5
Install gas lines 3 days 2/22 2/26 3/1 3/5 7
Install B/K fixtures 5 days 3/1 3/7 3/26 4/1 25
Plumbing Complete 0 days 3/7 3/7 4/1 4/1 25
Project Start: Install wiring 5 days 2/20 2/26 2/27 3/5 7
Install outlets/switches 4 days 3/22 3/26 3/22 3/26 0
1/15 Install fixtures
Electrical Complete
4 days
0 days
3/27
4/1
4/1
4/1
3/27
4/1
4/1
4/1
0
0
Install drywall 7 days 3/6 3/14 3/6 3/14 0
Painting 5 days 3/15 3/21 3/15 3/21 0
Install Carpeting 2 days 3/22 3/25 3/29 4/1 7
Project Complete: Interior Complete 0 days 3/25 3/25 4/1 4/1 7
Install felt 4 days 2/26 3/1 2/26 3/1 0
4/1 Install shingles 2 days 3/4 3/5 3/4 3/5 0
Install vents 3 days 3/6 3/8 3/12 3/14 6
Roofing Complete 0 days 3/8 3/8 3/15 3/15 7
House Complete 0 days 4/1 4/1 4/1 4/1 0

Project Scheduling – Schedule Baseline
As mentioned early in the module, the earned value management system

schedule must:
• Include logical ties for all activities

• Include all key milestones and deliverables
• Reflect the agreed to project baseline
• Integrate with the cost baseline
At this point, we have examined the first two bullets; the next step in our
process is to reflect the schedule baseline. Take a moment now to
familiarize yourself with this step on the next page.

Schedule Baselining
Baseline is the original approved plan that consists of both schedule and cost.
The baseline is used as the foundation for measuring project performance.
In an Earned Value Management System (EVMS), the schedule and cost
baseline are essential.
The Schedule Baseline is the standard that all schedule performance will be
measured against. It should be approved by the project manager and other
appropriate individuals. Once the project manager approved the project
start, logic, relationships and project duration, the schedule is then
“baselined” to measure schedule performance.
The final step, integrating with the cost baseline, will be discussed in detail in
the next module. For now, take a look at the types of scheduling formats on
the next page.

Schedule Formats
In reporting and displaying your schedule, there are multiple formats that have
and can be used. We focus on three major formats:
Gantt or Bar Chart Milestone or Event Charts
Logic or Network Diagram

Schedule Formats – Gantt or Bar Chart
Gantt or Bar chart shows the activity start and end dates as well as the
expected durations. It does not usually show dependencies between tasks.
It is a weak planning tool but is good for tracking and reporting progress to
the project team. Below is a copy of the Gantt chart for the ACME House
Building project.

Schedule Formats – Milestone or Event Charts
Milestone or Event Charts are a summary-level schedule which identifies the

major milestones on a project. It is easy to understand and good for
reporting to senior management, but it provides no progress information.
Below is a copy the Milestone chart for the ACME House Building project.

Schedule Formats – Logic or Network Diagram
The Logic or Network Diagram displays the logic relationships of the project
activities. It stresses the logic/interdependencies between activities and is
excellent for reviewing project logic. It is not a good reporting format,
because the time frame is not clear and can at times be confusing. Below is
a partial copy of the Gantt chart for the ACME House Building project.

Review of Module 3
At this point, you have covered all of the content in Module 4. Take some time
now to review the major items:
• Planning involves making decisions with the objective of influencing the

future. Planning is the “thinking” phase.
• Scheduling is the development of planned dates for performing project

activities and meeting milestones. Scheduling is the “doing” phase.
• A clear five step process delineates how to develop a project schedule:

– Develop a list of project activities
– Sequence the list of project activities
– Determine the relationship between each activities
– Establish the duration for each activities
– Determine project duration (start and completion dates)

Review of Module 3
• The Critical Path tells you the activities that can not slip a day without
increasing the total duration of the project or moving the project completion
date. It is the longest path of logically related activities through the network
which cannot slip without impacting the total project duration, termed zero
float.
• The Schedule Baseline is what all schedule performance will be measured

against. It should be approved by the project manager and other
appropriate individuals.

Summary of Module 3
At this point we have examined the basics for developing a project schedule
and schedule baseline. The Schedule Baseline is one of the two most
important items in an earned value management system (EVMS). In the
next module you will examine the other important item in an earned value
management system (EVMS): the cost baseline.
have a solid understanding of the basics for developing a project schedule.

Module 4: Budgeting
Prepared by:
Module 4: Budgeting

Budgeting Concepts and Definitions.
• Cost/Schedule Baselines
• WBS Levels: Control Accounts, Work Packages, Planning Packages
• Elements of an Earned Value Contract Baseline
• Proposed Cost and the Contract Budget Baseline
• Control Account Manager Roles and Responsibilities
• Review
Module 4 – Budgeting 1
The Budgeting Process
In the previous module, we defined Planning as making decisions with the

following objectives:
• Define what will be performed (Statement of Work)

• Determine how the work will be structured and tracked (Work Breakdown
Structure)
• Assign Responsibility for elements of work (Organizational Breakdown
Structure)
• Schedule the authorized work in a manner which describes the sequence of
work and identifies significant task interdependencies required to meet the
requirements of the program
Now let’s discuss Budgeting.
The budgeting process establishes a means for developing and tracking the
cost goals for all contractually authorized work.
One of the key criteria for establishing an earned value management system is
that all major components of a project must be integrated and baselined.
Major components of the earned value management system include scope,
schedule and cost. The cost and schedule performance are measured
against a baseline to help track the progress of the project.
But what is a baseline, and how do you establish one?
Let’s review the steps required to establish a cost and schedule baseline on the
next page.
Establish the Schedule Baseline
Recall the Work Breakdown Structure from Module 2, which defines a

project’s tasks, processes, responsible parties, etc. Establishing the WBS
is the first step in defining the project and in establishing the baseline.
Acme Project Work Breakdown Structure
ACME Project X
1.0
Design Procurement Construction Project Mgmt

1.1 1.2 1.3 1.4
Prelim Design Title I Design Final Design

1.1.1 1.1.2 1.1.3
Establish the Schedule Baseline
ACME Project X
1.0

1.1 1.2 1.3 1.4

1.1.1 1.1.2 1.1.3
Based on the Project Scope and available
resources, the work activities in the WBS are
scheduled to establish the Schedule Baseline.
This important step was covered in Module 3.
Schedule Baseline
Preliminary Design 1.1.1 Jan Feb Mar Apr May
1.1.1.1 Define Specifications & Req.
1.1.1.2 Develop Preliminary Design
1.1.1.3 Review Preliminary Design
1.1.1.4 Incorporate Comments
1.1.1.5 Preliminary Design Complete
Establish the Cost Baseline
ACME Project X
1.0

1.1 1.2 1.3 1.4

Based on the Project Scope and available
1.1.1 1.1.2 1.1.3
resources, the project budget is allocated across
the scheduled activities and across time. The
time phased allocation of resources, establishes
the Cost Baseline. Notice in the chart the time
Cost Baseline
phased hours associated with each task.
Preliminary Design 1.1.1 Hours Jan Feb Mar Apr May
1.1.1.1 Define Specifications & Req. 1,500 1,000
1.1.1.2 Develop Preliminary Design 2,000 2,000
1.1.1.3 Review Preliminary Design 500 500
1.1.1.4 Incorporate Comments 320 320
1.1.1.5 Preliminary Design Complete 1,000
Integrated Scope, Schedule and Cost
ACME Project X
1.0

1.1 1.2 1.3 1.4

The allocation of resources across the schedule for
1.1.1 1.1.2 1.1.3
each element of the project’s scope is what creates the
project’s integrated baseline. The scope, cost, and
schedule must be fully integrated to be able to perform
EVM. As the chart shows below , each task has an
associated schedule and time phased cost.
Integrated Cost/Schedule Baseline
Preliminary Design 1.1.1 Hours Jan Feb Mar Apr May
1.1.1.1 Define Specifications & Req.

1,500 1,000
1.1.1.2 Develop Preliminary Design

2,000 2,000
1.1.1.3 Review Preliminary Design

500 500
1.1.1.4 Incorporate Comments

320 320
1.1.1.5 Preliminary Design Complete

1,000
Work Breakdown Structure Reporting Levels
Now let’s discuss how the budgeting process and the cost/schedule integration
is accomplished in an earned value environment.
The Work Breakdown Structure is the framework used to facilitate the

requirement for integrating these major components. The Work Breakdown
Structure is further broken down by Control Accounts, Work Packages, and
Planning Packages.
Let’s discuss these three key elements in more detail, starting with Control
Accounts, on the next page.
Control Accounts
A Control Account is an assigned WBS Level used to monitor the cost and
schedule performance of a significant element of the work. Control
Accounts are also referred to as Cost Accounts. These terms are
interchangeable, however, we will use the term Control Accounts.
A Control Account is a major management control point for:

• Cost Summarization
• Variance Analysis and Reporting
• Responsibility Assignment
• Scope Description
• Corrective Action Planning
A Control Account Manager (CAM) is responsible for executing the Statement

of Work associated with their assigned Control Account(s).
The illustration on the following page depicts the ACME House Project WBS
down to the Control Account Level.
Control Accounts
For the ACME House project, it was determined that the performance
measurements for the project will be taken at Level 3 (see graphic below).
The project manager and the stakeholders must determine the level at
which the performance measurement will be required.
ACME Housing Corporation

Level 1 1
House Building
Level 2 Project
1.1 Control Account Level
Concrete Framing Plumbing Electrical Interior Roofing

Level 3 1.1.1 1.1.2 1.1.3 1.1.4 1.1.5 1.1.6
Work Packages
The detail that builds up to the Control Account Level is contained in Work
Packages and Planning Packages. Take a moment now to review Work
Packages.
Work Packages (WP) contain a discrete segment of work below the Control
Account level that is defined by
– a description or brief work statement
– starting and ending dates
– completion milestone
– work-in-process measure
– time-phased budget expressed in direct labor (hours and/or dollars),
material, other direct costs and subcontract dollars
It is important that the duration of a Work Package be a relatively short span of
time (normally, but not limited to, six months or less).
Now let’s take a look at Planning Packages on the next page.
Planning Packages
Planning Packages reflect a future segment of work within a Control Account

that is not yet broken down into detailed work packages. A planning
package has a firm budget, estimated start and complete dates, and
Statement of Work.
As work becomes more clearly defined, Planning Packages are converted into
Work Packages, with the following constraints. These constraints ensure
the initial budget is used appropriately:
– All planning packages are converted into work packages as

requirements are defined, and at a minimum, are scheduled to start at
least one month beyond the current reporting period
– Conversion of planning packages to work packages is reviewed by the
Team Leader and documented on a Revision Request (RR)
– Any conversion involving a change to the schedule or budget of the
control account must be accompanied by an RR
Work Packages/Planning Packages
Now that you are familiar with work packages and planning packages, take
some time to examine how they appear in the WBS. For the ACME House
project, the Work Packages and Planning Packages will be at Level 4 of
the WBS. This is the level at which detailed budgets will be developed,
statused, and then summarized at the Control Account level for reporting.
Level 1 ACME Housing Corporation

1
Level 2 House Building

Project
1.1
Control Account Level
Level 3 Concrete
1.1.1
Framing
1.1.2
Plumbing
1.1.3
Electrical
1.1.4
Interior
1.1.5
Roofing
1.1.6
Frame Exterior Install Water

Pour Foundation Install Wiring Install Drywall Install Felt
Walls Lines
1.1.1.1 1.1.4.1 1.1.5.1 1.1.6.1
1.1.2.1 1.1.3.1
Level 4
Frame Interior Install Outlets/
Install Patio Install Gas Lines Install Carpets Install Shingles
Walls Switches
1.1.1.2 1.1.3.2 1.1.5.2 1.1.6.2
1.1.2.2 1.1.4.2
Install Roofing Install B/K

Stairway Install Fixtures Install Painting Install Vents
Trusses Fixtures
1.1.1.3 1.1.4.3 1.1.5.3 1.1.6.3
1.1.2.3 1.1.3.3
Work Package / Planning Package Level

Review
At this point, you should have a comfortable understanding of the following:
The budgeting process establishes a means for documenting and tracking

the cost goals for all contractually authorized work.
The baseline is what cost and schedule performance is measured against.
schedule performance of a significant element of the work.
Detail below the Control Account Level is contained in Work Packages and
Planning Packages.
If you are unsure about any of these concepts, please go back and review,
otherwise let’s move on to discuss the key elements used to develop,
baseline, and manage an earned value project or contract.
Elements of a Contract Baseline
The contract baseline is comprised of eight key elements:
• Total Contract Price • Performance Measurement Baseline (PMB)

• Total Contract Cost • Management Reserve (MR)
• Profit / Fee • Distributed Budgets
• Contract Budget Base (CBB) • Undistributed Budgets (UB)
The relationship between these eight elements is depicted below. Each

element is defined on the following pages and is illustrated using the ACME
House Building Project.
Total Contract Price
Total Contract Cost Profit/Fee
Contract Budget Base (CBB)
Performance Measurement Baseline (PMB) Management Reserve (MR)
Distributed Budgets Undistributed Budget (UB)
Control Accounts
Work Packages
Planning Packages
Total Contract Price is the total negotiated contract cost plus profit/fee.
Control Accounts
Work Packages
Planning Packages
Total Contract Cost
Total Contract Cost is the total negotiated contract cost without profit/fee.
Control Accounts
Work Packages
Planning Packages
Profit/Fee
Profit/Fee is the estimated profit or fee realized by executing the contract or

project. Profit/Fee is not part of the Contract Budget Base (CBB), as
defined on the next page.
Control Accounts
Work Packages
Planning Packages
Contract Budget Base
The Contract Budget Base (CBB) represents the total budget for all authorized
contractual work, minus Profit/Fee. The CBB can only be modified when duly
authorized changes to the contract are received. CBB is always calculated as
follows:
Current Estimated cost of additional

negotiated + authorized unpriced work = CBB
contract cost (yet to be negotiated)
Control Accounts
Work Packages
Planning Packages Module 4 – Budgeting 19

Performance Measurement Baseline (PMB)
The Performance Measurement Baseline (PMB) is the time-phased budget

plan against which contract performance is measured. It includes all
allocated or Distributed Budgets plus the Undistributed Budget. PMB does
not include Management Reserve.
PMB = Sum of Control Accounts

PMB = Distributed Budgets + Undistributed Budgets
PMB = Contract Base Budget – Management Reserve
Control Accounts
Work Packages
Planning Packages
Management Reserve
Once the CBB is established, the Program Manager establishes a

Management Reserve (MR) prior to distributing budgets to the performing
organizations. The purpose of MR is to have a budget for the Program
Manager to allocate for unforeseen problems.
MR is not part of the Performance Measurement Baseline because it is held at

the program level only. Transactions into and out of MR are approved by
the Program Manager. The documentation supporting all MR transactions
is maintained and reported by Program Control.
Control Accounts
Work Packages
Planning Packages
Distributed Budgets
Distributed Budgets reflect the contractually authorized efforts allocated to the

WBS elements.
Distributed Budgets include budgets assigned to control accounts during

baseline establishment as well as work packages and planning packages.
Distributed Budgets = Budgets assigned to Control Accounts
Control Accounts
Work Packages
Planning Packages
Undistributed Budget
Undistributed budget (UB) applies to contractually authorized efforts not yet

allocated to WBS elements. The UB consists of a budget for authorized
changes for which there has not been adequate time to plan the change at
the control account level. Undistributed budget is an element of the
Performance Measurement Baseline, but it is not time-phased.
Every effort should be taken to distribute budgets in a timely manner and to
minimize undistributed budgets. Undistributed budgets are controlled by the
Program Manager, and all changes must be documented using an
Undistributed Budget Log. Total Contract Price
Control Accounts
Work Packages
Planning Packages
Proposed Costs and the Contract Budget Base Relationship
To better understand the key elements of the Contract Budget Base, lets walk
through the Proposal Development, Negotiations, and Contract Award
Phases. To begin, first ensure you understand the relationship between the
proposed cost and the established Contract Budget Base.
Program Funding, the negotiated and/or authorized amount, is based on the

estimates developed during the proposal preparation phase. These
estimates can be modified during the contract negotiation phase. The
Program Funding amount is used to establish the Contract Budget Baseline
(CBB).
A proposed cost estimate and a Contract Budget Base are developed in the
same manner. The resources required to complete each defined element of
work are developed in terms of hours. These hours are converted to Labor
Dollars by applying Direct Labor Rates and Indirect Burdens (Direct and
Indirect Costs are discussed on the following page). Costs of purchased
materials and subcontracts (and applicable acquisition overhead rates) as
well as Other Direct Costs (ODC) are also generated and included in the
proposed amount. Module 4 – Budgeting 24
Direct and Indirect Cost Accounting
As mentioned on the previous page, costs include direct and indirect charges.
Direct Costs – Costs applicable to, and identified specifically with, the program
contract Statement of Work.
Examples of Direct Costs: Labor, Travel, Material, Subcontractor Charges
Indirect Costs – Charges that cannot be consistently or economically identified

against a specific contract. These are typically calculated by applying rates
and factors to the cost base.
Example of Indirect Costs: Fringe Benefits, Overhead, Material Handling,
General & Administrative, Cost of Money.
Sample Indirect Rate Application
Here is an example of indirect rates applied to prime dollars or direct costs.

Overhead costs are applied to prime dollars to derive the Total Cost. The
application of indirect rates and factors is based on a company’s accounting
policies and procedures.
Design Engineering Task
Design Engineer Hours 1,000

Design Engineer Rate/Hour $ 40.00 Direct Costs
Prime Dollars $ 40,000.00
Overhead Rate 100%
Overhead Dollars $ 40,000.00
Total Burdened Dollars $ 80,000.00
G&A Rate 10%
Indirect Cost G&A Dollars $ 8,000.00
Sub-Total $ 88,000.00
COM Rate 0.05%
COM Dollars $ 44.00
Total Cost $ 88,044.00
Fee Rate 10%
Fee Dollars $ 8,800.00
Total Price $ 96,844.00
ACME House Cost Proposal Development
By now you should be familiar with the difference in types of costs, but how
exactly do you go about determining costs in a project? Take some time to
see how to develop a proposed cost using the ACME House Building
project.
So far in the ACME House Building project, we have:

– Defined what will be performed (Statement of Work)
– Determined how will it be tracked (Work Breakdown Structure)
Now we have to:

– Determine the Proposed Total Cost and Price
– Assign Labor, Material, ODC, and Subcontractor Resources to the Work
Elements.
– Apply Burdens and Fee to derive the Total Cost and Price.
To start, we need our ACME House Work Breakdown Structure as shown here.

1
House Building
Project
1.1
Concrete Framing Plumbing Electrical Interior Roofing

1.1.1 1.1.2 1.1.3 1.1.4 1.1.5 1.1.6

Pour Foundation Install Wiring Install Drywall Install Felt
Walls Lines
1.1.1.1 1.1.4.1 1.1.5.1 1.1.6.1
1.1.2.1 1.1.3.1
Frame Interior Install Outlets/

Install Patio Install Gas Lines Install Carpets Install Shingles
Walls Switches
1.1.1.2 1.1.3.2 1.1.5.2 1.1.6.2
1.1.2.2 1.1.4.2
Install Roofing Install B/K

Stairway Install Fixtures Install Painting Install Vents
Trusses Fixtures
1.1.1.3 1.1.4.3 1.1.5.3 1.1.6.3
1.1.2.3 1.1.3.3
This insures that we develop cost for only approved project scope.
Next, we must develop the Proposal Price. Below is an example of how we

developed the Price for the WBS 1.1.1.2 to Install Patio.
We assigned resources to this task, and based on the Labor Hours, Material,
and ODC Dollars, burdened by all the indirect rates, a Total Price of
$11,574 has been estimated to complete this task.
This process is used to price each WBS element. On the next page is the
completed price for the ACME House.
WBS 1.1.1.2 Install Patio
RES CODE Hours Rate/Hour Prime Overhead G&A COM Fee Total Price
Carpenter 40 $ 25.00 $ 1,000 $ 1,666 $ 422 $ 2 $ 618 $ 3,707
Drywall 40 $ 15.00 $ 600 $ 1,000 $ 253 $ 1 $ 371 $ 2,224
ELEC 4 $ 40.00 $ 160 $ 267 $ 67 $ 0 $ 99 $ 593
ENGE 20 $ 30.36 $ 607 $ 825 $ 226 $ 1 $ 332 $ 1,991
Material 0 $ 2,000 $ 109 $ - $ 1 $ 422 $ 2,531
Other 0 $ 500 $ 27 $ - $ 0 $ - $ 527
Total 104 $ 4,867 $ 3,894 $ 968 $ 5 $ 1,840 $ 11,574
The proposed resources for the entire project have been priced as described
on the previous page. The following chart reflects the Total Price for each
WBS of the ACME Housing Building project.

1 Total Proposed Price = $231,894
$231,894
House Building
Project 1.1
$231,894
Concrete 1.1.1 Framing 1.1.2 Plumbing 1.1.3 Electrical 1.1.4 Interior 1.1.5 Roofing 1.1.6
$59,094 $57,905 $25,018 $61,826 $20,447 $7,605
Pour Foundation Frame Exterior Install Water Install Wiring Install Drywall
Install Felt 1.1.6.1
1.1.1.1 Walls 1.1.2.1 Lines 1.1.3.1 1.1.4.1 1.1.5.1
$3,259
$28,452 $22,026 $8,257 $24,642 $9,312
Install Patio Frame Interior Install Gas Lines Install Outlets/ Install Carpets Install Shingles
1.1.1.2 Walls 1.1.2.2 1.1.3.2 Switches 1.1.4.2 1.1.5.2 1.1.6.2
$11,574 $14,699 $8,339 $12,353 $2,500 $3,259
Install Roofing Install B/K Install Fixtures Install Painting Install Vents
Stairway 1.1.1.3
Trusses 1.1.2.3 Fixtures 1.1.3.3 1.1.4.3 1.1.5.3 1.1.6.3
$19,067
$21,180 $8,421 $24,831 $8,635 $1,086
ACME House Cost Proposal Negotiations
Now let’s review the proposed price and complete the negotiations.
The proposed price is $231,894; however, the buyer of the ACME house can
only afford to pay $220,000. The ACME house builder has agreed to build
the ACME house for $219,999, but some revisions had to be made to the
plans to utilize less expensive materials.
The following summary reflects the negotiated cost and price to build the
ACME House.
Negotiated ACME House Cost and Price
Total Cost Fee Total Price

$183,852 $36,147 $219,999
On the next page, let’s look at the Total Price by WBS.
ACME House Cost Proposal Negotiations
The following summary reflects the negotiated price by WBS to build the
ACME House.
1
$219,999
Total Negotiated Price = $219,999

House Building
Project 1.1
$219,999
$47,200 $57,905 $25,018 $61,826 $20,447 $7,605
1.1.1.1 Walls 1.1.2.1 Lines 1.1.3.1 1.1.4.1 1.1.5.1
$3,259
$20,523 $22,026 $8,257 $24,642 $9,312
1.1.1.2 Walls 1.1.2.2 1.1.3.2 Switches 1.1.4.2 1.1.5.2 1.1.6.2
$10,781 $14,699 $8,339 $12,353 $2,500 $3,259
Stairway 1.1.1.3
$15,895
$21,180 $8,421 $24,831 $8,635 $1,086
Now that we have a negotiated contract, we can establish the Contract Budget
Base.
The Awarded Amount to the Builder is $219,999. This includes Profit/Fee.
The Negotiated Total Cost, without Profit/Fee, for the ACME House equals
$183,852. This will be the basis for developing the Contract Budget
Baseline (CBB). Again, remember that this amount is exclusive of Fee.

$219,999

$183,852 $36,147

$183,852
Control Accounts
Work Packages
Planning Packages Module 4 – Budgeting 33

After the Contract Budget Base has been established, the Management
Reserve is established by the Program Manager.
In the case of the ACME House, the Program Manager has decided to
establish a Management Reserve amount equal to 10% of the Contract
Budget Base. This equates to $18,385. The Performance Measurement
Baseline, which equals the CBB – MR, will be established at $165,467.
All of the PMB will be distributed, therefore Distributed Budgets will equal
$165,467, and Undistributed Budget will remain zero.
$219,999

$183,852 $36,147

$183,852

$165,467 $18,385

$165,467 $0
Control Accounts
Work Packages
Planning Packages
Now that the Management Reserve has been established by the Program
Manager, target budgets are developed and distributed to the Control
Account Managers.
Establishing the target budgets will often be accomplished through a joint effort
by the Program Manager, Team Leaders, and the Control Account
Managers.

$219,999

$183,852 $36,147

$183,852

$165,467 $18,385

$165,467 $0
Control Accounts
Work Packages
Planning Packages
In developing target budgets, applicable proposal information is relied upon

heavily. The proposal information is modified to reflect negotiated changes
and to accommodate establishment of MR.
For example, remember the ACME House Proposal? Control Account 1.1.1
Concrete, had a proposed Total Price of $59,094, however, based on final
contract negotiations, the negotiated price was $47,200. The negotiated
cost, without Profit Fee was $39,424.
The following table summarizes the proposed vs. negotiated price for the
Concrete effort. Remember, in establishing target budgets, Profit/Fee is not
included.
Control Account 1.1.1 Concrete
Total Dollars Profit/Fee Total Price

Proposed $49,337 $9,757 $59,094
Negotiated $39,424 $7,776 $47,200
The Program Manager has decided to establish a Management Reserve (MR)

amount equal to 10% of the negotiated dollars. Once again, remember in
establishing target budgets Profit/Fee and Management Reserve are not
included.
The target budget released to the Control Account Manager for 1.1.1 Concrete
is $35,482 ($39,424 – $3,942 = $35,482).
Control Account 1.1.1 Concrete
Total Dollars
Negotiated $39,424
MR (10%) -$3,942
Target Budget $35,482
When detailed planning reveals the target budget established for the control
account is unrealistic (too high or low), the CAM, Team Leader and
Program Manager participate jointly to determine appropriate adjustments.
In some cases, this may require the use of MR.
In the case of the Concrete Control Account, the Control Account Manager has
accepted the budget of $35,482.
Once the budgets have been allocated to the Control Accounts, the Control
Account budgets are further subdivided into work packages and planning
packages.
Here’s the distributed budget for the entire ACME WBS. Remember, this does
not include Profit/Fee, or Management Reserve.

1
$165,467
Distributed Budget = $165,467

Control Accounts House Building
Project 1.1
$165,467
$35,482 $43,432 $18,765 $46,373 $15,711 $5,704
1.1.1.1 Walls 1.1.2.1 Lines 1.1.3.1 1.1.4.1 1.1.5.1
$2,445
$15,394 $16,521 $6,194 $18,483 $6,984
1.1.1.2 Walls 1.1.2.2 1.1.3.2 Switches 1.1.4.2 1.1.5.2 1.1.6.2
$8,166 $11,025 $6,255 $9,265 $2,250 $2,445
Stairway 1.1.1.3
$11,922
$15,887 $6,317 $18,625 $6,477 $815
Work Packages
Time phased budgets are prepared for each work package and planning
package. Each work package and planning package contains a budget
divided into time increments (typically monthly) by elements of cost, such as
direct labor, material, subcontract, and other direct cost (ODC).
During the phasing process, Management ensures that requirements will be

met, work sequences are logical, and resources are available to execute the
plan.
The development of detail planning for the control account and ultimate
approval of the budget, schedule, and associated Work Authorization
Document (WAD) is accomplished through an iterative process.
A Work Authorization Document (WAD) authorizes and documents the work

scope, schedule and budget to organizations supporting the project. No
work is to proceed without a proper WAD.
The Budget Process
The Control Account Manager (CAM) uses work packages and planning
packages to divide the control account into specific manageable and
measurable units of work for the purpose of developing plans and
determining progress.
Each work package and planning package is sequenced in a manner that

provides logical support for the program schedule. The CAM assigns each
work and/or planning package a budget value in hours and/or dollars.
The sum of the work packages and planning package budgets are equal to the
total budget assigned to the CAM on the work authorization form. The total
budget for the control account is time-phased in hours and dollars.
Baseline Documentation
Summaries of schedules and budgets at the work package level are integrated
using a Control Account Plan (CAP). A CAP is a low level detail plan
prepared by the CAM showing time phased planning of tasks and their
associated budget for a Control Account. The CAP also provides brief work
package and milestone descriptions that enable the CAM to clarify and
differentiate the unique content of each work package.
The CAM and Program Control develop the cost and schedule database by
using the control account planning documentation and other data. A series
of checks and balances are performed to ensure the data is consistent.
Upon completion of the baseline development, reports displaying the
planning data as it appears in the system are reviewed and verified for
accuracy.
The baselining process is complete when all Work Authorization Document

(WADs) have been issued and accepted, and all CAPS have been
developed and equal the WAD budget amounts.
Schedule and Cost Baseline
Below is the time-phased budget for the ACME House Building Project. This
profile represents the cost and schedule baseline in Total Dollars.
Total $165,467 $38,269 $73,412 $49,130 $4,656

Review of Module 4: Budgeting
Many new terms and concepts were presented in this module. Let’s summarize
what was covered.
The budgeting process establishes a means for developing and tracking the
cost goals for all contractually authorized work.
One of the key criteria for establishing an earned value management system is
that the scope, schedule and cost must be integrated and baselined. The
baseline is what cost and schedule performance is measured against
The Work Breakdown Structure is the
framework used to facilitate the ACME Housing Corporation
1
$165,467
requirement of integrating scope,

schedule, and cost. House Building
Project 1.1
$165,467
$35,482 $43,432 $18,765 $46,373 $15,711 $5,704
1.1.1.1 Walls 1.1.2.1 Lines 1.1.3.1 1.1.4.1 1.1.5.1
$2,445
$15,394 $16,521 $6,194 $18,483 $6,984
1.1.1.2 Walls 1.1.2.2 1.1.3.2 Switches 1.1.4.2 1.1.5.2 1.1.6.2
$8,166 $11,025 $6,255 $9,265 $2,250 $2,445
Stairway 1.1.1.3
$11,922
$15,887 $6,317 $18,625 $6,477 $815
schedule performance of a significant element of the work.
Work Packages (WP) contain a discrete segment of work below the Control
Account level and provide detailed planning for accomplishing the work
within a Control Account.
Level 1 1
Planning Packages
House Building
include efforts that will Level 2 Project

1.1
Control Account Level
eventually be identified
as separate work Level 3 Concrete
1.1.1
Framing
1.1.2
Plumbing
1.1.3
Electrical
1.1.4
Interior
1.1.5
Roofing
1.1.6
packages within the Pour Foundation

Install Wiring Install Drywall Install Felt
control account. They Level 4

Walls Lines
1.1.1.1 1.1.4.1 1.1.5.1 1.1.6.1
1.1.2.1 1.1.3.1
represent far term Install Patio

1.1.1.2
Frame Interior
Walls
1.1.2.2
Install Gas Lines
1.1.3.2
Install Outlets/
Switches
1.1.4.2
Install Carpets
1.1.5.2
Install Shingles
1.1.6.2
efforts that cannot be Stairway

Install Roofing
Trusses
Install B/K
Fixtures
Install Fixtures Install Painting Install Vents
1.1.1.3 1.1.4.3 1.1.5.3 1.1.6.3
defined in detail at the 1.1.2.3 1.1.3.3
start of the control Work Package / Planning Package Level

account.
The major elements of an earned value contract consist of:
Contract Budget Base (CBB): The total

budget, exclusive of fee, for all Total Contract Price
authorized work Total Contract Cost Profit/Fee

Baseline (PMB): The time- Distributed Budgets Undistributed Budget (UB)
phased sum of all the Control Accounts
allocated budgets Work Packages
Planning Packages
Management Reserve: The amount of the contract budget withheld by

Management
Undistributed Budget: Contractually authorized funds not yet allocated to WBS

elements.
At this point we have examined the basics of planning, scheduling, and

budgeting to establish the integrated baseline. These items lay the
groundwork for maintaining an Earned Value Management System (EVMS).
The next module takes us into the details of Earned Value.
If you have a firm grasp of the concepts covered in these first four modules,
feel free to progress to the next module. Otherwise, review the modules to
ensure you have a solid understanding of the basics.
Module 5: EVMS Concepts and Methods
Prepared by:
Module 5: EVMS Concepts and Methods
Welcome to Module 5. The objective of this module is to introduce you to Basic

Earned Value concepts and methods.
• Earned Valve Management System (EVMS) Criteria
• The definitions and illustrations of the basic EVMS terminology
• The definition and illustrations of the EV methods
Module 5 – EVMS Concepts and Methods 1

In the previous four modules, we discussed the framework needed to perform

Earned Value and develop an Earned Value Management System (EVMS).

properly implementing an earned value management system (EVMS)
• In Module 2 we discussed the development of the work breakdown structure

(WBS), organizational breakdown structure (OBS) and the integration of
WBS and OBS in creating the responsibility assignment matrix (RAM)
• In Module 3 we discussed the development of the project schedule and the

schedule baseline
• In Module 4 we discussed the development of the project budget and the

cost baseline
Now lets discuss the basic Earned Value concepts and methods.

EVMS Criteria
Before we start discussing the Earned Value concepts and methods, let’s look
at an overview of the criteria needed for EVMS. There are numerous EVMS
guidelines that have been developed in both the government and
commercial industry.
On the next page, we will look at the

Industry Standard Earned Value Management
Department of
System guideline published in DoD 5000.2-R. Department
Defense of
These guideline comes from the ANSI/EIA Department
Defense of
Defense
5000.2-R
standard 748-98. 5000.2-R
5000.2-R

EVMS Criteria
The Industry Standard Earned Value Management System guide provides

a uniform set of 32 criteria for developing an EVMS. It is compliant with the
ANSI/EIA Standard 748-98 discussed in Module 1.
The criteria represents the requirements against

which the validity of a contractor’s Earned Value
Management System will be judged. The criteria Department of
Department
Defense of
provides contractors the flexibility to develop and Department
Defense of
implement effective management systems tailored Defense
5000.2-R
5000.2-R
to meet their respective needs, while still ensuring 5000.2-R
that fundamental Earned Value Management
concepts are provided for.
Let’s review these criteria on the next page.

EVMS Criteria
The criteria are divided into five categories:
Industry
• Organization Standard
• Planning and Budgeting Industry
Department
Earned Valueofof
Department
Standard
Defense
• Accounting Management
Defense
Department
Earned
5000.2-R Valueofof
Department
• Analysis and Management Reporting SystemDefense
5000.2-R
Management
Defense
• Revisions and Data Maintenance 5000.2-R
System
5000.2-R
On the followings pages we provide a summary level review of the criteria. As

mentioned earlier there are 32 criteria but for the purpose of a summary
review, the criteria were combined. For a complete list of the criteria and the
guideline go to the frequently asked questions (FAQ) section or reference
section of this web site.

EVMS Criteria - Organization
The first category is Organization. Within Industry Standard Earned Value

Management System
Organization the criteria require the following:
• Organization
• Planning & Budgeting
• Accounting
• Define the Work Breakdown Structure (WBS) • Analysis & Management Reporting
• Revisions & Data Maintenance
• Define the Organizational Breakdown Structure (OBS)
• Establish the work authorization and cost accumulation processes
• Establish Cost and Schedule Integration Process
• Identify Indirect/Overhead Cost Structure
• Create the Responsibility Assignment Matrix (RAM)

EVMS Criteria – Planning and Budgeting
The second category is Planning and Budgeting. Industry Standard Earned Value
Management System
Within Planning and Budgeting the criteria require
• Organization
the following: • Planning & Budgeting
• Accounting
• Analysis & Management Reporting
• Create the Integrated Master Schedule • Revisions & Data Maintenance
• Identify Milestones, Key Events, Technical Performance Measures
• Establish and Maintain a Time-Phased Budget Baseline
• Identify Management Reserves and Undistributed Budget
• Ensure that the Contract Budget Base (CBB) is reconciled with the Total
Allocated Budget (TAB)

EVMS Criteria - Accounting
The third category is Accounting. Within Accounting Industry Standard Earned Value
Management System
the criteria require the following:
• Organization
• Accounting
• Record direct and indirect costs in accordance • Analysis & Management Reporting
with company disclosure statement
• Provide summary and detail visibility of costs
• Establish process for reporting Material, Other Direct Costs, and

Subcontractor Costs
• Provide full accounting of all material purchased for the project

EVMS Criteria – Analysis and Management Reports
The fourth category is Analysis and Management Industry Standard Earned Value
Management System
Reports. Within Analysis and Management
Reports the criteria require the following: • Organization
• Accounting
• At least monthly, provide information at the • Analysis & Management
Reporting
Control Account Level necessary for analysis and • Revisions & Data Maintenance
reporting using actual cost data that is
reconcilable with the approved accounting system
• Provide variance reporting of Budget (BCWS), Earned Value (BCWP), and
Actual (ACWP)
• Provide explanation of indirect costs
• Implement recovery plans, management actions, recommendations
• Develop revised estimates (EACs, LREs) based on performance to date and

estimates of future performance
EVMS Criteria – Revisions and Data Maintenance
The final category is Revisions and Data Industry Standard Earned Value
Management System
Maintenance. Within Revisions and Data
• Organization
Maintenance the criteria require the following: • Planning & Budgeting
• Accounting
• Analysis & Management Reporting
• Establish Change Management System • Revisions & Data Maintenance
• Provide Reconciliation and Revision Reports
• Control and Document changes

EVMS Criteria – Revisions and Data Maintenance
In modules 1 through 4, we discussed the criteria in the first 3 categories:

Organization, Planning and Budgeting, and Accounting.
In this and succeeding modules we will cover the criteria in the final two
categories: Analysis and Management Reporting, and Revisions and Data
Maintenance.
Let’s get started! Industry Standard Earned

Value Management System
• Organization
• Accounting
• Analysis & Management
Reporting

EVMS Basic Concepts
At this point, you should understand that Earned Value helps determine if your
project is on schedule and within budget. It does this by assessing the
project on the basis of cost and schedule as compared to what has been
accomplished.
In determining the status of projects, three key components are examined
• Cost and Schedule baseline

• Actual Charges (expenditures)
• Reported accomplishments or “Earned Value”
Understanding how the three components work in earned value is explained on

the following pages.

Planned Value (PV)
Cost and Schedule baseline refers to the physical work scheduled and the
approved budget to accomplish the scheduled work. Together, they result
in an important value: Planned Value (PV). PV tells you what you plan to
do. Simply stated,
Planned Value = Physical Work + Approved Budget
PV can be looked at in two ways: cumulative and current.
Current PV is the
approved budget for
Cumulative PV is the sum
activities scheduled to be
of the approved budget
performed during a given
for activities scheduled to
period. This period could
be performed to date.
represent days, weeks,
months,etc.

Planned Value (PV) consists of a 5 step process…
PV, also known as Budget Cost of Work Scheduled (BCWS), can be defined
as:
1. Define Scope: What you are tasked to do (Scope Statement)
2. Assign Scope: Breakdown scope into manageable parts (WBS)
3. Schedule Scope: Time-phased, logic driven with critical path (Project

Schedule)
4. Budget Scope: develop cost (budget) for all approved scope (Performance
Measurement Baseline)
5. Baseline: Snap-shot in time, frozen. What performance measurement will

be based on.
Now let’s look at an example of Planned Value on the next page.

Planned Value (PV) example
We are working on a Client/Server project, and part of the scope is for

Software Design. The time frame is 5 months and the budget for this scope
is $15,000, resulting in a budget of $3,000 per month.
Client/Server Project - WBS 1.1.1 Software Design

Dollars
JAN FEB MAR APR MAY
PV 3000 3000 3000 3000 3000
Time Now

Planned Value (PV) example
Based on these figures, we can calculate the cumulative PV and the current
PV.
The Cumulative PV is the total for the elapsed months: January – March. The
cumulative PV is $9,000.
The Current PV is the budget for the current month, March, and equals $3,000.

Dollars
JAN FEB MAR APR MAY
PV 3000 3000 3000 3000 3000
Time Now
This example uses dollars as units of measure, but note that you can use any
unit of measurement: hours, days, dollars, etc.
Budget at Completion (BAC)
So far we have discussed the cumulative budget and current budget, but what
about the budget at the end of the project? Earned Value also uses this
figure, termed Budget at Completion (BAC).
BAC is the sum of all budgets allocated to a project scope.
Keep some important points in mind regarding BAC:

– BAC = PMB
– BAC can be examined by work packages and control accounts
– The Project BAC must always equal the Project Total PV. If they are not equal,
your earned value calculations and analysis will be inaccurate.
Let’s examine BAC using our previous example. Take a look on the next page.

Budget at Completion (BAC)
Take a moment to review the Software Design project. Knowing that BAC is
the sum of all budgets allocated to a project, what is the BAC for this
project if Software Design is the complete scope of the project?

Dollars
JAN FEB MAR APR MAY
PV 3000 3000 3000 3000 3000
Yes, BAC = $15,000. And, in keeping with the previous points about BAC, the
project BAC equals the Project Total PV. The Earned Value calculations
are correct.

EVMS Basic Concepts
As you recall from earlier in the module, three key components are required to
determine the status of projects. So far, we have examined the first: Cost
and Schedule Baseline.
Now let’s turn our attention on the following pages to the second, Actual
Charges.
 Cost and Schedule baseline
 Actual Charges (expenditures)

• Reported accomplishments or
“Earned Value”

Actual Cost (AC)
Actual Cost (AC), also called actual expenditures, is the cost incurred for
executing work on a project. This figure tells you what you have spent and,
as with Planned Value, can be looked at in terms of cumulative and current.
Cumulative AC is the sum Current AC is the actual

of the actual cost for costs of activities performed
activities performed to during a given period. This
date. period could represent days,
weeks, months,etc.
AC is also called Actual Cost of Work Performed (ACWP).

Actual Cost (AC) example
Illustrating again from the Client/Server project example, can you determine
the cumulative AC and current AC? Remember, Cumulative AC is the sum
of the actual cost for activities performed to date, and Current AC is the
actual costs of activities performed during a given period.

Dollars
JAN FEB MAR APR MAY
PV 3000 3000 3000 3000 3000
AC 1100 900 1200
Time Now
The Cumulative AC is the total for the elapsed months: January – March. The
cumulative AC is $3,200.
The Current AC is the actual cost for the current month, March, and equals
$1,200.
EVMS Basic Concepts
So far, we have examined Cost and Schedule Baseline and Actual Changes.
Now let’s turn our attention on the following pages to the last of the three
components, Actual Charges.
 Actual Charges (expenditures)

 Reported accomplishments or
“Earned Value”

Earned Value (EV)
To report the accomplishments of the project, you must apply Earned Value
(EV) to the figures and calculations in the project.
EV is the quantification of the “worth” of the work done to date.
In other words, EV tells you, in physical terms, what the project has
accomplished. As with PV and AC, EV can be presented in a Cumulative
and Current fashion.
Cumulative EV is the sum Current EV is the sum of the

of the budget for the budget for the activities
activities accomplished to accomplished in a given
date. period.
Earned Value is also called Budgeted Cost of Work Performed (BCWP).

Earned Value (EV) example
Through the Software Design example we have answered several questions,

namely, the cumulative PV and AC, the current PV and AC, and the BAC.
Let’s now determine the cumulative and current EV.

Dollars
JAN FEB MAR APR MAY
PV 3000 3000 3000 3000 3000
AC 1100 900 1200
EV 800 1300 1000
Time Now
The Cumulative EV is the sum of the budget for the activities accomplished to
date: January – March. The cumulative EV is therefore $3,100.
The Current EV is the sum of the budget for the activities accomplished in the
current month, March, and equals $1,000.
Earned Value (EV) example
Armed with a thorough picture of this project’s progress, let’s summarize the
findings we have.

Dollars
JAN FEB MAR APR MAY
PV 3000 3000 3000 3000 3000
AC 1100 900 1200
EV 800 1300 1000
Time Now
Cum PV = $9,000 Current PV = $3,000 BAC = $15,000

Cum AC = $3,200 Current AC = $1,200
Cum EV = $3,100 Current EV = $1,000

Review
At this point, you should have a solid understanding of the three key earned
value components. Let’s review them now.
• Planned Value (PV) is determined by the cost and schedule baseline

(discussed in Module 2 through 4)
• Actual Cost (AC) is determined by the actual cost incurred on the project
• Earned Value (EV) tells you, in physical terms, what the project
accomplished.
 Actual Charges (expenditures)

 Reported accomplishments or
“Earned Value”

Earned Value (EV) Methods
As you know, EV is determined by what has been physically accomplished. But

how do you determine the “physical” accomplishment? Physical
accomplishment is determined by measuring the progress of a given
activity.
There are numerous EV methods to measure progress. On the following

pages, we will focus on the following techniques:
Earned Value Methods
• Fixed Formula
• Milestone Weights
• Milestone Weights with % Complete
• Units Complete
• Percent Complete
• Level of Effort

Earned Value (EV) Methods - Fixed Formula
The Fixed Formula method for determining Earned Value Methods

progress applies to work packages and control
 Fixed Formula
accounts that span a short period of time (within
an accounting period, < 3 months). This method
applies a percent complete to the start and finish • Units Complete
of an activity. Generally, the percentages used • Percent Complete
in the formula are 0/100, 50/50, or 25/75. • Level of Effort
0/100 - Nothing is earned when activity starts but 100% of budget is

earned when completed
50/50 - 50% is earned when activity starts and the balance is earned on
completion
25/75 - 25% is earned when activity starts and the balance is earned on
completion

Earned Value (EV) Methods – Fixed Formula
The Fixed Formula method has several advantages and disadvantages:
Advantages: Works well for short term work packages, and requires minimal
effort to status.
Disadvantages: No significant disadvantages for short term, low value work

packages. Not very effective for longer term work packages.

Earned Value (EV) Methods – Milestone Weighting
The next method of calculating EV that Earned Value Methods

we will discuss is Milestone Weights.
The Milestone Weighting method assigns  Fixed Formula
budget value to each milestone. Not until  Milestone Weights
full completion of each milestone is the
• Units Complete
budget earned. Milestone Weighting is
used as a method for work packages with
• Level of Effort
long term durations and ideally should have
milestones each month or accounting period.
Let’s take a look at an example on the next page.

Below is an example of the Milestone Weighting method. For the purposes of

this and future examples, we will assume that the Building Design is the
Control Account Level and the activities are at the Work Package level.
Below are the activities and milestones in the Control Account for
completing a building design. The dates for each milestone are given,
along with the value for each milestone upon completion.
Let’s use this example and see how Milestone Weighting is applied.

For this example, assume that all activities begin and complete as scheduled.
With this in mind, can you determined the earned value as of January 31th?
Time Now
As you can see by the schedule the project has started (1/7). The “Start
Inspection milestone” has been completed, but no value appears for that
milestone. The “Site Inspection Complete” milestone has also been
completed, and its value is 100. There are no more milestones completed
through January, so our Current EV is 100. Because it is the first month for
the control account, the Cumulative EV is also 100. Now lets look at what
has been earned through February.
As you can see by looking at the schedule below, there are no milestones
scheduled for February (remember we assumed all activities will start and
complete as scheduled), but we have started the Phase 1 Design. What
are the Current EV and Cumulative EV as of February 28th?
Time Now
The Current EV is 0. Remember we can only take “earned” if milestone is
complete. Since there were no milestones scheduled for or accomplished
in February, we have earned no value under the milestone weighting
approach. The Cumulative EV is 100, which includes the 100 from January
and the 0 from February.
Lets take a look at one more month.
Two milestones are scheduled for March. What is are Current EV and
Cumulative EV as of March 31th?
Time Now
The Current EV is 350. Completion of Phase 1 Design (150) and Phase 2

Design (200).
The Cumulative EV is 450, which includes the Site Inspection Complete from
January (100), February (0), plus the current March EV (350).

The advantages and disadvantages of Milestone Weighting are:
Advantages: Requires objective measurable milestones, which most customers

or Project Managers prefer.
Disadvantages: Does not allow partial credit for in-process work, and requires
detailed milestone planning.

Earned Value (EV) Methods – Milestone Weighting with Percent
Complete
We will now look at the third method for Earned Value Methods
determing EV: Milestone Weights with
 Fixed Formula
Percent Complete.The Milestone
 Milestone Weights
Weighting with Percent Complete method
 Milestone Weights with % Complete
assigns budget value to each milestone, • Units Complete
and it is earned based on the percent of work • Percent Complete
Completed against each individual milestone. • Level of Effort
Like Milestone Weighting, Milestone Weighting
with Percent Complete is used as a method for
work packages with long term durations and ideally
should have milestones each month or
accounting period.
Take a look on the following pages at how using Milestone Weighting with
Percent Complete affects the Building Design example demonstrated
previously using simple Milestone Weighting.

Complete
There is no difference using either Milestone Weighting method for determining

the “earned” value for January because the milestone was 100%
completed during the month.
Milestone
As of January Milestone Weighting with
31th Weighting Percent
Complete
Current EV 100 100
Cumulative EV 100 100
Time Now

Complete
Through February the Milestone Weighting method had a current EV of 0 and

a cumulative of 100. Remember, because there are no milestones
completed in February, the project cannot earn anything. Using the
Milestone Weighting with Percent Complete method, however, you are able
to “earn” a portion of the value of the milestone equal to the amount of the
work completed for the activity(s) that make up the milestone.
Time Now

Complete
Using the Building Design schedule, you can see that the Phase 1 Design is
nearly complete by the end of February. For example, lets say that at the
end of February the Phase 1 Design was determined to be 70% complete.
Now let’s take this information and determine the EV for February using the
Milestone Weighting with Percent Complete method and compare.
Time Now

Complete
Because it has been determined that you are 70% complete with Phase 1
Design, you can take credit for earning 105 of the 150 for completing
Phase 1 Design in February. See the chart below to compare the two
methods as of February 28th.
Milestone
As of February Milestone Weighting with
28th Weighting Percent
Complete
Current EV 0 105
Cumulative EV 100 205
Time Now
Complete
The advantages and disadvantages of Milestone Weighting with Percent

Complete are:
Advantages: Requires objective measurable milestones, which most

customers prefer, and allows for partial credit against milestones.
Disadvantages: Requires a Control Account Manager (CAM) assessment of

the % complete for each milestone and requires documentation of
assessment methodology.

Earned Value (EV) Methods – Unit Complete
Now let’s look at the Unit Complete method Earned Value Methods
of computing EV.The Unit Complete method
 Fixed Formula
uses a physical count to determine what is
earned. To use Unit Complete you must have
 Milestone Weights with % Complete
units that are identical or similar and they must  Units Complete
have the same budget value. • Percent Complete
• Level of Effort
To examine the Unit Complete method, let’s
take a look at a different example on the next
page.

For this example, you must install a total of 40 mainframe computers over five
months. The number of units and the schedule to install them is listed
below. After the 1st month, you have installed 12 mainframes, which
means you are 30% complete with the total job. The earned value analysis
shows that the PV is 10 units($10,000), EV is 12 units($12,000) and the AC
is 12 units ($12,000).
JAN FEB MAR APR MAY

Main Frames (Units) 10 5 7 11 7
Cost = $1000/unit $10,000 $5,000 $7,000 $11,000 $7,000
Total Units = 40
If after the 1st month you install 12 main frames, you are 30% complete
PV EV AC
Units 10 12 12
Units ($) $10,000 $12,000 $12,000

The advantages and disadvantages of Unit Complete are:
Advantages: An objective and easy way of determining the earned value for
an activity.
Disadvantages: Limited to production type atmosphere of similar items that

are fixed unit prices. Does not take into consideration labor fluctuations so
may misrepresent actual EV.

Earned Value (EV) Methods – Subjective Percent Complete
The fifth method of EV calculation that we will Earned Value Methods

review is Subjective Percent Complete. The
 Fixed Formula
Subjective Percent Complete method applies
a percent complete to a budget value to
determine what is earned. The percent  Units Complete
complete value is determined by the Control  Percent Complete
Account Manager or other designated • Level of Effort
individuals. The percent complete is applied
to the Budget at Completion (BAC) for a
given activity to determine the current and
cumulative EV.
Take a look on the next page at how Subjective Percent Complete is used.

To use the Subjective Percent Complete method, the value is placed on the
work activity, not the milestone (as in the Milestone Weighting method).
Using the Building Design Project from earlier, this becomes more clear.

Looking at the Site Inspection activity in the schedule below, the start date is
January 7th with a scheduled completion date of January 30th. Let’s status
the activity as of January 15th.
To determine the percent complete for January 15th, the control account
manager (CAM) must use an educated guess to determine the percent
complete of the activity. The CAM must maintain the logic for assessing
each activity’s percent complete.
In this example, the CAM decides that the activity is 45% complete as of
January 15th. Given this, the EV for Site Inspection as of January 15th is 45.

The advantages and disadvantages of Subjective Percent Complete are:
Advantages: This is one of the more subjective methods. Earned Value is

based on the CAM’s assessment of the work package progress. Detailed
planning at the milestone level is not required.
Disadvantages: Customer Satisfaction maybe low due to the subjectiveness

involved and the lack of detailed planning, however, CAMs are required to
provide the customer with their assessment methodology.
Note: Milestones do not apply to this method. Labor and non-labor must be
identified in separate work packages if this method is applied. This method
is highly subjective, and documentation in support of percent complete
derivations is required.

Earned Value (EV) Methods – Level of Effort
The last EV method to define is Level of Earned Value Methods

Effort. The Level of Effort (LOE) method
 Fixed Formula
is based on the passage of time. A monthly
budget value is earned with the passage of
time and is always equal to the monthly  Units Complete
planned amount. When using LOE, the PV  Percent Complete
is always equal to the EV (see chart below).  Level of Effort
This method is usually used for accounts that
are more time related than task oriented.
Example of an LOE account is Program and
Project Management support.
Jan Feb Mar Apr May Jun Jul Aug

PV $1,000 $1,000 $1,200 $1,200 $1,200 $1,500 $1,500 $1,500
EV $1,000 $1,000 $1,200 $0 $0 $0 $0 $0
Time Now

Earned Value (EV) Methods – Level of Effort
The advantages and disadvantages of Level of Effort are:
Advantages: This EVM does not require statusing, and is appropriate for
sustaining tasks like Program Management.
Disadvantages: Level of Effort work packages are often challenged by the

customer. This EV method should be kept to a minimal number of work
packages. LOE work packages require accurate assessment (planning) of
monthly performance.

Review
At this point, you should have a firm grasp of the EV methods of calculation.
Earned Value Methods
• Fixed Formula
• Units Complete
• Level of Effort
Now that we are finished reviewing the EV methods, let’s take a look at our
ACME House Building project using the concepts discussed in this module.

Project Status: Example
Let’s recall, from previous modules, the project baseline (schedule and cost)
for the House Building project. The project start date is 1/15, with an
expected completion date of 4/1. It is now 1/31. The project started on
schedule and needs to be statused as of 1/31. Look at the schedule and
identify the activities that need to be reviewed for status.
Status as of 1/31

According to the baseline, the following activities need to be reviewed for

status as of 1/31:
• Pour Foundation • Frame Exterior Walls
• Install Patio • Pour Stairway
Status as of 1/31

Before we go any further a few assumptions need to explained.
1. The activities will be done as sequenced, thus no other activities, besides

the four mentioned, will be affected by the 1/31 statusing effort.
2. Activity cost is spent uniformly across each activity
With these assumptions at hand, let’s focus on statusing the project.
Status as of 1/31

Now we need to determine our Earned Value (EV) for each activity. As we
discussed on the previous pages, there are numerous EV methods used
for measuring progress each method more applicable to certain types of
activities than other methods. For example we will use the following EV
methods for, the four activities we are statusing.
Activity EV Method
Pour Foundation Fixed Formula: 0/100
Install Patio Subjective % Complete
Frame Exterior Walls Subjective % Complete
Pour Stairway Fixed Formula: 25/75
Now that we understand what activities need statusing and what method of EV
will be used for each activity, it is time to status the project activities.

To obtain our project activity status, we will need to meet with the Project
Manager or those responsible for the work. In our case, we will need to
meet with the different CAMs or Project Superintendents responsible for
each Control Account. Below are the results of that meeting.
Monthly Status Meeting
January 31th, 2002
Actual Actual % Forecast
Control Account Activity Start Finish Complete Completion
Concrete Pour Foundation 1/15 1/22 100%
Install Patio 1/23 1/30 100%
Pour Stairway 1/31 25% 2/1
Framing Frame Exterior Walls 1/23 40% 2/8
Plumbing No activities scheduled
Electrical No activities scheduled
Interior No activities scheduled
Roofing No activities scheduled

Now let’s review the status of each activity.
The first activity is Pour Foundation. This activity was scheduled to start on
1/15 and finish on 1/22 (see schedule below). It’s actually started on 1/15
and finished on 1/22 (see status report below). Thus this activity was on
schedule and is 100% complete. What is its Planned Value (PV), Earned
Value (EV), and Actual Cost (AC)?
January 31th, 2002

The Planned Value is determine by what was “planned” or scheduled to be

complete. Using the schedule below, the activity was planned to start on
1/15 and finish on 1/22 thus as of 1/31 the PV for Pour Foundation is
$15,394, the entire value of the activity.
The Earned Value (EV) is what was actually done as of 1/31. The activity is
100% complete and its EV is $15,394 (100% of PV). Remember you
cannot earn more then was planned. Monthly Status Meeting
January 31th, 2002
The Actual Cost (AC) is what was Control Account
Concrete
Activity
Pour Foundation
Start
1/15
Finish
1/22
Complete
100%
Completion
actually spent and can be Install Patio

Pour Stairway
1/23
1/31
1/30 100%
25% 2/1
obtained from the accounting Framing Frame Exterior Walls 1/23 40% 2/8
system. The AC is $15,850. Plumbing No activities scheduled

The next activity, Install Patio, is handled the same way as the previous
activity. It was completed on schedule and is 100% complete as of 1/31.
Its PV, EV and AC are as follows:
Planned Value (PV) = $8,166

Earned Value (EV) = $8,166
Actual Cost (AC) = $7,200
January 31th, 2002

The next two activities are a little different because they are not 100% complete,
and they use two different methods of determining EV.
Let’s take a look at the activity, Frame Exterior Walls first. Check out this activity
on the next page.

January 31th, 2002

The activity, Frame Exterior Walls, was schedule to start on 1/23 and finish
on 2/8. It started on 1/23 and is forecasted to complete on 2/8 (see
status report), thus the activity is on schedule. As of 1/31 the Project
Superintendent said the activity was 40% complete. Remember the EV
method used for this activity is Subjective % Complete. What is our PV,
EV and AC?

January 31th, 2002

The Planned Value is $8,748. Let’s review how the planned value was
determined.
The activity is schedule from 1/23 to 2/8, which is 17 calendar days or 13

working days. We will use calendar days in our example calculation.
Remembering the assumption that all costs are spent uniformly across each
activity, we need to determine what the PV is as of 1/31. Let’s take a look at
the calculations on the next page. Monthly Status Meeting
January 31th, 2002

The cost of the activity, $16,521, will be divided by the total duration of the
activity, 17 days, to give us a value of $972 per day. Next we take the
planned start date (1/23) and the status date (1/31) to determine the
amount of days planned (9). Now let’s determine the Planned Value (PV).
The PV is determined by taking the amount of days (9) times the value per day
($972). Our PV is $8,748. Remember that there is a difference between
cumulative and current. For this example they are the same.
January 31th, 2002
Now let’s take a look on the next Control Account
Concrete
Activity
Pour Foundation
Start
1/15
Finish
1/22
Complete
100%
Completion
page at determining EV. Install Patio

Pour Stairway
1/23
1/31
1/30 100%
25% 2/1

The Earned Value for this activity is determined by taking the activity's total
value, $16,521, and multiplying it by the % complete. In this case, the %
complete is 40%. The EV for this activity, as of 1/31, is $6,608.
The Actual Cost (AC) as derived from the accounting system is $6,250.
In summary: Monthly Status Meeting

January 31th, 2002
PV = $8,748 Actual Actual % Forecast
EV = $6,608 Install Patio
Pour Stairway
1/23
1/31
1/30 100%
25% 2/1
AC = $6,250 Framing Frame Exterior Walls 1/23 40% 2/8

Now let’s take a look at our last activity. Roofing No activities scheduled

The last activity is Pour Stairway. This activity was scheduled to start on 1/31
and finish on 2/1. It started on schedule on 1/31 and is forecasted to
complete on 2/1 (see status report), thus the activity is on schedule. Its EV
method is Fixed Formula 25/75, so its % complete is 25%. Using the
same processes discussed on the previous pages, what is the PV, EV and
AC for this activity?

January 31th, 2002
PV = $5,961 ($11,922/2 calendar days) Actual Actual % Forecast
EV = $2,981 ($11,922 x .25) Install Patio
Pour Stairway
1/23
1/31
1/30 100%
25% 2/1
AC = $3,100 (from accounting system) Framing Frame Exterior Walls 1/23 40% 2/8

Now let’s review our project status. Roofing No activities scheduled

The chart below lists the project status results as of 1/31. But what does this
information tell us?
as of 1/31 PV EV AC SV CV SPI CPI
Foundation $15,394 $15,394 $15,850 0 -456 1.00 0.97
Patio $8,166 $8,166 $7,200 0 966 1.00 1.13
Exterior Walls $8,748 $6,608 $6,250 -2,140 358 0.76 1.06
Stairway $5,961 $2,981 $3,100 -2,980 -119 0.50 0.96
Project Total $38,269 $33,149 $32,400 -5,120 749 0.87 1.02
Note: SV = Schedule Variance, CV = Cost Variance, SPI = Schedule Performance Index, CPI = Cost Performance Index
Can you answer these questions?

• Is the Project on Schedule?, If not, what activity(s) is behind?
• Is the project overrunning? If so, what activity(s) is overrunning?
• Is the project going to miss the project completion milestone?
• Is the project going to need more budget?
These questions and others will be answered in the next module, Module 6 –
Metrics, Performance Measures and Forecasting where the value of EVM
will become apparent.
Estimate at Completion (EAC)
One final item that needs to be covered briefly is Estimate at Completion

(EAC).
The Estimate at Completion (EAC) is the actual cost to date plus an objective
estimate of costs for remaining authorized work. The objective in preparing
an EAC is to provide an accurate projection of cost at the completion of the
project. There are multiple ways and varying degrees of detail to calculate
EAC, and they will be covered in a future module. The most common is:
EAC = Actual Cost (AC) + Estimate to Complete (ETC)
The Estimate to Complete (ETC) is the cost of completing the authorized

remaining work.

Review of Module 5
Take some time to review the major items of this module
• There is an Industry Standard Earned Value Management System guideline

published in DoD 5000.2-R. It contains 332 criteria in 5 categories.
• There are three key components to earned value: Planned Value, Earned
Value and Actual Cost.
– PV (BCWS) is the physical work scheduled or “what you plan to do”.
– EV (BCWP) is the quantification of the “worth” of the work done to date
or “what you physically accomplished”.
– AC (ACWP) is the cost incurred for executing work on a project or “what
you have spent”.
• There are numerous EV methods used for measuring progress.

– Fixed Formula
– Milestone Weights
– Milestone Weights with % Complete
– Units Complete
– Percent Complete
– Level of Effort Module 5 – EVMS Concepts and Methods 68
Summary of Module 5
In previous modules, we examined the basics of planning, scheduling,

budgeting, and establishing a baseline. In this module we examined the
basic EVMS concepts and methods. The next module takes us into
analyzing the Metrics of Earned Value, along with addressing Performance
Measures and Forecasting.
If you have a firm grasp of the concepts covered in these first five modules, feel
free to progress to the next module. Otherwise, review the modules to
ensure you have a solid understanding of the basics.

Module 6: Metrics, Performance
Measurements and Forecasting
Prepared by:
Module 6: Metrics, Performance Measurements and Forecasting
Welcome to Module 6. The objective of this module is to introduce you to the

Metrics and Performance Measurement tools used, along with Forecasting,
in Earned Value Management.
• Define Cost and Schedule Variances
• Define Cost and Schedule Performance Indices
• Define Estimate to Complete (ETC)
• Define Estimate at Completion (EAC) and Latest Revised Estimate (LRE)
Module 6 – Metrics, Performance Measures and Forecasting 2

Let’s quickly review what has been covered in the previous modules.
• There are three key components to earned value: Planned Value, Earned
Value and Actual Cost.
– PV is the physical work scheduled or “what you plan to do”.
– EV is the quantification of the “worth” of the work done to date or “what
you physically accomplished”.
– AC is the cost incurred for executing work on a project or “what you
have spent”.
• There are numerous EV methods used for measuring progress.
The next step is to stand back and monitor the progress against the
Performance Measurement Baseline (PMB).

What is Performance Measurement?
Performance measurement is a common phrase used in the world of project

management, but what does it mean? Performance measurement can have
different meanings for different people, but in a generic sense performance
measurement is how one determines success or failure on a project. How
then can performance measurement have different meanings for different
people?
To answer this question, consider the ACME House Building project. You
have two major stakeholders on this project, the Buyer and the Builder. Do
you think they both measure success on the project identically or do you
believe their definition of project success may be different? Let’s take a look
on the next page.

It seems logical to say that they both want a home that provides security,
meets building code, and keeps them warm in the winter and cool in the
summer. Now let’s look at possible differences in the way they define
successful performance on the project.
Buyer Builder
– Home has 4 bedrooms, 3 – Completed on time

bathrooms – Within contract price
– Backyard is landscaped for – Sells within first two months
children to play – Less than 10% Post-sell
– Two car garage maintenance
– Walls don’t have paint streaks
– Carpeting is correct color
Can you see how different parties or individuals can have conflicting views of
what defines project success?
The Stakeholders (Buyer and Builder in the ACME House Building Project)
should understand how each party defines project success and what each
party measures to determine that success.
In the case of Earned Value Management, performance measurements focus

on cost and schedule management.
The Cost Management focuses on the cost performance of the project. It looks
at the relationships between the Earned Value (EV) and the Actual Cost
(AC).
The Schedule Management focuses on the schedule performance of the

project. It looks at the relationships between the Earned Value (EV) and the
Planned Value (PV).
Now let’s look at these relationships in more detail on the following pages.

Earned Value: Metrics and Performance Measurements
Earned value performance measurements look at the project cost and

schedule performance by analyzing the cost and schedule variance along
with cost and schedule efficiency. The formulas used are as follows:
Variance Analyses
Cost Variance (CV) = Earned Value (EV) – Actual Cost (AC)
Schedule Variance (SV) = Earned Value (EV) – Planned Value (PV)
Performance Indices
Cost Performance Index = Earned Value (EV)/Actual Cost (AC)
Schedule Performance Index = Earned Value (EV)/Planned Value (PV)
Let's take a look at the Variance Analyses on the next page.

Variances
The Cost Variance (CV) is the difference between the earned value of work
performed and the actual cost. CV tells you the earned value of work
performed for each dollar’s worth of work scheduled.
Cost Variance (CV) = EV – AC
If the result is POSITIVE, project is experiencing an

“Underrun”
If the result is NEGATIVE, project is experiencing an

“Overrun”

Variances: Cost Variance example
Using the ACME Home Building project information from Module 5, let's
calculate the Cost Variance (CV) for the project.
as of 1/31 PV EV AC
Foundation $15,394 $15,394 $15,850
Patio $8,166 $8,166 $7,200
Exterior Walls $8,748 $6,608 $6,250
Stairway $5,961 $2,981 $3,100 Cost
Project Total $38,269 $33,149 $32,400
CV = EV – AC
Cost
CV = $33,149 - $ 32,400 Variance
CV = $749
What does this tell you? Look at the explanation

on the next page.
1/31
Time
A Cost Variance of $749 tells you that the project is “Underrun” or under
budget.
Please note that the cost variance, along with all other performance analyses
tools, can be computed (or assessed) in terms of cumulative and current.
Since we are in the first status period in our example, the cumulative and
current are the same.
Cost
Using the graph to right, you can see that on

1/31 the EV line (green) is above the AC line Cost
Variance
(red). This means that it cost less to
accomplish the work then was budgeted,
thus a positive cost variance.
Let's look at another Cost Variance calculation

on the next page. 1/31
Time
Another calculation for reviewing Cost Variance (CV) Percentage is CV%.
Cost Variance (CV)% = CV/EV
Tells you what percentage cost varies from what

has been earned to date.
Using our example, what is the CV%?

CV = EV – AC CV% = CV/EV
CV = $33,149 - $32,400 CV% = $749/$33,149
CV = $749 CV% = .023 or 2.3%
To date the project has a Cost Variance of $749 or 2.3%

Variances
The Schedule Variance (SV) is the difference between the earned value of
work performed and the work scheduled. SV tells you the value of work
performed less value of work scheduled.
Schedule Variance (SV) = EV – PV
If the result is POSITIVE, project is on schedule or

exceeding the schedule
If the result is NEGATIVE, project is behind schedule

Variances: Schedule Variance example
Using the ACME Home Building project information from Module 5, let's
calculate the Schedule Variance (SV) for the project.
as of 1/31 PV EV AC
Foundation $15,394 $15,394 $15,850
Patio $8,166 $8,166 $7,200
Exterior Walls $8,748 $6,608 $6,250
Stairway $5,961 $2,981 $3,100 Cost
Project Total $38,269 $33,149 $32,400
Schedule
Variance
SV = EV – PV
SV = $33,149 - $38,269
SV = -$5,120

on the next page.
1/31
Time
A Schedule Variance of -$5,120 tells you that the project is “Behind”

schedule.
Using the graph to right, you can see that

Cost
on 1/31 the EV line (green) is below the
PV line (blue). This means that what was Schedule
Variance
earned to date is less then what was
planned to be accomplished.
Now consider on the following page what

schedule variance does and does not 1/31
address. Time
Variances: Schedule Variance
Schedule Variance status does:

• indicate the dollar value difference between work that is ahead or
behind the plan
• reflect a given measurement method
Schedule Variance status does not:

• address impact of work sequence
• address importance of work
• reflect critical path assessment
• indicate amount of time it will slip
• identify source (labor & material) of difference
• indicate the time ahead/behind (or regain) schedule
• indicate the cost needed to regain schedule
Let's look at another Schedule Variance calculation on the next page.

Another calculation for reviewing Schedule Variance (SV) is SV%.
Schedule Variance (SV)% = SV/PV
Tells you what percentage schedule varies from

what has been planned to date.
Using our example, what is the SV%?

SV = EV – PV SV% = SV/PV
SV = $33,149 - $38,269 SV% = -$5,120/$38,269
SV = -$5,120 SV% = -.134 or -13.4%
To date the project has a Schedule Variance of -$5,120 or -13.4%

Variances: Review
You should have a solid understanding of the cost and schedule variance
calculations and what they mean. Let's review them now.
Cost Variance (CV) = EV – AC Schedule Variance (SV) = EV – PV
If the result is POSITIVE “Underrun” If the result is POSITIVE  “On Schedule”

If the result is NEGATIVE “Overrun” If the result is NEGATIVE  “Behind Schedule”
Using these variance calculations, our project information is as follows.
as of 1/31 PV EV AC SV CV
Foundation $15,394 $15,394 $15,850 0 -456
Patio $8,166 $8,166 $7,200 0 966
Exterior Walls $8,748 $6,608 $6,250 -2,140 358
Stairway $5,961 $2,981 $3,100 -2,980 -119
Project Total $38,269 $33,149 $32,400 -5,120 749
Now let's look at the performance indices on the following pages.

Performance Indices
The Cost Performance Index (CPI) is a measure of Cost Efficiency. The

CPI measures the value of work performed against the actual cost.
Cost Performance Index (CPI) = EV/AC
If the result is less than 1.0, cost is GREATER than

budgeted
If the result is greater than 1.0, cost is LESS than

budgeted
Example 1: Example 2:
PV = $950 PV = $1100
EV = $1000 EV = $1000
AC = $ 900 AC = $1200
CPI = $1000 = 1.11 CPI = $1000 = .83

$900 $1200
Performance Indices: Cost Performance Index example
Using the ACME Home Building project information, let's calculate the Cost
Performance Index (CPI) for the project.
as of 1/31 PV EV AC
Foundation $15,394 $15,394 $15,850
Patio $8,166 $8,166 $7,200
Exterior Walls $8,748 $6,608 $6,250
Stairway $5,961 $2,981 $3,100 Cost
Project Total $38,269 $33,149 $32,400
CPI = EV/AC
CPI= $33,149/$32,400
CPI = 1.02

on the next page.
1/31
Time
A Cost Performance Index (CPI) of 1.02 tells you that your actual costs are
less then what was budgeted.
You are getting $1.02 worth of work for every $1.00 spent.
1.2
1.15
1.1
1.05
CPI1.02
1
0.95 CPI 1.02
0.9
0.85
0.8
Now let's look at some causes of favorable and unfavorable cost performance.

Potential Causes of Unfavorable (-) Potential Causes of Favorable (+)

Cost Performance Cost Performance
• Work more complex than • Efficiencies being realized

anticipated • Work less complex than anticipated
• Design review comments extensive • Fewer revisions and rework
• Rework • Favorable Market Fluctuations in
• Unclear Requirements the Cost of Labor or Material
• Scope Creep • Overhead Rate Decreases
• Unfavorable Market Fluctuations in
the Cost Labor or Material
• Overhead Rate Increases

Performance Indices
The Schedule Performance Index (SPI) is a measure of Schedule

Efficiency. The SPI measures the value of work performed against the
work scheduled.
Schedule Performance Index (SPI) = EV/PV
If result is less than 1.0, project is “BEHIND” schedule

If the result greater than 1.0, project is “AHEAD of schedule
Example 1: Example 2:
PV = $950 PV = $1100
EV = $1000 EV = $1000
AC = $ 900 AC = $1200
SPI = $1000 = 1.05 SPI = $1000 = .91

$950 $1100

Performance Indices: Schedule Performance Index example
Using the ACME Home Building project information, let's calculate the
Schedule Performance Index (SPI) for the project.
as of 1/31 PV EV AC
Foundation $15,394 $15,394 $15,850
Patio $8,166 $8,166 $7,200
Exterior Walls $8,748 $6,608 $6,250
Stairway $5,961 $2,981 $3,100 Cost
Project Total $38,269 $33,149 $32,400
SPI = EV/PV
SPI = $33,149/$38,269
SPI = .87

on the next page. 1/31
Time
A Schedule Performance Index (SPI) of .87 tells you that you are behind
schedule. It can be defined in two ways:
You are 13% behind schedule

Or
You are working at an 87% efficiency
1.2
1.15
1.1
1.05
CPI 1.02
1
0.95 CPI 1.02
0.9
SPI 0.87
0.85
0.8
Now let's look at some causes of favorable and unfavorable schedule

performance on the following page.
Potential Causes of Unfavorable (-) Potential Causes of Favorable (+)

Schedule Performance Schedule Performance
• Manpower shortage • Efficiencies being realized

• Revised Execution Plan • Work less complex than anticipated
• Supporting organizations behind • Fewer revisions and rework
• Favorable Market Fluctuations in
schedule the Cost of Labor or Material
• Late Vendor delivery • Subcontractor ahead of schedule
• Delayed customer
feedback/direction
• Rework
• Work more complex than
anticipated
• Design review comments extensive
• Unclear requirements
• Scope creep

Review of Variance and Performance Indices
Below is a summary of the ACME Home Building project.

Foundation $15,394 $15,394 $15,850 0 -456 1.00 0.97
Patio $8,166 $8,166 $7,200 0 966 1.00 1.13
Exterior Walls $8,748 $6,608 $6,250 -2,140 358 0.76 1.06
Stairway $5,961 $2,981 $3,100 -2,980 -119 0.50 0.96
Project Total $38,269 $33,149 $32,400 -5,120 749 0.87 1.02
What conclusions can be inferred as to the cost and schedule performance of

this project?
Let’s take a look on the next page.


Foundation $15,394 $15,394 $15,850 0 -456 1.00 0.97
Patio $8,166 $8,166 $7,200 0 966 1.00 1.13
Exterior Walls $8,748 $6,608 $6,250 -2,140 358 0.76 1.06
Stairway $5,961 $2,981 $3,100 -2,980 -119 0.50 0.96
Project Total $38,269 $33,149 $32,400 -5,120 749 0.87 1.02
The ACME Home Building Project is 13% behind schedule (SPI = .87) but is
ahead on cost by 2% (CPI = 1.02). In review of the activities, Installation of
the Stairway and Framing the Exterior Walls are the activity causing the
project to be behind (SPI = .50 and .76) schedule. On the cost side, the
Installation of the Patio is costing less then budgeted (CV =$966) and is the
main reason for the project underrunning its budget.
What is the standard reporting variance threshold for a project? Find out on the
next page.

Reporting Variances
The size and complexity of the project determines the

reporting needed. Different industries and
government agencies will set variance thresholds at
different levels, but most set the variance level Variance Report for
Department
ACME Housingof
between + or - 7% to 10%. This means that a SPI Department
Defense of
Project
or CPI of .90 to 1.1 will require an official variance Defense
5000.2-R
analysis to explain what is happening on the project. 5000.2-R
Note that you need to explain positive variances as
well as negative variances.

So far we have only looked at how to analyze what has happened on a project
(CV,SV, CPI, SPI). Take some time to review the formulas below.
Cost Variance (CV) = EV – AC Schedule Variance (SV) = EV – PV
If the result is POSITIVE “Underrun” If the result is POSITIVE  “On Schedule”

If the result is NEGATIVE “Overrun” If the result is NEGATIVE  “Behind Schedule”
Cost Variance (CV)% = CV/EV Schedule Variance (SV)% = SV/PV
Tells you what percentage cost varies Tells you what percentage schedule varies from
from what has been earned to date. what has been planned to date.
Cost Performance Index (CPI) = EV/AC Schedule Performance Index (SPI) = EV/PV
If result is less than 1.0, cost is If result is less than 1.0, project is
GREATER than budgeted “BEHIND” schedule
If the result greater than 1.0, cost is If the result greater than 1.0, project is
LESS than budgeted “AHEAD of schedule

Estimate at Completion
Now it is time to learn how to analyze the future or what is expected to happen
on a project given the progress measurements reported to date. Anticipating
future progress requires determining when the project will be completed and
how much it will cost to complete it.
To complete our analysis, we will look at the Estimate at Completion (EAC) and
the Budget at Completion (BAC).
The Estimate at Completion (EAC), which was defined in Module 5, is the

actual cost to date plus an objective estimate of costs for remaining
authorized work. The objective in preparing an EAC is to provide an
accurate projection of cost at the completion of the project.
The Budget at Completion (BAC) is the sum of all budgets allocated to a

project scope. The Project BAC must always equal the Project Total PV. If
they are not equal, your earned value calculations and analysis will be
inaccurate.
The chart on the following page lists the parameters of the BAC and EAC along
with the other EVM items we have covered.
Item Questions
Planned Value (PV) How much work should be done?
Earned Value (EV) How much work was done?
Actual Cost (AC) How much did the work cost?
Budget at Completion (BAC) What is the total job budgeted to cost?
Estimate at Completion (EAC) What do we expect the total job to cost?
Another term you may hear is Latest Revised Estimate (LRE). The LRE is
equal to the EAC.
Estimate At Completion = Latest Revised Estimate
For the remainder of the Modules, we will refer to Estimate at Completion as

“EAC”.

The EAC is the best estimate of the total cost at the completion of the project.
The EAC is a periodic evaluation of the project status, usually on a monthly
basis or when a significant change happens to the project.
EACs are developed with varying degrees of detail and supporting documents.
A comprehensive EAC is usually prepared annually or if there are any major
changes in the project. The EAC should be reviewed on a monthly basis by
the Control Account Manager (CAM) or those responsible. The EAC is
developed for projects as well as Control Accounts and Work Packages.
There are multiple ways to develop an EAC. The technique selected is
based upon the dollar value of the project, the risk, accounting system
available and the accuracy of the estimates.
Let's take a look on the following pages at the most frequently used EAC
formulas.

Calculating Estimate at Completion
The first EAC calculation we will look at is Estimate to Complete:
EAC = Actual Cost (AC) + Estimate to Complete (ETC)
The Estimate to Complete (ETC) is the estimated cost of completing the

authorized remaining work. A detailed ETC will include a description of the
work remaining and any revisions to the estimated resources or cost for
completing the project. This formula assumes that all remaining work is
independent of the burn-rate incurred to date.
Now let's look use the EAC formula for our ACME Home Building project. Take
a look on the next page.

Earlier in this module, we determined the actual cost (AC) for January to be
$32,400. Now we need to determine the Estimate to Complete (ETC) for all
activities. For the two activities that are 100% complete, their actual cost
replaces their ETC (see chart below). For the two activities current being
worked, we will assume that they will be completed as budgeted even though
they have current cost variances (see ETC adjustments below). It will also be
assumed that all other activities will have no adjustments to their ETC.
ACTUALS ETC EAC
By reviewing the Activity January February March April Total
1.1.1.1 Pour foundation $15,850 $15,850
chart to the left you 1.1.1.2 Install Patio
1.1.1.3 Pour stairway
$7,200
$3,100 $8,822
$7,200
$11,922
can see that our 1.1.2.1 Frame exterior walls $6,250 $10,271 $16,521
1.1.2.2 Frame interior walls $11,025 $11,025
new Estimate at 1.1.2.3 Install roofing trusse $15,887 $15,887
1.1.3.1 Install waterlines $6,194 $6,194
Completion (EAC) 1.1.3.2 Install gas lines $6,255 $6,255
1.1.3.3 Install B/K fixtures $6,317 $6,317
is $164,957. 1.1.4.1 Install wiring $18,483 $18,483
1.1.4.2 Install outlets/switches $9,265 $9,265
1.1.4.3 Install fixtures $13,969 $4,656 $18,625
1.1.5.1 Install drywall $6,984 $6,984
Now lets look at the 1.1.5.2 Install Carpeting $2,250 $2,250
same example with 1.1.5.3 Painting
1.1.6.1 Install felt $1,834
$6,477
$611
$6,477
$2,445
some additional 1.1.6.2 Install shingles
1.1.6.3 Install vents
$2,445
$812
$2,445
$812
changes to the $32,400 $85,088 $42,813 $4,656 $164,957
ETC. Module 6 – Metrics, Performance Measures and Forecasting 34

As the project manager you are reviewing your ETC and you get a call from the
carpeting contractor. He tells you that the original budget for installing the
carpet ($2,250) is no longer correct because the price of the carpet
increased. The project manager asks for a new estimate and the carpeting
contractor tells him that it will now cost $3,100. Additionally, your
superintendent tells you that the current ETCs for Framing the Exterior Walls
and Pour Stairway are good, thus the current cost underrun ($358) for
Framing and the cost overrun ($120) for Stairway will be realized at the
completion of each activity.
With this information, lets take a look at the EAC.

EAC = Actual Cost (AC) + New Estimate to Complete
The new ETC total is $133,169 ($84,850 + $43,663 + $4,656)

The new EAC total is $165,569 ($32,400 (AC) + $133,169 (ETC)).
When using this formula to calculate EAC, you can also include expert opinion,
project and industry trends and other forms of objective analysis.
ACTUALS ETC EAC
Activity January February March April Total
1.1.1.1 Pour foundation $15,850 $15,850
1.1.1.2 Install Patio $7,200 $7,200
1.1.1.3 Pour stairway $3,100 $8,942 $12,042
1.1.2.1 Frame exterior walls $6,250 $9,913 $16,163
1.1.2.2 Frame interior walls $11,025 $11,025
1.1.2.3 Install roofing trusse $15,887 $15,887
1.1.3.1 Install waterlines $6,194 $6,194
1.1.3.2 Install gas lines $6,255 $6,255
1.1.3.3 Install B/K fixtures $6,317 $6,317
1.1.4.1 Install wiring $18,483 $18,483
1.1.5.1 Install drywall $6,984 $6,984
1.1.5.2 Install Carpeting $3,100 $3,100
1.1.5.3 Painting $6,477 $6,477
1.1.6.1 Install felt $1,834 $611 $2,445
1.1.6.2 Install shingles $2,445 $2,445
1.1.6.3 Install vents $812 $812
$32,400 $84,850 $43,663 $4,656 $165,569
Now that we have the EAC, what does it tell us?
As mentioned earlier, EAC is the best estimate of the total cost at the
completion of the project. It is also used to determine the Variance at
Completion (VAC) for the project. The VAC is calculated as follows:
VAC = BAC – EAC
If the result is POSITIVE, project is projecting an “Underrun”
If the result is NEGATIVE, project is projecting an “Overrun”
Now let's determine the VAC for our project as shown on the next page.

The VAC for our project is determined as follows:
BAC – EAC = VAC

$ 165,467 – $165,569 = - $102
In other words, the project is now forecasted to overrun by $102 using this form
of EAC. Remember, this is only one method of forecasting the performance
of the project. Several other methods can be used. Let’s consider those on
the following pages.
As you examine the remaining Estimate at Completion (EAC) formulas, keep in

mind that they are subjective analyses. These calculations use
performance-to-date data to help calculate the EAC. Sometimes these
forms of EAC Calculations are called Independent Estimate at Completion
(IEAC).

The second EAC formula is as follows:
EAC = AC/EV x BAC
This calculation uses the Actual cost, Earned value and Budget at Completion
for the project.
This formula is the easiest to use, but it assumes that the “burn-rate” will be the
same for the remainder of the project.
Let's use our ACME Home Building project to calculate the EAC using this
formula. Take a look on the next page.

EAC = AC/EV x BAC

EAC = $32,400/$33,149 x $165,467
EAC = .98 x $165,467
EAC = $162,158
as of 1/31 PV EV AC BAC
VAC = BAC – EAC Foundation $15,394 $15,394 $15,850 $15,394
Patio $8,166 $8,166 $7,200 $8,166
VAC = $165,467 - $162,158 Frame exterior Walls $8,748 $6,608 $6,250 $16,521
VAC = 3,309 Stairway $5,961 $2,981 $3,100 $11,922
Frame interior walls $0 $0 $0 $11,025
Install roofing trusse $0 $0 $0 $15,887
Using this EAC calculation, our Install waterlines $0 $0 $0 $6,194
Install gas lines $0 $0 $0 $6,255
project is projected to underrun by Install B/K fixtures $0 $0 $0 $6,317
$3,309. Install wiring $0 $0 $0 $18,483
Install outlets/switches $0 $0 $0 $9,265
Install fixtures $0 $0 $0 $18,625
Now let's look at the next EAC Install felt $0 $0 $0 $2,445
Install shingles $0 $0 $0 $2,445
formula on the next page. Install vents $0 $0 $0 $815
Install drywall $0 $0 $0 $6,984
Painting $0 $0 $0 $6,477
Install Carpeting $0 $0 $0 $2,250
$38,269 $33,149 $32,400 $165,467
The third EAC formula is as follows:
EAC = BAC/CPI
This calculation uses the Budget at Completion (BAC) and the Cost
Performance (CPI) Index to calculate EAC.
This formula is also easy to use and assumes that the “burn-rate” remains
constant for the remainder of the project.
This formula is derived from the previous formula and thus should result in the
same EAC figure. Note that with this formula you need additional information
than the previous formula.
Let's use our ACME Home Building project and calculate the EAC using this

EAC = BAC/CPI
EAC = $165,467/1.02 as of 1/31 PV EV AC SV CV SPI CPI
Foundation $15,394 $15,394 $15,850 0 -456 1.00 0.97
EAC = $162,222 Patio $8,166 $8,166 $7,200 0 966 1.00 1.13
Exterior Walls $8,748 $6,608 $6,250 -2,140 358 0.76 1.06
Stairway $5,961 $2,981 $3,100 -2,980 -119 0.50 0.96
Project Total $38,269 $33,149 $32,400 -5,120 749 0.87 1.02
VAC = BAC – EAC
as of 1/31 PV EV AC BAC
VAC = $165,467 - $162,222 Foundation $15,394 $15,394 $15,850 $15,394
VAC = 3,245 Patio $8,166 $8,166 $7,200 $8,166
Frame exterior Walls $8,748 $6,608 $6,250 $16,521
Stairway $5,961 $2,981 $3,100 $11,922
Using this EAC calculation, our Frame interior walls $0 $0 $0 $11,025
project is projected to underrun by Install roofing trusse $0 $0 $0 $15,887
$3,245. Install waterlines $0 $0 $0 $6,194
Install B/K fixtures $0 $0 $0 $6,317
Why is this answer different then the Install wiring $0 $0 $0 $18,483
previous calculation when it was Install outlets/switches $0 $0 $0 $9,265
mentioned that the two formulas Install felt $0 $0 $0 $2,445
are derived from each other? Install shingles $0 $0 $0 $2,445
Install vents $0 $0 $0 $815
Rounding to the second decimal is Painting $0 $0 $0 $6,477
the reason for the $64 difference. Install Carpeting $0 $0 $0 $2,250
$38,269 $33,149 $32,400 $165,467

The fourth EAC formula is as follows:

[Work Completed
EAC = AC/EV x and in Progress]
+ [Cost of work not yet begun]
This calculation uses the Actual cost, Earned value, the value of work
completed and in process and the cost of work not yet begun.
This formula assumes that the work not yet begun will be completed as
planned.

[Work Completed
You need the chart to the left to
determine the first part of the
formula (actual cost and earned as of 1/31 PV EV AC BAC
value). Foundation $15,394 $15,394 $15,850 $15,394
Patio $8,166 $8,166 $7,200 $8,166
Frame exterior Walls $8,748 $6,608 $6,250 $16,521
AC/EV = $32,400/$33,149 Stairway $5,961 $2,981 $3,100 $11,922
AC/EV = .98 Install roofing trusse $0 $0 $0 $15,887
Install waterlines $0 $0 $0 $6,194
To obtain the remaining two parts, Install B/K fixtures $0 $0 $0 $6,317
you will also need to use the chart, Install wiring $0 $0 $0 $18,483
Install outlets/switches $0 $0 $0 $9,265
but some calculations will be Install fixtures $0 $0 $0 $18,625
needed. Install felt $0 $0 $0 $2,445
Install shingles $0 $0 $0 $2,445
Let's take a look on the next page at Install drywall $0 $0 $0 $6,984
Painting $0 $0 $0 $6,477
the final two part of this formula. Install Carpeting $0 $0 $0 $2,250
$38,269 $33,149 $32,400 $165,467

[Work Completed
The project has 4 activities that are
completed and in progress
(Foundation, Patio, Frame exterior as of 1/31 PV EV AC BAC
Foundation $15,394 $15,394 $15,850 $15,394
walls and stairway). The value of Patio $8,166 $8,166 $7,200 $8,166
these activities is obtained by Frame exterior Walls $8,748 $6,608 $6,250 $16,521
using the BAC column. The total Stairway $5,961 $2,981 $3,100 $11,922
for Work Completed and in Install roofing trusse $0 $0 $0 $15,887
Progress is $52,003. Install waterlines $0 $0 $0 $6,194
Install B/K fixtures $0 $0 $0 $6,317
The final part is the cost of work not Install wiring $0 $0 $0 $18,483
yet begun. The value for this Install outlets/switches $0 $0 $0 $9,265
section is the sum of the activities Install fixtures $0 $0 $0 $18,625
Install felt $0 $0 $0 $2,445
not yet begun. The total Cost of Install shingles $0 $0 $0 $2,445
work not yet begun is $113,464. Install vents $0 $0 $0 $815
Painting $0 $0 $0 $6,477
Now let's calculate our EAC. Check Install Carpeting $0 $0 $0 $2,250
it out on the next page. $38,269 $33,149 $32,400 $165,467

[Work Completed
EAC = (.98 x $52,003) + $113,464
EAC = $164,427
Now let's calculate the Variance at Completion (VAC).
VAC = BAC – EAC

VAC = $165,467 - $164,427
VAC = 1,040
Using this EAC calculation, our project is projected to underrun by $1,040.
Now let's look on the next page at our final EAC formula.

The final EAC formula is as follows:
EAC = AC + [1/CPI (BAC-EV)]
This calculation uses the Actual Cost (AC) Budget at Completion (BAC),
Earned Value (EV) and the Cost Performance (CPI) Index to calculate EAC.
This formula is a very subjective way of calculating EAC.
formula. Check it out on the next page.

EAC = AC + [1/CPI (BAC-EV)]

EAC = $32,400 + [1/1.02 ($165,467 – $33,149)]
EAC = $32,400 + [.98 ($132,319) as of 1/31 PV EV AC BAC
Foundation $15,394 $15,394 $15,850 $15,394
EAC = $32,400 + $129,726 Patio $8,166 $8,166 $7,200 $8,166
EAC = $162,073 Frame exterior Walls $8,748 $6,608 $6,250 $16,521
Stairway $5,961 $2,981 $3,100 $11,922
Install roofing trusse $0 $0 $0 $15,887
Install waterlines $0 $0 $0 $6,194
VAC = BAC – EAC Install gas lines $0 $0 $0 $6,255
VAC = $165,467 - $162,073 Install B/K fixtures $0 $0 $0 $6,317
Install wiring $0 $0 $0 $18,483
VAC = 3,394 Install outlets/switches $0 $0 $0 $9,265
Install felt $0 $0 $0 $2,445
Using this EAC calculation, our project Install shingles $0 $0 $0 $2,445
is projected to underrun by $3,394. Install drywall $0 $0 $0 $6,984
Painting $0 $0 $0 $6,477
Install Carpeting $0 $0 $0 $2,250
$38,269 $33,149 $32,400 $165,467
Foundation $15,394 $15,394 $15,850 0 -456 1.00 0.97
Patio $8,166 $8,166 $7,200 0 966 1.00 1.13
Exterior Walls $8,748 $6,608 $6,250 -2,140 358 0.76 1.06
Stairway $5,961 $2,981 $3,100 -2,980 -119 0.50 0.96
Project Total $38,269 $33,149 $32,400 -5,120 749 0.87 1.02
The outcomes of the various methods for computing EAC are shown in the
table below:
EAC Formula EAC VAC
EAC = AC + ETC $165,569 -$102
EAC = AC/EV x BAC $162,158 $3,309
EAC = BAC/CPI $162,222 $3,245
[Work Completed [Cost of work
+ not yet begun] $164,427 $1,040
EAC = AC + [1/CPI (BAC-EV)] $162,073 $3,394
In reviewing the EAC formulas, be aware that the formula you use impacts
your project’s EAC. Though all the EAC calculations are correct, choosing
the appropriate formula for your project is important. The EAC formula you
choose should be determined by the specifics of the project.
If you need to review these techniques, please pay close attention to the
assumptions of each.

Review Module 6
• Performance measurement defines how success or failure is determined on

a project. In the case of Earned Value Management, performance
measurements focus on cost and schedule management.
• Earned value performance measurements look at the project cost and

schedule performance by analyzing the cost and schedule variance along
with cost and schedule efficiency.
– Cost Variance (CV) is the difference between the earned value of work
performed and the actual cost. CV tells you the earned value of work performed
for each dollars worth of work scheduled.
– Schedule Variance (SV) is the difference between the earned value of work
performed and the work scheduled. SV tells you the value of work performed
less value of work scheduled.
– Cost Performance Index (CPI) is a measure of Cost Efficiency. The CPI
measures the value of work performed against the actual cost.
– Schedule Performance Index (SPI) is a measure of Schedule Efficiency. The
SPI measures the value of work performed against the work scheduled.
Review Module 6 cont.
• The Estimate at Completion (EAC) is the actual cost to date plus an

objective estimate of costs for remaining authorized work. The objective in
preparing an EAC is to provide an accurate projection of cost at the
completion of the project.
• There are multiple methods for determining EAC. Each project needs to be
evaluated to determine which EAC formula best fits the project’s size and
complexity.

Summary of Module 6
At this point we have examined the basic metrics and performance measures
used in EVMS. In the next module you will examine the concepts of
Integrated Baseline Review (IBR), Rebaselining, and Change Control.
have a solid understanding of the basics metrics and performance measures
used in EVMS.

Module 7: Integrated Baseline Review
and Change Control
Prepared by:
Module 7: Integrated Baseline Review and Change Control
Welcome to Module 7. The objective of this module is to introduce you to the

concepts of the Integrated Baseline Review Process and requirements for
Change Control.
• Definition of an Integrated Baseline Review (IBR)

• Integrated Baseline Review Objectives and Responsibilities
• Change Control Process
Module 7 – Integrated Baseline Review and Change Control 1

To review some critical terminology and define the framework within which
IBRs are conducted, let’s look back at the previous six modules.
• In Module 1 we introduced you to the basic concepts of an Earned Value

Management System (EVMS)
• In Module 2 we discussed the Work Breakdown Structure (WBS),

Organizational Breakdown Structure (OBS), and the integration of WBS and
OBS to create the Responsibility Assignment Matrix (RAM)

schedule baseline

• In Module 4 we discussed the Contract Budget Base (CBB), Performance

Measurement Baseline (PMB), Control Account , Work Package, and
Planning Package setup
• In Module 5 we discussed EVMS Criteria, EVMS Terminology, and Earned

Value Methods
• In Module 6 we discussed Earned Value Metrics and Performance

Measures

Integrated Baseline Review (IBR) Definition
Now let’s discuss the Integrated Baseline Review (IBR), followed by the
Change Control Process.
An Integrated Baseline Review (IBR) is a formal review led by the Government

Program Manager and Technical Support Staff. An IBR is conducted jointly
with the Government and their Contractor counterparts.
The purpose of an IBR is to

– verify the technical content of the Performance Measurement Baseline
(PMB)
– assess the accuracy of the related resources (budgets) and schedules
– identify potential risks

Performance Measurement Baseline Review
Because the IBR uses the technical content of the Performance Measurement
Baseline (PMB), it’s important that you have a solid understanding of the
PMB.
Remember the discussion on PMB from Module 4? Let’s quickly review. The
Performance Measurement Baseline (PMB) is the time-phased budget plan
against which contract performance is measured.
Now that we’ve reviewed the PMB and defined the purpose of an IBR, let’s
discuss when an IBR is conducted.

Integrated Baseline Review (IBR) Timing
The initial Integrated Baseline Review is typically conducted within six months
after contract award. Integrated Baseline Reviews will also be performed
when work on a production option of a development contract begins or, at
the discretion of the program manager, when a major modification to an
existing contract significantly changes the existing PMB.
When a major event occurs within the life of a program such as a Critical
Design Review (CDR), and a significant shift in the content and/or time-
phasing of the PMB occurs, the Program Manager may conduct a review of
the associated resources and schedules affected by the changes.
The IBR is intended to be a continuous part of the Program Management

Process by both the Government and the Contractor.
Now let’s review the specific IBR objectives, on the next page.

Integrated Baseline Review (IBR) Objectives
The Objectives of the Integrated Baseline Review are to:
• Ensure that the technical content of Control Account, Work Packages, and
Planning Packages is consistent with the Contract Work Breakdown
Structure (CWBS) and the Contract Statement of Work (SOW)
• Ensure that a logical sequence of effort planned is consistent with the

contract schedule
• Assess the validity of allocated budgets in terms of work content, resources,

and time-phasing
• Understand the earned value methods for measuring accomplishment and

to verify that objective and meaningful performance data is provided in
terms of technical accomplishment

Integrated Baseline Review (IBR) Objectives
Integrated Baseline Review Objectives (Continued)
• Verify that effective variance analysis processes are applied to identify,

correct, and report problems including cost and schedule impacts
• Verify that proper accounting cross-checks are established so cost account

data is accurately reflected in reports to the government
• Verify that cost, schedule, and technical systems are integrated
• Establish a forum through which the government program manager and the
program technical staff gain a sense of ownership of the cost/schedule
management process
Now that we’ve reviewed the IBR objectives, let’s review some of the key
documents required at an IBR. Check these out on the next page.
Integrated Baseline Review (IBR) Checklist
The following documents are typically provided by the Contractor to the

Government for review during the Integrated Baseline Review:
Statement of Work (SOW) Contract Work Breakdown Structure (CWBS)

CWBS Dictionary Work Authorization Documents (WADs)
Control Account Plans (CAPs) Integrated Master Schedule
Variance Thresholds for Reporting Management Reserve Logs
Undistributed Budget Logs Responsibility Assignment Matrix (RAM)
Earned Value Methods  Earned Value Measurement Criteria
Organizational Breakdown Structure (OBS)
All of these documents were discussed in previous modules.

Integrated Baseline Review (IBR) Responsibilities
Now that we’ve discussed the key objectives for conducting an IBR and
reviewed the IBR Checklist, let’s review the responsibilities.
As the primary beneficiary of the IBR process, the Government Program

Manager is responsible for the timeliness and successful execution of the
review.
The Program Office Technical Team assesses the PMB and identifies risk
areas. The Control Account Managers are responsible for the integrity and
compliance of their Control Accounts/Work Packages.

Key Integrated Baseline Review (IBR) Concepts
Check your understanding by reviewing these key Integrated Baseline Review

(IBR) Concepts:
• The IBR is an assessment of the contractor’s Performance Measurement

Baseline (PMB) and is conducted jointly by the Government and the
Contractor.
• The IBR is conducted within six months of the award of a new contract or as
required due to a major change to an existing contract.
• The responsibility for conducting the IBR lies with the Program Manager
and the Program Office Technical Staff.

Integrated Baseline Review (IBR) Summary
In summary, the IBR facilitates an understanding of the overall technical, cost,

and schedule processes. The Government and Contractor technical
counterparts can jointly conduct recurring reviews of PMB planning, status,
and Estimates at Completion (EAC) to ensure that baseline integrity is
maintained throughout the life of the contract.
Now that we’ve discussed the Integrated Baseline Review Process, let’s
discuss what happens when there are changes made to the PMB and the
Change Control Process used to track baseline changes. Take some time
to review this on the following pages.

Change Control Overview
As we’ve discussed, the Performance Measurement Baseline (PMB) is the

time-phased budget plan against which contract performance is measured.
Meaningful performance measurement data require a documented PMB,
which reflects the most current conditions of the program.
Once the Performance Measurement Baseline (PMB) is frozen or established,

cost and schedule changes are processed through formal change control
procedures. Authorized changes must be incorporated into the PMB in a
timely manner and reflected in both budgets and schedules.
The Change Control Process is used to establish, analyze, communicate, and

record approved changes to the program baseline.
Now let’s discuss the specific objectives of a Change Control Process.

Change Control Objectives
The objectives of a Change Control Process are to:
• Document, track, and communicate changes to the Performance

Measurement Baseline
• Reconcile current budgets to prior budgets in terms of changes to the

authorized work in the detail needed by management for effective control
• Control retroactive changes to records pertaining to work performed that

would change previously reported amounts for actual costs, earned value,
or budgets. Adjustments should be made only for correction of errors,
routine accounting adjustments, effects of customer or management
directed changes, or to improve the baseline integrity and accuracy of
performance measurement data
• Prevent revisions to the program budget except for authorized changes

Change Control: Baseline Changes
What types of baseline changes are subject to the change control process? Are
all changes subject to it? Let’s discuss types of baseline changes that would
be subject to the change control process.
Baseline changes may occur as a result of

– contractual changes/modifications
– application of undistributed budget
– the use of management reserve
– re-planning
– formal reprogramming
We will examine each of these in more detail on the following pages, but first,
take a look on the next page at the types of documentation that must be
completed for these changes.

Baseline changes must be documented and reflected in the Cost Performance

Reports (CPRs) and Change Control Logs, and must be coordinated with
the procuring agency.
Revised Work Authorization Documents (WADs), Revised Control Account

Plans (CAPs), and Revision Request Forms are all required as part of the
Change Control Process.
Revised Statement of Work (SOW) and Contract Work Breakdown Structure

(CWBS) documentation may also be required for contractual modifications.


Contractual changes/modifications are  contractual changes/modifications
initially incorporated into the Contract – application of undistributed budget
Budget Base (CBB), typically as part of – the use of management reserve
– re-planning
Undistributed Budget (UB), immediately
after the change is received. These
modifications can be either definitized or
authorized unpriced work.
Definitized Work Authorized Unpriced Work
Definitized work is incorporated Authorized Unpriced Work,

into the PMB within 60 days of including cost of money, is entered
definitization. in UB using the proposal dollars at
total cost. It may be maintained in
UB until definitized or distributed to
the responsible organizations.

Change Control: Undistributed Budget

Undistributed Budget is budget applicable to  contractual changes/modifications
contract effort that has not yet been  application of undistributed budget
identified to specific WBS elements at or – the use of management reserve
– re-planning
below the lowest level of reporting to the
customer.
Distribution of Undistributed Budget (UB) is authorized by the Program

Manager. UB may be established at the time of initial contract award and/or
when contract modifications are received.
The distribution of UB must be identified in the Contract Budget Base (CBB)

and Undistributed Budget (UB) Log for each authorized contract
change/modification. This is a requirement as part of a Change Control
Process.

Change Control: Management Reserve

Management Reserve (MR) is an amount of  contractual changes/modifications
the total contract target cost withheld for  application of undistributed budget
management control purposes rather than  the use of management reserve
– re-planning
designated to accomplish specific tasks.
Baseline changes caused by a
distribution of Management Reserve (MR)
are also subject to Change Control.
Distribution of Management Reserve (MR) is at the discretion of the Program

Manager and is based on a justified request for budget to perform an
unidentified scope of work that is within the contract SOW.
Distribution of Management Reserve must be identified in the Contract Budget

Base (CBB) and Management Reserve (MR) Log. This is a requirement as
part of a Change Control Process.

Change Control: Re-Planning

Baseline changes caused by a re-planning of  contractual changes/modifications
Work Packages are also subject to  application of undistributed budget
Change Control.  the use of management reserve
 re-planning
Re-planning of Work Packages within Control Accounts is sometimes

necessary to compensate for internal conditions which affect the planning
and scheduling of remaining work. Except for correction of errors and
accounting adjustments, no retroactive changes will be made to budgets for
completed work.
Re-planning should be accomplished within the constraints of the previously

established Control Account schedule and budget.

Change Control: Re-Planning

When more extensive re-planning of future  contractual changes/modifications
work is necessary and the total Control  application of undistributed budget
Account budget must be changed,  the use of management reserve
 re-planning
Management Reserve may be used to
increase or decrease the control account
budgets.
If re-planning requires that work and associated budget be transferred between
control accounts, this transfer must also be controlled and documented.
Major internal re-planning/re-baselining may be required when the result of

cost, schedule or technical issues have caused the original plan to become
unrealistic. The contract target cost remains unchanged. The ground rules
for re-baselining the remaining effort are submitted to the procuring agency
prior to implementation, and all baseline changes must be documented and
tracked.

Change Control: Over Target Baseline (OTB)

Over Target Baseline (OTB)/Formal  contractual changes/modifications
Reprogramming may arise when contract  application of undistributed budget
performance deviates from the plan to such  the use of management reserve
 re-planning
an extent that the original plan no longer
 formal reprogramming
serves as a reasonable measurement device.
In this case, formal reprogramming to a
budget that exceeds the CBB may be necessary.
The remaining work and budget should be thoroughly analyzed prior to

reprogramming. An overrun contract and overrun projections are not the
most important factors in the decision. Changing a baseline merely to
compensate for current variances is inappropriate.
The procuring agency must be consulted prior to reprogramming. The change

to the budget and schedule are recorded as though the contractual scope
had been changed. Changes to the baseline budget are fully documented
and traceable per the change control process.
Review Module 7
• The IBR facilitates an understanding of the overall technical, cost, and

schedule processes. The Government and Contractor technical
counterparts can jointly conduct recurring reviews of PMB planning, status,
and Estimates at Completion (EAC) to ensure that baseline integrity is
maintained throughout the life of the contract.
Change Control is required to:
• Maintain the integrity of the Performance Measurement Baseline

• Incorporate authorized changes in a timely manner, recording the effects of
such changes in budgets and schedules
• Reconcile current budgets to prior budgets in terms of changes to the
authorized work and internal re-planning in the detail needed by
management for effective control
• Prevent revisions to the program budget except for authorized changes
• Document changes to the Performance Measurement Baseline
Summary of Module 7
At this point we have examined the basic metrics and performance measures
used in EVMS. In the next module you will examine EVMS Reporting.
have a solid understanding of the basics metrics and performance
measures used in EVMS.

Module 8: Reporting
Prepared by:
Module 8: Government Required Reports

Government required reports.
• Define Cost Performance Report (CPR)
• Define Cost/Schedule Status Report (C/SSR)
Module 8 – Reporting 1
In the previous seven modules, we discussed the framework needed to

perform Earned Value and develop an Earned Value Management System
(EVMS).

properly implementing an earned value management system (EVMS)
• In Module 2 we discussed the development of the work breakdown structure

(WBS), organizational breakdown structure (OBS) and the integration of
WBS and OBS in creating the responsibility assignment matrix (RAM)

schedule baseline
• In Module 4 we discussed the development of the project budget and the

cost baseline
• In Module 5 we discussed EVMS criteria and the three key components to

earned value: Planned Value (PV) , Earned Value (EV) and Actual Cost
(AC).
• In Module 6 we discussed Earned value metrics and performance

measurements (CV, SV, SPI, CPI,etc.)
• In Module 7 we discussed the Integrated Baseline Review (IBR),

rebaselining of a project and proper baseline control or change control
Now let’s look at the Government reporting requirements for earned value.
Government Reporting Requirements
There are several reports which may be used for Earned Value Management
Reporting and Analysis.
The most commonly used reports are:

• Cost Performance Report (CPR)
• Cost/Schedule Status Report (C/SSR)
Let’s take a look at each type of report on the next page.
Cost Performance Report (CPR)
The Cost Performance Report (CPR) is the most comprehensive of the EVMS
reports. It is normally a monthly report and has five different formats.
• Format 1 Work Breakdown Structure (WBS)

• Format 2 Organizational Categories (OBS)
• Format 3 Baseline
• Format 4 Staffing (Manpower)
• Format 5 Variance Analysis Report
Generally, all five formats are applied to a contract requiring EVMS. However,
the customer may not require all the reports and may delete one or more.
Most customers will require at least the CPR Format 1 (WBS) and Format 5
(Variance Analysis Report).
Cost Performance Report (CPR)
All Performance Measurement data reported in the CPR are derived from the
formal Earned Value Management System (EVMS).
All reported changes to the project baseline, management reserve (MR) and
contingency should be traceable through the formal Earned Value
Management System (EVMS) and CPR reports.
On the following pages, we will look at examples of the five CPR reports using
the ACME House Building Project.
Cost Performance Report (CPR) - Example
First let’s quickly review the projects current status that will be used in the
example reports.
ACME Home Building Project
Project Start date: January 15th as of 1/31 PV EV AC SV CV SPI CPI
Foundation $15,394 $15,394 $15,850 0 -456 1.00 0.97
Patio $8,166 $8,166 $7,200 0 966 1.00 1.13
Status Date: January 31th Exterior Walls $8,748 $6,608 $6,250 -2,140 358 0.76 1.06
Stairway $5,961 $2,981 $3,100 -2,980 -119 0.50 0.96
Project Total $38,269 $33,149 $32,400 -5,120 749 0.87 1.02
EAC calculations used for the ACTUALS ETC EAC

Activity January February March April Total
example will be based on 1.1.1.1 Pour foundation $15,850 $15,850
1.1.1.2 Install Patio $7,200 $7,200
the assumptions discussed 1.1.1.3 Pour stairway $3,100 $8,942 $12,042
1.1.2.1 Frame exterior walls $6,250 $9,913 $16,163
on Page 35 and 36 of 1.1.2.2 Frame interior walls $11,025 $11,025
Module 6. See the charts to 1.1.2.3 Install roofing trusse

1.1.3.1 Install waterlines
$15,887
$6,194
$15,887
$6,194
the right for an overview. 1.1.3.2 Install gas lines
1.1.3.3 Install B/K fixtures
$6,255
$6,317
$6,255
$6,317
1.1.4.1 Install wiring $18,483 $18,483
Now let’s take a look at the 1.1.5.1 Install drywall
1.1.5.2 Install Carpeting
$6,984
$3,100
$6,984
$3,100
Cost Performance Reports 1.1.5.3 Painting $6,477 $6,477
1.1.6.1 Install felt $1,834 $611 $2,445
(CPR) on the next page. 1.1.6.2 Install shingles $2,445 $2,445
1.1.6.3 Install vents $812 $812
$32,400 $84,850 $43,663 $4,656 $165,569
Cost Performance Report (CPR) Format 1 - WBS
The Cost Performance Report (CPR) Format 1 includes current period,

cumulative, and at complete values for each WBS element. It also contains
header data showing quantity, targets, ceilings, and Management Estimate
At Completion (MEAC) calculations.
This report also contains data about budget, price, Management Reserve (MR),
Undistributed Budget (UB), and MEAC cases.
A copy of the CPR Format 1 for the ACME Home Building project is on the
following page. Please review the entire report but pay close attention to
the lower section (highlighted red) of the report. This is the Performance
data section that contains the current and cumulative cost and schedule
information for the project.
Cost Performance Report (CPR) Format 1 - WBS
COST PERFORMANCE REPORT Form Approved

FORMAT 1 - WORK BREAKDOWN STRUCTURE OMB No. 0704-0188
1. CONTRACTOR 2. CONTRACT 3. PROGRAM 4. REPORT PERIOD
a. NAME: ACME Construction a. NAME: ACME Housing a. NAME: ACME Housing a. FROM: 01-JAN-02
b. LOCATION: Denver, CO b. NUMBER: ACME - 1000 b. PHASE (X one) b. TO: 31-JAN-02
c. TYPE: FFP [ ] RDT&E [X] PRODUCTION
d. SHARE RATIO:
5. CONTRACT DATA
a. QTY b. NEG COST c. EST COST AUTH UNPR d. TGT PROFIT/FEE e. TGT PRICE f. EST PRICE g. CONT CEILING h. EST CEILING
0 $183,852 $0 $36,147 / 20.00% 219,999 219,999 0 0
6. EST COST AT MGMT EST AT COMPL CONT BUDGET BASE VARIANCE 7. AUTHORIZED CONTRACTOR REPRESENTATIVE
COMPLETION (1) (2) (3)
a. NAME (Last, First, Middle Initial) b. TITLE
a. BEST CASE $227,009 Ted Smith Manager
b. WORST CASE $165,467 c. SIGNATURE d. DATE SIGNED
c. MOST LIKELY $226,158 $183,852 -$42,306 31-JAN-02
8. PERFORMANCE DATA CURRENT PERIOD CUMULATIVE TO DATE AT COMPLETION
BUDGETED COST ACTUAL VARIANCE BUDGETED COST ACTUAL VARIANCE
ITEM COST COST
WORK WORK WORK WORK WORK WORK
SCHED PERF PERF SCHED COST SCHED PERF PERF SCHED COST BUDGET EST VAR
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14)
1.1.1 Concrete 9,670 8,757 26,150 -912 -17,393 9,670 8,757 26,150 -912 -17,393 11,485 28,873 -17,388
1.1.2 Framing 7,089 5,355 6,250 -1,734 -895 7,089 5,355 6,250 -1,734 -895 27,147 28,041 -893
1.1.3 Plumbing 0 0 0 0 0 0 0 0 0 0 5,704 5,704 0
1.1.4 Electrial 0 0 0 0 0 0 0 0 0 0 14,070 14,070 0
1.1.5 Interior 0 0 0 0 0 0 0 0 0 0 6,328 7,178 -850
1.1.6 Roofing 0 0 0 0 0 0 0 0 0 0 1,730 1,730 0

OVERHEAD 16,062 14,317 0 -1,745 14,317 16,062 14,317 0 -1,745 14,317 75,684 61,371 14,313
b. COST OF MONEY 19 17 0 -3 17 19 17 0 -3 17 82 65 17
c. GEN & ADMIN 5,429 4,702 0 -726 4,702 5,429 4,702 0 -726 4,702 23,237 18,537 4,700
d. UNDISTRIBUTED BUDGET 0 0 0
e. SUBTOTAL (PM Baseline) 38,269 33,149 32,400 -5,120 749 38,269 33,149 32,400 -5,120 749 165,467 165,569 -102
f. MANAGEMENT RESERVE 18,385
g. TOTAL 38,269 33,149 32,400 -5,120 749 38,269 33,149 32,400 -5,120 749 183,852
Cost Performance Report (CPR) Format 2 – Organizational
Categories
The Cost Performance Report (CPR) Format 2 includes current period,

cumulative, and at complete values for each Organization (Performing or
Responsible), It also contains header data showing quantity, targets,
ceilings, and MEAC cases.
This report also contains data about budget, price, Management Reserve (MR),
Undistributed Budget (UB), and MEAC cases.
The reporting details in CPR Format 2 are the same as on the CPR Format 1
accept that it is structured by organization.
A copy of the CPR Format 2 for the ACME Home Building project is on
following page. Please review the entire report but pay close attention to
the lower section (highlighted red) of the report. This is the Performance
data section that contains the current and cumulative cost and schedule
information for the project.
Cost Performance Report (CPR) Format 2 – Organizational
Categories

FORMAT 2 - ORGANIZATIONAL CATEGORIES OMB No. 0704-0188
d. SHARE RATIO:
5. PERFORMANCE DATA CURRENT PERIOD CUMULATIVE TO DATE AT COMPLETION
BUDGETED COST ACTUAL VARIANCE BUDGETED COST ACTUAL VARIANCE
ITEM COST COST
WORK WORK WORK WORK WORK WORK
SCHED PERF PERF SCHED COST SCHED PERF PERF SCHED COST BUDGET EST VAR
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14)
Construction
Construction 12,116 9,560 10,300 -2,556 -740 12,116 9,560 10,300 -2,556 -740 17,226 17,965 -739
Management
Project Management 7,503 5,668 6,250 -1,835 -582 7,503 5,668 6,250 -1,835 -582 19,475 20,057 -582
SubCont
Subcontractor Mgmt 13,203 13,203 15,850 0 -2,647 13,203 13,203 15,850 0 -2,647 36,272 38,919 -2,647
SUBTOTAL 32,821 28,430 32,400 -4,391 -3,970 32,821 28,430 32,400 -4,391 -3,970 72,973 76,941 -3,969
b. COST OF MONEY 19 17 0 -3 17 19 17 0 -3 17 82 65 17
c. GEN & ADMIN 5,429 4,702 0 -726 4,702 5,429 4,702 0 -726 4,702 23,237 18,537 4,700
e. SUBTOTAL (PM Baseline) 38,269 33,149 32,400 -5,120 749 38,269 33,149 32,400 -5,120 749 165,467 165,569 -102
f. MANAGEMENT RESERVE 18385
g. TOTAL 38,269 33,149 32,400 -5,120 749 38,269 33,149 32,400 -5,120 749 183,852
6. RECONCILIATION TO CONTRACT BUDGET BASE
a. VARIANCE ADJUSTMENT 0 0
b. TOTAL CONTR VARIANCE 0 0 0 0 0
Cost Performance Report (CPR) Format 3 – Baseline
Cost Performance Report (CPR) Format 3 displays a forecast of monthly

changes to the Baseline, Management Reserve, and Undistributed Budget
for the entire project, and contains header data showing schedule dates for
the contract and the project.
FORMAT 3 - BASELINE DOLLARS IN THOUSANDS OMB No. 0704-0188
d. SHARE RATIO:
5. CONTRACT DATA
a. ORIGINAL NEGOTIATED COST b. NEGOTIATED CONTRACT
c. CURRENT NEGOTIATED d. ESTIMATED COST e. CONTRACT BUDGET f. TOTAL ALLOCATED g. DIFFERENCE
CHANGE COST (A + B) AUTH UNPRICED WORK BASE (C + D) BUDGET (E - F)
$0 $0 $0 $0 $0 $0 $0
h. CONTRACT START DATE i. DEFINITIZATION DATE j. PLANNED COMPL DATE k. CONT COMPLETION DATE l. EST COMPLETION DATE
01-JAN-01 31-DEC-01
6. PERFORMANCE DATA BUDGETED COST FOR WORK SCHEDULED (NON - CUMULATIVE)
BCWS BCWS SIX MONTH FORECAST
ITEM CUM FOR
TO REPORT +1 +2 +3 +4 +5 6+ UNDISTRIB TOTAL
DATE PERIOD FEB02 MAR02 APR02 MAY02 JUN02 JUL02 AUG02 SEP02 OCT02 NOV02 DEC02 BUDGET BUDGET
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16)
a. PM BASELINE
(BEGIN OF PERIOD) 165 0 0 0 0 0 0 0 0 0 0 0 0 0 165
b. BASELINE CHANGES AUTH
DURING REPORT PERIOD
c. PM BASELINE
(END OF PERIOD) 38 73 49 5 0 0 0 0 0 0 0 0 0 165
7. MANAGEMENT RESERVE 18
8. TOTAL 184
Cost Performance Report (CPR) Format 4 – Staffing
The Cost Performance Report (CPR) Format 4 displays a forecast of hours and
person-months by Organization (Performing/Responsible), and contains
header data showing schedule dates for the contract and the project. This
report also contains program variance thresholds for month, cumulative, and
at-complete percents and values.
FORMAT 4 - STAFFING OMB No. 0704-0188
d. SHARE RATIO:
5. PERFORMANCE DATA FORECAST (NON - CUMULATIVE)
ACTUAL
END OF SIX MONTH FORECAST BY MONTH
ORGANIZATIONAL ACTUAL CURRENT
CATEGORY CURRENT PERIOD +1 +2 +3 +4 +5 +6 AT
PERIOD (CUM) FEB02 MAR02 APR02 MAY02 JUN02 JUL02 AUG02 SEP02 OCT02 NOV02 DEC02 COMPL
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15)
Construction
Hours 0 0 121 0 0 0 0 0 0 0 0 0 0 343
Man Months 0 0 1 0 0 0 0 0 0 0 0 0 0 2
Project Management
Hours 0 0 134 0 0 0 0 0 0 0 0 0 0 134
Man Months 0 0 1 0 0 0 0 0 0 0 0 0 0 1
Subcontractor Mgmt
Hours 0 0 138 0 0 0 0 0 0 0 0 0 0 305
Man Months 0 0 1 0 0 0 0 0 0 0 0 0 0 2
6. TOTAL DIRECT
Hours 0 0 393 0 0 0 0 0 0 0 0 0 0 781
Man Months 0 0 2 0 0 0 0 0 0 0 0 0 0 5
Cost Performance Report (CPR) Format 5 – Variance Analyses
Report
The Cost Performance Report (CPR) Format 5 provides narrative explanation

of cost, schedule, and other problems related to total contract, undistributed
budget (UB), management reserve (MR), PMB, and manpower.
The variance reporting thresholds are pre-determined prior to the start of the
program. Explanations and problem analysis reporting is only required for
those variances that breech the pre-set threshold(s). The report will
indicate those variances needing explanation.
A copy of the Variance Analyses Report is on the following page. The

variance report uses the ACME Home Building project information.
Cost Performance Report (CPR) Format 5 – Variance Analyses
Report
WBS: 1.1 Manager: Phillips

Desc: House Building Project Charge #:
(EAC - Actuals thru JAN-02 + ETC) Header information includes
TOTAL $$ BCWS BCWP ACWP SCHED-VAR % COST-VAR %
quantified cost and schedule
Mon Hours
Cum Hours
389
389
328
328
0
0
-61
-61
-16
-16
328
328
100
100
variances and indicates out of
Mon Dollars 38,269 33,149 32,400 -5,120 * -13 749 * 2 tolerance items. Explanations may
Cum Dollars 38,269 33,149 32,400 -5,120 * -13 749 * 2
be required for monthly, cumulative,
BAC Hours 1,732 EAC: 1,404 VAC: 328 19 and at complete variances.
BAC Dollars 165,467 EAC: 165,569 VAC: -103 * 0
PROBLEM ANALYSIS: (* = requires explanation)

Problem Analysis:
The schedule variance is due to delays in completing the framing of the exterior walls. This delay
is caused by both material shortages and availability of qualified resources. This section is used to explain the
The cost variance is due to increased productivity in installing the patio. The concrete subcontractor variance drivers, abnormal conditions
developed a faster way of forming a pour the stairway. and factors creating variances, and other
issues, problems, and concerns.
TASK/PROJECT IMPACT:
Task/Project Impact:
Framing the exterior walls will be completed on schedule and no delay will occur to the project complete.
This section is used to explain the impact
to the Control Account and overall
Project.
CORRECTIVE ACTION PLAN:
The current skill mix will be adjusted to complete this activity as scheduled. The ACME project
Corrective Action Plan:
management team is conducting a review of all future work to determine if resource availability will an issue.
This section provides the recovery and
risk mitigation plan.
Preparer: Dept: Initials: Date:
Approval: Dept: Initials: Date:
Cost/Schedule Summary Report (C/SSR)
The final standard EVMS report we will review is the Cost/Schedule Summary
Report (C/SSR).
The C/SSR (Cost/Schedule Summary Report) is used primarily for reporting

cost and schedule summary data to the government or contractors on
specific procurements.
This report includes cumulative and at complete summaries for each WBS
element, and contains header data showing contractor and contract
information, and MEAC calculations.
This report also contains data about contract price, budget, Management
Reserve (MR), Undistributed Budget (UB), and MEAC cases.
It is very similar to the CPR Format 1 except that the C/SSR has only
cumulative information.
A copy of the C/SSR for the ACME Home Building project in on the following
page.
Cost/Schedule Summary Report (C/SSR)
COST/SCHEDULE STATUS REPORT Form Approved

OMB No. 0704-0188
a. NAME: a. NAME: ACME Housing a. NAME: ACME Housing a. FROM: 01-JAN-02
ACME Construction b. NUMBER: ACME - 1000 b. PHASE (X one) [ ] RDT&E [X] PRODUCTION b. TO: 31-JAN-02
b. LOCATION: c. TYPE: FFP
Denver, CO d. SHARE RATIO:
5. AUTHORIZED CONTRACTOR REPRESENTATIVE c. SIGNATURE d. DATE SIGNED
a. NAME (Last, First, Middle Initial) b. TITLE 31-JAN-02
Ted Smith Manager
6. CONTRACT DATA
a. ORIGINAL CONTRACT TARGET COST b. NEGOTIATED CONTRACT CHANGES c. CURRENT TARGET COST (A + B) d. EST COST OF AUTH UNPR WORK
$0 $0 $0 $0
e. CONTRACT BUDGET BASE (C + D) f. MGMT ESTIMATE AT COMPLETION g. VARIANCE AT COMPLETE (E - F) h. OVER TARGET BASELINE DATE
$0 $0 $0 01-JAN-02
7. PERFORMANCE DATA CUMULATIVE TO DATE AT COMPLETION
BUDGETED COST ACTUAL VARIANCE
ITEM COST
WORK WORK WORK
SCHEDULED PERFORMED PERFORMED SCHEDULED COST BUDGET ESTIMATE VARIANCE
(1) (2) (3) (4) (5) (6) (7) (8) (9)
1.1.1 Concrete 9,670 8,757 26,150 -912 -17,393 11,485 28,873 -17,388
1.1.2 Framing 7,089 5,355 6,250 -1,734 -895 27,147 28,041 -893
1.1.3 Plumbing 0 0 0 0 0 5,704 5,704 0
1.1.4 Electrical 0 0 0 0 0 14,070 14,070 0
1.1.5 Interior 0 0 0 0 0 6,328 7,178 -850
1.1.6 Roofing 0 0 0 0 0 1,730 1,730 0
OVERHEAD 16,062 14,317 0 -1,745 14,317 75,684 61,371 14,313

b. COST OF MONEY 19 17 0 -3 17 82 65 17
c. GEN & ADMIN 5,429 4,702 0 -726 4,702 23,237 18,537 4,700
e. SUBTOTAL (PM Baseline) 38,269 33,149 32,400 -5,120 749 165,467 165,569 -102
f. MANAGEMENT RESERVE 18,385
g. TOTAL 38,269 33,149 32,400 -5,120 749 183,852
Review Module 8
• There are two major formats for EVMS reports

– Cost Performance Reports (CPR)
– Cost/Schedule Summary Report (C/SSR)
• The Cost Performance Report (CPR) has five formats:

– Format 1 Work Breakdown Structure (WBS)
– Format 2 Organizational Categories (OBS)
– Format 3 Baseline
– Format 4 Staffing (Manpower)
– Format 5 Variance Analysis Report
• CPR Format 1 and 5 are the most widely used
• The Cost/Schedule Summary Report (C/SSR) is similar to CPR Format 1
Summary of Module 8
At this point we have examined the basic reporting formats of EVMS.
If you have a firm grasp of the concepts covered in this module, along with all
provide modules, you have completed the EVMS tutorial. Otherwise, review
this or any other module to ensure you have a solid understanding of the
Earned Value Management.
Congratulations, you have completed Module 8 and the EVMS tutorial.

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Module 1: Introduction to Earned Value

Welcome to Module 1. The objective of this module is to introduce you to

This module will include the following topics:

• Earned Value Management defined

• The differences between Traditional Management and Earned Value

• The framework necessary for proper Earned Value implementation

Earned Value Management (EVM) is a systematic approach to the integration

Earned Value Management is intended to provide data from a contractor’s

By using Earned Value and implementing an Earned Value Management

• Where have we been?

• Where are we now?

• Where are we going?

A memorandum from the Deputy Secretary of Energy, dated September 19,

“I intend to continue the direction contained in DOE Order 413.3. The

Now let’s look at the DOE Order 413.3

“ The industry standard for project control systems described in American

The Office of Field Management has issued a series of 33 Good Practice

1960s - Earned value-based performance management began in the 60s,

1970s-80s – The DOD continued the use of Earned Value in response to

1990s – Policy moved Earned Value into all Federal agencies

To better understand Earned Value Management, let’s take a look at how

There is an important and fundamental difference between the data available

what was actually 0

In Earned Value Management, unlike in traditional management, there are

– the budget (or planned) value of work scheduled

– the actual value of work completed

– the “earned value” of the physical work completed

Let’s take a closer look at how earned value appears in a graph.

(red line). Given the 125

progression of each line, it 100

is also apparent that this 75

In addition to tracking budget and actual expenditures, the graph indicates

Schedule Variance - the project is experiencing a schedule variance of 15. This

Cost Variance - the project is experiencing a cost variance of -15. This is

In summarizing, Traditional management provides you with…

While Earned Value Management provides you with…

Program/Project Management is the application of knowledge, skills, tools,

Program/Project Management requires the ability to get the job done:

So how do projects and programs differ?

The Characteristics of a Project are:

The Characteristics of a Program are:

Earned Value is a Program/Project management technique used to objectively

Earned Value Management is Program Management

The EVMS framework can be divided into three phases:

1. Inputs - what is needed to implement Earned Value

1. Earned Value Methods – formulas, metrics and performance measurements

1. Outputs – reporting requirements (structure, time-phases, details)

Modules 2 through 4 and Corrective Actions

Modules 9,10 & 12 Corrective Actions

Reviewing the major items of this module:

At this point, we have examined the basics of earned value. As explored

This concludes Module 1.

Welcome to Module 2. The objective of this module is to introduce you to Work

• Work Breakdown Structure

• Organizational Breakdown Structure (OBS)

• Responsibility Assignment Matrix (RAM)

Module 2 – Work Breakdown Structure 1

Planning a project using earned value management is no different than the

– What makes up my entire project (Scope)?

On the following pages we will define and discuss a WBS.

Module 2 – Work Breakdown Structure 2

Each descending level of the

level of detailed definition of the

Earned Value Management Tutorial - BOOZ, ALLEN & HAMILTON

Earned Value Management Tutorial - BOOZ, ALLEN & HAMILTON