Control Schedule

EVA
 EVA Example

A $10,000 software project is scheduled for 4 weeks.

At the end of the third week, the project is 50%
complete and the actual costs to date is $9,000

Planned Value (PV) = $7,500

Earned Value (EV) = $5,000
Actual Cost (AC) = $9,000
 What is the project health?

Schedule Variance
= EV – PV = $5,000 – $7,500 = - $2,500
Schedule Performance Index (SPI)
= EV/PV = $5,000 / $7,500 = .66
Cost Variance
= EV – AC = $5,000 - $9,000 = - $4,000
Cost Performance Index (CPI)
= EV/AC = $5,000 / $9,000 = .55

Objective metrics indicate the project is behind schedule and over

budget.
On-target projects have an SPI and CPI of 1 or greater
 Forecasting Costs

• If the project continues at the current

performance, what is the true cost of the project?
• Estimate At Complete
= Budget At Complete (BAC) / CPI
= $10,000 / .55 = $18,181
At the end of the project, the total project costs will be
$18,181
 Earned Value Scenario

• BAC = $100,000 (current project budget)

• EV = $42,000 (42% of project completed, $100,000 planned)
• PV = $56,000 (56% of project planned $100,000 completed – initial
aging report)
• AC = $48,000 (from actual expenditures reporting)
• Is this project on schedule / budget? Or is it in
trouble?
 Contd…

• Cost Variance (CV):

CV = EV – AC
= $42,000 - $48,000
= - $6,000

• Cost Performance Index (CPI):

CPI = EV / AC
= $42,000 / $48,000
= 0.875

• Cost Variance % (CV%):

CV% = CV / EV
= - $6,000 / $42,000
= 14% OVER BUDGET
 Contd…
• Schedule Variance (SV):
SV = EV – PV
= $42,000 - $56,000
= - $14,000

• Schedule Performance Index (SPI):

SPI = EV / PV
= $42,000 / $56,000
= 0.750

• Schedule Variance % (SV%):

SV% = SV / PV
= - $14,000 / $56,000
= 25% BEHIND SCHEDULE
 Contd…

• Estimate at Completion (EAC):

• Method #1:
• EAC = AC + ETC
= $48,000 + $66,285.
= $114,285.71
• (Change Management for $14,285.71
funds request)
 Contd…
• Estimate to Complete (ETC):
• Method #3
• EAC = AC + [(BAC – EV) / CPI]
• = $48,000 + [($100,000 - $42,000) / 0.875]
• = $48,000 + $66,285
• = $114,285
• (Change Management for $14,285 funds request)

• Method #4
• EAC = BAC / CPI
• = $100,000 / 0.875
• = $114,285
• (Change Management for $14,285 funds request)
 Problem 1
• You are a project manager of a project to develop a new
wireless feature. The feature is made up of the phases in the
table below. Each phase is planned to be completed one after
the other. Today is the end of Month 5
Task Duration Budget
Requirements 1 month $10,000
Architecture 1 month $10,000
Design 1 month $10,000
Code 2 months $ 20,000
Testing 1 month $10,000
Using the Project status chart below, calculate PV, EV, AC,
BAC, CV, SV, CPI, SPI, EAC, ETC, VAC.

Task Mont Month Month 3 Month Mont Month 6 Status at end

h1 2 4 h5 of Month 5
Require S---F Complete, Spent
ments $10,000
Architect S---PF --F Complete, spend
ure $12,000
Design PS-S-PF --F Complete, Spend
$12,500
Code PS--S- --PF 25% Complete,
Spend $7000

Testing PS--PF Not yet started

What is Calculation Answer Interpretation

PV 10,000+10,000+10,000+10,000+10,00 50,000
0
EV 10,000+10,000+10,000+5,000 35,000
AC 10,000+12,000+,12,500+7,000 41,500
BAC 10,000+10,000+10,000+20,000+10,00 60,000
0
CV 35,000-41,500 -6,500
CPI 35,000 / 41,500 0.84
SV 35,000 – 50,000 -15,000
SPI 35,000 / 50,000 0.70
EAC 29762+41500 71,262
ETC (60000-35000)/.84 29,762
VAC 60,000 – 71,262 -11,262
Problem 2

You work for a company that manufactures high tech electronic

equipment. You are the project manager responsible for the
development of a new type of Handset for 4G applications. The project
life cycle is made up of the phases in the WBS below. We need to
purchase one oscilloscope. Each control account plan (CAP) is planned
to be completed one after the other. Today is the end of Month 5

Hardware
Design

1 2 3 4 5
Requirements Architecture Chip Design Circuit Pack Testing
Design
Assume the following rates:
1. System Engineer: $20,000/month 1 Oscilloscope at $20,000
2. Architect: $20,000/month
3. Chip Designer: $ 30,000/month
4. Circuit Pack Designer: $ 30,000/month
5. Tester: $20,000/month

The budget is calculated as follows:

1. Requirements: 1 month staff effort x 1 system engineer at $20,000 a month =
$20,000
2. Architecture: 1 month staff effort x 1 architect at $20,000 a month = $20,000
3. Chip Design: 1 month staff effort x 1 chip designer at $ 30,000 a month = $30,000
4. Circuit Pack Design: 2 month staff effort x 1 Circuit Pack Designer at $ 30,000 a
month = $60,000
5. Testing: 1month staff effort x 1 Tester at $20,000 a month = $20,000
CAP Resource Duration Budget

Requirements System Engineer 1 month $ 20,000

Architecture Architect 1 month $ 20,000

Chip Design Chip Designer 1 month $ 30,000

Circuit Pack
Circuit Designer 2 months $ 60,000
Design
Testing Tester 1 months $ 20,000

Total Staff $150,000

Equipment
Oscilloscope $20,000
Needs
Using the Project status chart below, calculate EV,
etc, at the end of month 5

Task Month Month 2 Month 3 Month 4 Month Month 6 Status at end of

1 5 Month 5
Requireme S-------F Complete, Spent
nts $22,000
Architectur S------F Complete, spend $
e 19,500

Chip Design PS-S-PF --F Complete, Spend $

30,500

Circuit Pack PS----S- -----PF 75% Complete,

Design Spend $ 48,000

Testing Not Started

What is Formula Calculation Answer

PV 20K + 20K + 30K + 60K $130,000

EV 20K + 20K + 30K + 45K $115,000
AC 22K + 19.5K + 30.5K + 48K $120,000
BAC 20K + 20K + 30K + 60K + 20K $ 150,000
CV EV - AC 115,000 – 120,000 - $ 5,000
CPI EV/AC 115,000 / 120,000 0.96
SV EV - PV 115,000 – 130,000 - $15,000
SPI EV / PV 115,000 / 130,000 0.88
EAC BAC/CPI 150,000 / 0.96 $156,250
ETC EAC - AC 156,250 – 120,000 $ 36,250
VAC BAC-EAC 150,000 – 156,250 - $6,250
Earned Value Management Example Problem 1

Compute Estimate At Completion (EAC) and Variance At

Completion (VAC) if both SPI and CPI influence the
project work when given variables are

•Budget At Completion (BAC) = $22,000

•Earned Value (EV) = $13,000
•Planned Value (PV) = $14,000
•Actual Cost (AC) = $15,000
Solution to EVM Problem 1

EAC (if the both SPI and CPI influence the project work) =
AC + [(BAC – EV) / (CPI x SPI)]
1.Schedule Performance Index (SPI) = EV/PV =
$13,000/$14,000 = 0.93 Since SPI is less than 1, this
indicates that the project is behind schedule
2.Cost Performance Index (CPI) = EV/AC =
$13,000/$15,000 = 0.87 Since CPI is less than 1, this
indicates that the project is over budget.
3.EAC = $15000 + [($22,000 – $13,000)/(0.93 X 0.87)] =
$26,123
4.VAC = BAC – EAC = $22,000 – $26,123 = -$4,123 The
project is experiencing a budget overrun of -$4,123.
Problem 2

You are the project manager on a project that has

$800,000 software development effort. There are two
teams of programmers that will work for six month for
a total of 10,000 hours. According to the project
schedule your team should be done with 38% of the
work. As of today, the project is 40% complete while
50% budget has been used. Calculate and share your
conclusion
Solution to Problem 2

BAC = $800,000 (given)

AC = $400,000 (50% budget used)
PV = BAC * Planned % Complete
= 800,000 * 38 = $304,000
EV = BAC * Actual % Complete
= 800,000 * 40 = $320,000
CV = EV – AC
= 320,000 – 400,000 = -80,000
CPI = EV / AC
= 320,000 / 400,000 = 0.8
SV = EV – PV
= 320,000 – 304,000 = 16,000
SPI = EV / PV
= 320,000 / 304,000 = 1.05
Since CPI is less than 1, the project is over budget
And since SPI is more than 1, the project is ahead of schedule
Problem 3

Your project is scheduled for 2 years. There are six

different teams working on five major functional
areas. Some teams are ahead of schedule while
others are falling behind. There are cost overruns in
some areas but you’ve also saved costs in others.
Due to all this, it is difficult to understand whether
you are over or under budget. Nine months into the
project, while the total project budget is $4,200,000,
you’ve already spent $1,650,000. CPI is 0.875. Can
you perform EV analysis and forecast
Solution to Problem 3

EAC = BAC / CPI

= 4,200,000 / 0.875 = 4,800,000
ETC = EAC – AC
= 4,800,000 – 1,650,000 = 3,150,000
VAC = BAC – EAC
= 4,200,000 – 4,800,000 = -600,000
Since the Variance At Completion is negative, the project
will be over budget at completion by $600,000
Problem 4

You are building a 4-sided fence. Each side is of equal

length and you estimate that each side will contain the
same material and labor costs as well as take the same
amount of time to complete. You estimate that the project
will take 4 days to complete and your budget, including a
contingency reserve is $4,000.At the end of 3 days, you
are asked to prepare an Earned Value calculation in order
to determine how the project is progressing. You determine
that as of the end of day 3, total costs incurred are $3,500.
and 70% of the project is complete
Solution to Problem 4

BAC (budgeted cost at completion) = $ 4,000.Your Actual %

completed is 70%.Therefore your EV (earned value) = BAC X Actual
%completed, or EV = $ 4,000. X .70= $ 2,800.
Next, your PV (planned value) = BAC X Planned %completed, or PV
= $ 4,000. X 75% (3 of 4 days) = $ 3,000.Therefore, your
SPI (schedule performance index) = EV / PV, or $ 2,800. / $ 3,000. =
.933, which means you are behind schedule. Your SV (schedule
variance) = EV - PV, or $ 2,800 -$ 3,000 = - $ 200.
Your CPI (cost performance index) = EV / AC (actual costs), or $
2,800 / $ 3,500 = .8, which means you are over budget. Your CV
(cost variance) = EV - AC or $ 2,800 - $ 3,500 = - $ 700.
Forecasting ahead, your EAC (estimated cost at completion) = BAC /
CPI, or $ 4,000. / .8 = $ 5,000.
Your VAC (variance at completion) = BAC - EAC or $ 4,000. - $ 5,000
= - $ 1,000. Your ETC (estimated cost to complete) = EAC - AC or $
5,000. - $ 3,500. = $ 1,500.