Earned value analysis.

Earned value analysis in its various forms is the most com-

monly used method of performance measurement. It integrates scope, cost, and
schedule measures to help the project management team assess project performance.
Earned value involves calculating three key values for each activity:
• The budget, also called the budgeted cost of work scheduled (BCWS), is that
portion of the approved cost estimate planned to be spent on the activity dur-
ing a given period.
• The actual cost, also called the actual cost of work performed (ACWP), is the
total of direct and indirect costs incurred in accomplishing work on the activ-
ity during a given period.
• The earned value, also called the budgeted cost of work performed (BCWP), is
a percentage of the total budget equal to the percentage of the work actually
completed. Many earned value implementations use only a few percentages
(e.g., 30 percent, 70 percent, 90 percent, 100 percent) to simplify data collec-
tion. Some earned value implementations use only 0 percent or 100 percent
(done or not done) to help ensure objective measurement of performance.
These three values are used in combination to provide measures of whether or
not work is being accomplished as planned. The most commonly used measures are
the cost variance (CV = BCWP – ACWP), the schedule variance (SV = BCWP –
BCWS), and the cost performance index (CPI = BCWP / ACWP). The cumulative
CPI (the sum of all individual BCWPs divided by the sum of all individual ACWPs)
is widely used to forecast project cost at completion. In some application areas, the
schedule performance index (SPI = BCWP / BCWS) is used to forecast the project
completion date.
ACWP Actual Cost of Work Performed Expressed in ($)
Actual cost of worked completed in a given amount of time.

BCWP Budgeted Cost of Work Performed Expressed in ($)

Cost estimates of work completed in a given amount of time. Also known
as "Earned Value."

BCWS Budgeted Cost of Work Scheduled Expressed in ($)

Cost estimates of work scheduled to be completed in a given amount of time,
also known as the "Baseline."

Note: Only tasks that are 100% complete will be counted as complete.

CV Cost Variance Expressed in ($) SV Schedule Variance Expressed in ($)

CV = BCWP - ACWP SV = BCWP - BCWS
Enter the number of estimated effort hours Enter the number of estimated effort hours
of task completed as of current sampling of task completed as of current sampling
date in this cell ---------> 0.00 date in this cell ---------> 0.00
BCWP = $0.00 BCWP = $0.00
ACWP = $0.00 BCWS = $0.00
Enter the number of actual effort ----------> 0.00 Enter the number of estimated effort -------> 0.00
hours of task completed as of current hours of task scheduled be completed as
sampling date in this cell of current sampling date in this cell
CV = $0.00 Negative numbers indicate SV = 0.00 Negative numbers indicate
actuals exceed estimate cost behind schedule

CPI Cost Performance Index SPI Schedule Performance Index

CPI = BCWP / ACWP SPI = BCWP / BCWS
Enter the number of estimated effort hours Enter the number of estimated effort hours
of task completed as of current sampling of task completed as of current sampling
date in this cell ---------> 0.00 date in this cell ---------> 0.00
BCWP = $0.00 BCWP = $0.00
ACWP = $0.00 BCWS = $0.00
Enter the number of actual effort ----------> 0.00 Enter the number of estimated effort -------> 0.00
hours of task completed as of current hours of task scheduled be completed as
sampling date in this cell of current sampling date in this cell
CPI = #DIV/0! A value of less than one SPI = #DIV/0! A value of less than one
is unfavorable is unfavorable
 Costs are not shown in this schedule but will appear in the example

ID Task Name Baseline_Work Baseline_Start Baseline_Finish

1 Mike & John Remove A Tree 72 hrs 2/19/2001 2/23/2001
2 Cut down the tree 32 hrs 2/19/2001 2/20/2001
3 Load tree into pick-up truc 16 hrs 2/21/2001 2/21/2001
4 Drive to Dump 4 hrs 2/22/2001 2/22/2001
5 Unload tree 16 hrs 2/22/2001 2/23/2001
6 Drive home 4 hrs 2/23/2001 2/23/2001

Example: The project started on 2/19/01. Today is 2/22/01 (C.O.B.), and we are going to sample
the project based upon the information provided in the project schedule above.
 Baseline_Duration Actual_Work Actual_Start Actual_Finish Resource_Names
5 days 68 hrs 2/19/2001 NA
2 days 29 hrs 2/19/2001 2/20/2001 Mike,John
1 day 19 hrs 2/20/2001 2/21/2001 Mike,John
0.5 days 10 hrs 2/22/2002 2/22/2001 Mike[50%],John[50%]
1 day 10 hrs 2/22/2001 NA Mike,John
0.5 days 0 hrs NA NA Mike[50%],John[50%]

oing to sample
Predecessors

2
3
4
5
 CV - Calculating Cost Variance CV = BCWP - ACWP SV - Calculating Schedule Variance SV = BCWP - BCWS

Enter the number of estimated effort hours Task 2 32 estimated hrs Enter the number of estimated effort hours Task 2 32 estimated hrs
of task completed as of current sampling Task 3 16 estimated hrs of task completed as of current sampling Task 3 16 estimated hrs
date in this cell Task 4 4 estimated hrs date in this cell Task 4 4 estimated hrs
52.00 estimated hrs BCWP = $3,120.00 52.00 estimated hrs BCWP = $3,120.00
Enter the number of actual effort Task 2 29 actual hrs Enter the number of estimated effort Task 2 32 estimated hrs
hours of task completed as of current Task 3 19 actual hrs hours of task scheduled be completed as Task 3 16 estimated hrs
sampling date in this cell Task 4 10 actual hrs of current sampling date in this cell Task 4 4 estimated hrs
58.00 actual hrs ACWP = $3,480.00 52.00 estimated hrs BCWS = $3,120.00

CV = -$360.00 Negative amounts indicate actuals SV = 0.00 Negative amounts indicate

exceed estimate hours behind schedule

CPI - Cost Performance Index CPI = BCWP / ACWP SPI - Schedule Performance Index SPI = BCWP / BCWS
Enter the number of estimated effort hours Task 2 32 estimated hrs Enter the number of estimated effort hours Task 2 32 estimated hrs
of task completed as of current sampling Task 3 16 estimated hrs of task completed as of current sampling Task 3 16 estimated hrs
date in this cell Task 4 4 estimated hrs date in this cell Task 4 4 estimated hrs
52.00 estimated hrs BCWP = $3,120.00 52.00 estimated hrs BCWP = $3,120.00
Enter the number of actual effort Task 2 29 actual hrs Enter the number of estimated effort Task 2 32 estimated hrs
hours of task completed as of current Task 3 19 actual hrs hours of task scheduled to be completed as Task 3 16 estimated hrs
sampling date in this cell Task 4 10 actual hrs of current sampling date in this cell Task 4 4 estimated hrs
58.00 actual hrs ACWP = $3,480.00 52.00 estimated hrs BCWS = $3,120.00

CPI = 0.90 A value of less than one SPI = 1.00 A value of less than one
is unfavorable is unfavorable

This project is on schedule (SV=0) and (SPI=1), however your actual costs are exceeding your estimated costs (CV = $360.00)
and your Cost Performance Index is unfavorable (CPI=.90) which means you're spending money faster than estimated to reach your scheduled dates.

At this rate you are going to run out of money before you reach project completion.
End Result = keep your resume current!