EVM Concepts

‫) هو تكنيك يستخدم في ادارة المشاريع و ذلك إلعطاء دالالت عن وضع‬EVM( ‫مفهوم الـ‬
)Budget( ‫) و الميزانية‬Schedule( ‫المشروع من ناحية الوقت‬

 With EVM:
 The project manager will know exactly whether the project is:
 Ahead of / on / Behind Schedule
 Under / on / Over Budget
Basic EVM Formulas

 Planned Value (PV) (BCWS)

 The Budgeted Cost of Work Scheduled so far at a specific date.
 The value of the work planned to be completed to a point in time,
usually the data date, or project completion.
 Example:
 At end of week 4
 4 items should be completed.
 The PV is US$4000
Basic EVM Formulas

 Earned Value (EV) (BCWP)

 Budgeted Cost of Work Performed.
 The actual value of the work completed so far at a specific date (refer
to the “Notes on Earned Value Measurement” section below).
 Example:
 By end of week 4
 Only 3 items are completed.
 The EV is US$3000
Basic EVM Formulas

 Actual Cost (AC)

 The total expenditure for the work so far at a specific date.
 Example:
 By end of week 4
 US$4000 was spend.
 The AC is US$4000
Basic EVM Formulas

 EVM is based on MONITORING these three aspects along the project

in order to reveal the health of the project with the following indices:
 Schedule Variance (SV)
 Schedule Performance Index (SPI)
 Cost Variance (CV)
 Cost Performance Index (CPI)
Basic EVM Formulas

 Schedule Variance (SV)

Difference between PV and EV, to tell whether the project work is

ahead of / on / behind schedule

SV = EV – PV
Basic EVM Formulas

 Schedule Variance (SV)

SV = EV – PV
 If the project is:
1. Behind Schedule: SV will be: Negative
 Achieved less than what planned
2. On Schedule the SV = 0
3. Ahead of Schedule: SV will be: Positive
 Achieved more than what planned
Basic EVM Formulas

 Schedule Variance (SV)

SV = EV – PV
 Example:
 By end of week 4,
 SV = EV – PV
 = US$3000 – US$4000
 = -US$1000 (behind schedule)
Basic EVM Formulas

 Schedule Performance Index (SPI)

Ratio between EV and PV, to reflect whether the project work is ahead
of / on / behind schedule in relative terms

SPI = EV/PV
Basic EVM Formulas

 Schedule Performance Index (SPI)

SPI = EV / PV
 If the project is:
1. Behind Schedule: SPI < 1
 Achieved less than what planned
2. On Schedule: SPI = 1
3. Ahead of Schedule: SPI > 1
 Achieved more than what planned
Basic EVM Formulas

 Schedule Performance Index (SPI)

SPI = EV / PV
 Example:
 by end of week 4,
 SPI = EV/PV
 = US$3000/US$4000
 = 0.75 (behind schedule)
Basic EVM Formulas

 Cost Variance (CV)

Difference between EV and AC, to tell whether the project work is under
/ on / over budget

CV = EV – AC
Basic EVM Formulas

 Cost Variance (CV)

CV = EV – AC
 If the project is:
1. Over Budget: CV will be: Negative
 Achieved less than spent
2. On Budget: CV = 0
3. Under Budget: CV will be: Positive
 Achieved more than spent
Basic EVM Formulas

 Cost Variance (CV)

CV = EV – AC
 Example:
 By end of week 4,
 CV = EV – AC
 = US$3000 – US$4000
 = -US$1000 (over budget)
Basic EVM Formulas

 Cost Performance Index (CPI)

Ratio between EV and AC, to reflect whether the project work is under /
on / over budget in relative terms

CPI = EV/AC
Basic EVM Formulas

 Cost Performance Index (CPI)

CPI = EV/AC
 If the project is:
1. Over Budget: CPI < 1 (i.e. achieved less than spent)
2. On Budget: CPI = 1
3. Under Budget: CPI > 1 (i.e. achieved more than spent)
Basic EVM Formulas

 Cost Performance Index (CPI)

CPI = EV/AC
 Example:
 By end of week 4,
 CPI = EV/AC
 = US$3000/US$4000
 = 0.75 (over budget)
‫‪Notes‬‬

‫يوجد لدى (‪ )EVM‬عيب كبير جدا‬ ‫‪‬‬

‫و هو انه ال يأخذ في عين اإلعتبار (‪)Critical Path‬‬ ‫‪‬‬

‫أي أنه يخبرنا إن المشروع متأخر عن الوقت و لكن من الممكن ان يكون التأخر موجود‬ ‫‪‬‬
‫بالـ(‪ ) NON CRITICAL PATH‬و ليس بالـ(‪ )Critical Path‬و يوجد له (‪ )Slack‬كافي يحتمل هذا‬
‫التأخير‪.‬‬

‫لذلك من الجيد العمل بالـ(‪ )EVM‬باإلضافة إلى ‪ Critical Path Management‬للحصول‬ ‫‪‬‬
‫على نتائج أدق‪.‬‬
‫والعيب اآلخر في (‪ )EVM‬هو انه ال يراعي الـ(‪ )Quality‬في المشروع و لكن كل ما يراعيه‬ ‫‪‬‬
‫هو الوقت و التكلفة‪.‬‬
Example

 If earned value (EV) = 350, actual cost (AC) = 400, and planned
value (PV) = 325, what is cost variance (CV)?
 A. 350
 B. -75
 C. 400
 D. -50
Example

 If earned value (EV) = 350, actual cost (AC) = 400, and planned
value (PV) = 325, what is cost variance (CV)?
 A. 350
 B. -75
 C. 400
 D. -50
Example

 Cost performance index (CPI) of 0.89 means:

 A. At this time, we expect the total project to cost 89 percent more than
planned.
 B. When the project is completed, we will have spent 89 percent more
than planned.
 C. The project is progressing at 89 percent of the rate planned.
 D. The project is getting 89 cents out of every dollar invested.
Example

 Cost performance index (CPI) of 0.89 means:

 A. At this time, we expect the total project to cost 89 percent more than
planned.
 B. When the project is completed, we will have spent 89 percent more
than planned.
 C. The project is progressing at 89 percent of the rate planned.
 D. The project is getting 89 cents out of every dollar invested.

 Explanation: The CPI is less than one, so the situation is bad. The project
is only getting 89 cents out of every dollar invested.
Example

 A schedule performance index (SPI) of 0.76 means:

 A. You are over budget.
 B. You are ahead of schedule.
 C. You are progressing at 76 percent of the rate originally planned.
 D. You are progressing at 24 percent of the rate originally planned
Example

 A schedule performance index (SPI) of 0.76 means:

 A. You are over budget.
 B. You are ahead of schedule.
 C. You are progressing at 76 percent of the rate originally planned.
 D. You are progressing at 24 percent of the rate originally planned

 Explanation: In this case, the project is progressing at 76 percent of the

rate planned.
 Earned Value Analysis Summary
Term Equation Indicates
Schedule Variance SV = EV - PV Good if >=0

Cost Variance CV = EV - AC Good if >=0

Schedule Performance Index SPI = EV/PV Good if >=1

Cost Performance Index CPI = EV/AC Good if >=1

Estimate at Completion EAC = BAC/CPI Actual cost

Estimate to Complete ETC = EAC – AC How much more will

be spent

Variance at Completion VAC = BAC - EAC Good if >=0

 Interpretation of Variances

Under Over
-CV
+CV
Ahead +SV
+SV
Schedule
+CV -CV
-SV -SV
Behind

Budget
Advanced EVM Formulas

 Budget at Completion (BAC)

 Also known as the Project/Work Budget
 The total amount of money originally planned to spend on the
project/work.
 Example:
 The BAC for the housing project = US$10000
Advanced EVM Formulas

 Estimate at completion (EAC)

 As the project goes on
 There may be variations into the actual final cost from the planned final cost.
 EAC is a way to estimate the planned cost at project finish based on the
currently available data
 The following formulas can be used to calculate EAC based on which
information and conditions given in the question
Advanced EVM Formulas

 Estimate at completion (EAC)

BAC/CPI
 If we believe the project will continue to spend at the same rate up to
now
 The delay is caused by reasons which is likely to continue (e.g. labor with
less skilled than expected)
 Example:
 The EAC for the housing project = US$10000 / 0.75 = US$13333
Advanced EVM Formulas

 Estimate at completion (EAC)

AC + [(BAC-EV)/(SPI*CPI)]
 If we believe that both current cost and current schedule performance
will impact future cost performance
 This formula is less likely to be used for the PMP® Exam
 Example:
 The EAC for the housing project
 = US$4000 + [(US$10000 – $3000)/(0.75*0.75)]
 = US$16444
Advanced EVM Formulas

 Estimate at completion (EAC)

AC + New Estimate (ETC)

 If we believe the original conditions and assumptions are wrong
Example

 Estimate at completion (EAC) is a periodic evaluation of:

 A. The cost of work completed.
 B. The value of work performed.
 C. The anticipated total cost at project completion.
 D. What it will cost to finish the project.
Example

 Estimate at completion (EAC) is a periodic evaluation of:

 A. The cost of work completed.
 B. The value of work performed.
 C. The anticipated total cost at project completion.
 D. What it will cost to finish the project.

 Explanation: EAC means the Estimate At Completion.

 What it will cost to finish the project is the definition of ETC, or estimate to
complete.
Advanced EVM Formulas

 Variance at Completion (VAC)

BAC – EAC
 The difference between the new estimate at completion and original
planned value
 If we forecast the project will be over budget, VAC will be negative
 If we forecast the project will be under budget, VAC will be positive
 Example:
 The VAC for the housing project
 = US$10000 – US$13333 (just take the 1st EAC as an example only)
 = -US$3333
Advanced EVM Formulas

 To Complete Performance Index (TCPI)

 The efficiency needed to finish the project on budget,
 It is the ratio between budgeted cost of work remaining and money
remaining
Advanced EVM Formulas

 To Complete Performance Index (TCPI)

(BAC-EV)/(BAC-AC)
 Use this equation if the project is required to finish within BAC
 Example:
 The TCPI for the housing project at end of week 4
 = (US$10000 – US$3000) / (US$10000 – US$4000)
 the TCPI for the housing project at end of week 4 = (US$10000 – US$3000) /
(US$10000 – US$4000) = 1.67 = 1.67
Advanced EVM Formulas

 To Complete Performance Index (TCPI)

(BAC-EV)/(EAC-AC)
 Use this equation if the project is required to finish within new EAC
 Example:
 The TCPI for the housing project at end of week 4 with new EAC US$13333
 = (US$10000 – US$3000) / (US$13333 – US$4000)
 = 0.75
Example
You are the project manager for a project where your team must travel to the work site
by foot. The walk is 100 miles, and is the first task on the project schedule. The total
amount budgeted for this task is $4,000. If the team is scheduled to walk 20 miles per
day, they should reach the work site at the end of day 5. At the end of the second
day, you realize the team has only traveled 30 miles, and you have spent $2,000.
Based on this, what is the SPI for your project, and the projected TCPI
A. 0.8, 1.4
B. 0.75, 1.4
C. 0.75, 1.2
D. Cannot be determined with the given information
Example
You are the project manager for a project where your team must travel to the work site
by foot. The walk is 100 miles, and is the first task on the project schedule. The total
amount budgeted for this task is $4,000. If the team is scheduled to walk 20 miles per
day, they should reach the work site at the end of day 5. At the end of the second
day, you realize the team has only traveled 30 miles, and you have spent $2,000.
Based on this, what is the SPI for your project, and the projected TCPI
A. 0.8, 1.4
B. 0.75, 1.4
C. 0.75, 1.2
D. Cannot be determined with the given information
Example
You are the project manager for a project where your team must travel to the work site
by foot. The walk is 100 miles, and is the first task on the project schedule. The total
amount budgeted for this task is $4,000. If the team is scheduled to walk 20 miles per
day, they should reach the work site at the end of day 5. At the end of the second
day, you realize the team has only traveled 30 miles, and you have spent $2,000.
Based on this, what is the SPI for your project, and the projected TCPI

BAC =
AC =
PV =
EV =
Example
You are the project manager for a project where your team must travel to the work site
by foot. The walk is 100 miles, and is the first task on the project schedule. The total
amount budgeted for this task is $4,000. If the team is scheduled to walk 20 miles per
day, they should reach the work site at the end of day 5. At the end of the second
day, you realize the team has only traveled 30 miles, and you have spent $2,000.
Based on this, what is the SPI for your project, and the projected TCPI

BAC = $4,000
AC = $2,000
PV = $1,600 ($4,000 / 5 days = $800 / day x 2 days = $1,600)
EV = $1,200 ($4,000 / 100 = $40 / mile; 30 miles x $40 / mile)
Example
BAC = $4,000
AC = $2,000
PV = $1,600 ($4,000 / 5 days = $800 / day x 2 days = $1,600)
EV = $1,200 ($4,000 / 100 = $40 / mile; 30 miles x $40 / mile)

SPI = ….
Example
BAC = $4,000
AC = $2,000
PV = $1,600 ($4,000 / 5 days = $800 / day x 2 days = $1,600)
EV = $1,200 ($4,000 / 100 = $40 / mile; 30 miles x $40 / mile)

SPI = EV/PV
= $1,200 / $1,600
= 0.75 (or 30 miles / 40 miles = 0.75)
Example
BAC = $4,000
AC = $2,000
PV = $1,600 ($4,000 / 5 days = $800 / day x 2 days = $1,600)
EV = $1,200 ($4,000 / 100 = $40 / mile; 30 miles x $40 / mile)

TCPI =…
Example
BAC = $4,000
AC = $2,000
PV = $1,600 ($4,000 / 5 days = $800 / day x 2 days = $1,600)
EV = $1,200 ($4,000 / 100 = $40 / mile; 30 miles x $40 / mile)

TCPI = (BAC – EV) / (BAC – AC)

Example
BAC = $4,000
AC = $2,000
PV = $1,600 ($4,000 / 5 days = $800 / day x 2 days = $1,600)
EV = $1,200 ($4,000 / 100 = $40 / mile; 30 miles x $40 / mile)

TCPI = (BAC – EV) / (BAC – AC)

= ($4,000-$1,200) / ($4,000-2,000)
= $2,800 / $2,000 = 1.4
Example
BAC = $4,000
AC = $2,000
PV = $1,600 ($4,000 / 5 days = $800 / day x 2 days = $1,600)
EV = $1,200 ($4,000 / 100 = $40 / mile; 30 miles x $40 / mile)

SPI = 0.75
TCPI = 1.4
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