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Earned Value Management: Instructor Hamza Ejaz
Earned Value Management: Instructor Hamza Ejaz
2
Which Factor do you use for
Performance measurement?
Time
Cost
Progress
Terminologies
Stands for Old Terminology
Assumptions:
1. Each room will be completed one
by one.
2. Each room will cost Rs.100,000.
3. Each room will take 1 month to
complete.
Suppose five months have passed. The team has spent Rs.600,000 and only 4
rooms have been completed.
= 400,000-500,000 = -100,000
CV = EV - AC
(Cost Variance) (Earned Value) (Actual Cost)
= 400,000-600,000 = -200,000
-ve is bad
0 is according to plan
+ve is better than planned
PERFORMANCE
MEASUREMENT INDEX
• Schedule performance Index
<1 is behind schedule
SPI = EV / PV =1 is according to plan
>1 is ahead of schedule
=400,000/500,000 = 0.8
Where:
EAC = Estimate at completion (expected total cost of
completing a project)
ETC = estimate to complete (Estimate cost of completing the
remaining work OR cash required to complete remaining work)
Methods to calculate ETC
EXAMPLE
• International Laws
• Local Tax Laws
• Customs Authorities & Regulations
• Transfer Pricing
• Currency Management
Transfer Pricing
Transfer pricing is the setting of the price for
goods and services sold between controlled (or
related) legal entities within an enterprise. For
example, if a subsidiary company sells goods to
a parent company, the cost of those goods paid
by the parent to the subsidiary is the transfer
price.
Questions?
Practice Question
SUPARCO has initiated a Project for the Calculate the following:
construction of a Weather Satellite consisting of 1. Schedule & Cost Variance
20 individual modules for weather and 2. EAC (Typical & Atypical –
topographic surveys & monitoring. Each using CPI only)
module cost is estimated at PKR 200,000 with a 3. TCPI
project duration of 20 months with one module
targeted to completed within 01 month. At the
end of 15 months, only 12 modules have been
completed at a cost of 3 million.
SV= EV-PV
CV=EV-AC
SPI=EV/PV
CPI=EV/AC
EAC= AC+ETC
ETC= (BAC-EV) or (BAC-EV)/CPI
TCPI = (BAC-EV)/(BAC-AC)
Answers
• BAC = $ 4000,000
• PV = $ 3000,000
• AC = $ 300,000
• EV = $ 2,400,000
• SV = $ 2,400,000 – $ 3,000,000 = ($ 600,000)
• CV = $ 2,400,000 - $ 3,000,000 = ($ 600,000)
• CPI = $ 2,400,000/ $ 3,000,000 = 0.8