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MANAGEMENT
CHAPTER 5(PART 2)
EARNED VALUE MANAGEMENT
d
g e te
d
Bu
(BCWS)-Planned Value:
Value
what your plan called for
sending on the tasks planned
to be completed by this date.
g
n din lue
pe Va
S ed BCWP-Earned Value:
Value value
u al rn
t Ea (cost) of what you have
Ac
accomplished to date, per the
base plan.
Time (Date)
19
Earned Value: Example
g
ndin
Today
Spe
)
n ed
n
Over ( Pla
d
Cost (Person-Hours)
Budget g ete )
d
Bu CWS
(B
d i ng
en Behind
p lu e
lS ) a
a
tu P e dV Schedule
Ac CW r n )
Ea WP
(A (B
C
Time (Date)
20
Question
Suppose a project is in progress and as of today the planned
expenditures for the project were to have been $500,000.
Suppose also that there were five tasks and the tasks had
budgets of $30,000, $100,000, $250,000, $100,000, and
$20,000, respectively. The actual cost of each of the tasks
that were worked on was $11,000, $120,000, $230,000,
$105,000, and $20,000. Tasks 1, 2, 3, and 4 are complete.
What are the BCWS, ACWP, and BCWP (PV, AC, and EV)?
Answer
BCWS is $500,000.
ACWP is $486,000.
BCWP is $480,000.
From these figures we can see that the accomplishments of the project as of
today are somewhat less than what was planned for. This is the difference
between the earned value and the planned value to date. The planned value is
the BCWS and the earned value is the BCWP. This means that we are $20,000
behind schedule.
We can also see that the actual cost is $14,000 less than the planned
expenditures to date. This means that we are somewhat under budget.
Unfortunately we are $14,000 under budget but also $20,000 behind schedule. If
we add the $20,000 of work that should have been completed but was not, we
find ourselves projecting a $6,000 over budget condition. It could be that things
are actually worse than they appear at first glance. If the performance to date
continues, the amount over budget will probably be even higher at the end of the
project. This is usually considered a bad situation.
Variances & Indices
Variances:
CV = BCWP – ACWP (Cost variance=Earned-Actual)
SV = BCWP – BCWS (Schedule variance=Earned-Planned)
Indices:
CPI=(BCWP/ ACWP) ---- cost performance
Cost Performance Index=(Earned/ Actual)
Cost variance related as a ratio instead of a dollar amount.
A ratio less than 1.0 indicates that the value of the work that has been accomplished is
less than the amount of money spent.
Current date
1.Carry out a performance review of project A using Earned value Analysis (EVA)
2. Carry out Forecasting cost at completion
Solution
From the table :
BCWP or Earned Value= 34.4% x 1700 = RM 584.80
BCWS or Planned Value = RM 635
ACWP or Actual Cost = RM 570