Basics of EVM.pdf
- 2. 2 Why use Earned Value Management Systems? “The Bottom Line” • EVM can focus program management attention on critical issues and risks during the “project” life cycle • How are you doing, and how do you know how you are doing? – Early problem identification • Completion Estimates – How far along are you? (64%, 50%, >40%) – What is your productivity/efficiency? – Work remaining
- 3. 3 Five Basic Elements BCWS Budgeted Cost of Work Scheduled BCWP Budgeted Cost of Work Performed ACWP Actual Cost of Work Performed
- 4. 4 5 Basic Performance Data Questions & Answers QUESTION ANSWER ACRONYM How much work should Budgeted Cost for BCWS be done? Work Scheduled How much work is done? Budgeted Cost for BCWP Work Performed How much did the is done Actual Cost of ACWP work cost? Work Performed
- 5. 5 What do we measure progress against? and Why? • Performance measurement baseline – Budget that is spread over . . . – Time, to accomplish the scope of – Work, against which progress can be measured • Earned Value is key concept – how much progress did I make against my original plan? – expressed in dollars or hours – Why? – early warning $ time baseline earned value
- 6. 6 Why do we need Early Warning? Small course corrections are easier when made early… … If you wait until you reach the Iceberg, its too late!!!
- 7. 7 Work Budgeted and Earned • The value of the budgeted work is called: Budgeted Cost of Work Scheduled (BCWS) • The value of work earned is called: Budgeted Cost of Work Performed (BCWP) – BCWP is also called Earned Value (EV)
- 8. Budgeted Cost of Work Scheduled (BCWS) Total Budget = $5,000 to be spent over 5 months I plan to lay 1 section of track each month at an estimated cost of $1,000. BCWS each month = $1,000 Total BCWS = $5,000 Month 1 BCWS = $1,000 Month 4 BCWS = $1,000 Month 3 BCWS = $1,000 Month 5 BCWS = $1,000 Month 2 BCWS = $1,000 sum of all BCWS = performance baseline
- 9. 9 Budgeted Cost of Work Performed (BCWP) aka. Earned Value We’re at the end of February, Track 1 is complete and track 2 is ½ done. BCWS = $1,000 Track 1 Track 2 BCWS = $1,000 50% done Value of work performed = $1,500
- 10. 10 Schedule Variance BC WS BC WP of the work I scheduled to have done, how much did I budget for it to cost? of the work I actually performed, how much did I budget for it to cost? SCHEDULE VARIANCE is the difference between work scheduled and work performed (expressed in terms of budget dollars) formula: SV $ = BCWP - BCWS BUDGET BASED example: SV = BCWP - BCWS = $1,500 - $2,000 SV= -$500 (negative = behind schedule)
- 11. 11 Schedule Variance $ BCWS “the baseline” BCWP “earned value” TIME 5,000 sv
- 12. 12 Actual Cost of Work Performed (ACWP) Track 1 Cost = $1,500! Track 2 Cost = $750 cost to date Total Cost to Date = $2,250
- 13. 13 Cost Variance BC WP AC WP of the work I actually performed, how much did I budget for it to cost? of the work I actually performed, how much did it actually cost? COST VARIANCE is the difference between budgeted cost and actual cost formula: CV $ = BCWP - ACWP PERFORMANCE BASED example: CV = BCWP - ACWP = $1,500 - $2,250 CV= -$750 (negative = cost overrun)
- 14. 14 Cost Variance $ TIME BCWP “earned value” ACWP “actual cost” 5,000 cv
- 15. 15 Variance Summary • The difference between the BCWP and the ACWP is called a cost variance • The difference between the BCWP and BCWS is called schedule variance and is provided in terms of dollars
- 16. 16 Trend Analysis Cost Performance Index (CPI) measure of cost efficiency CPI = Value of Work Completed (BCWP) Cost of Work Completed (ACWP) Schedule Performance Index (SPI) measure of schedule efficiency SPI = Value of Work Completed (BCWP) Value of Work Planned (BCWS) Closer to “1” the better Less than 1 = overrun (CPI); behind schedule (SPI) Greater than 1 = underrun (CPI); ahead of schedule (SPI)
- 17. 17 • DO I THINK THE CONTRACTOR WILL COME IN ON BUDGET? COST PERFORMANCE INDEX: CPI = cost efficiency for work performed to date (The value of work accomplished for each dollar spent) SCHEDULE PERFORMANCE INDEX: SPI = schedule efficiency with which work has been accomplished (The rate at which work is being accomplished) Performance Efficiencies WORK = ACCOMPLISHED ACTUALS WORK = ACCOMPLISHED WORK SCHEDULED WORK BCWP ACCOMPLISHED $1500 = BCWS = WORK = $2000 = .75 SCHEDULED WORK BCWP ACCOMPLISHED $1500 = ACWP = ACTUAL = $2250 = .67 COST
- 18. 18 EXERCISES • Attendees – Go to your Exercise Packet
- 19. 19 Solution Cost Variance = -10 Schedule Variance = + 20 CPI = .97 SPI = 1.07 • How would you describe this project? Over budget, ahead of schedule