Earned value management lecture 2009e my31
- 1. Earned Value Management Drexel University, Goodwin College CT431-120 Project Management R. Gottardi, Instructor/Author May 31, 2009
- 2. Some Definitions • Planned Value, PV (BCWS): the portion of the approved total cost estimate during a given period • Actual Cost, AC: the total of the direct & indirect costs incurred in accomplishing work on a task or project during a given period 2
- 3. Project Tracking without Earned Value Project Performance BCWS Actual Cost 200 180 160 140 120 $000 100 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 BCWS 10 20 25 40 62 80 98 125 137 149 160 175 Actual Cost 30 48 52 55 60 65 70 72 Weeks Conclusion: It looks like we are under budget. What’s missing? 3
- 4. What’s Missing • Any measure of how much work has been accomplished • Earned Value: an estimate of the value of the physical work actually completed • Can be – currency, e.g., $ – Quantities, e.g., tons, yds3, SF, etc. – Any agreed upon value for the tasks 4
- 5. How Can We Measure Progress? • % complete of the tasks’ durations • Rate of performance (RP): % complete actual/% compete planned • Physical quantities (works for some tasks but not others) – Tons of earth moved – Cubic yards of cement poured – Floors completed – Sq ft completed • Let’s use RP because it is common to many tasks & gives us a schedule related measure 5
- 6. Establish Earning Rules Rule Credit at Start Credit at End 0/100 0% 100% 50/50 50% 50% 25/75 25% 75% 20/80 20% 80% Credit means the budgeted cost of work performed is included in the earned value calculation to the extent of the % indicated. 6
- 7. Earned Value Vs. Planned Value Project Performance PV(BCWS) EV(BCWP) 200 180 160 140 120 $000 Schedule Variance 100 Behind Schedule 80 60 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 PV(BCWS) 10 20 25 40 62 80 98 125 137 149 160 175 EV(BCWP) 28 60 62 70 72 80 82 92 Weeks 7
- 8. Earned Value vs. Actual Cost Project Performance Actual Cost EV(BCWP) 100 90 Cost Variance ($) 80 Under Budget 70 60 $000 50 40 30 20 10 0 1 2 3 4 5 6 7 8 9 10 11 12 Actual Cost 30 48 52 55 60 65 70 72 EV(BCWP) 28 60 62 70 72 80 82 92 Weeks 8
- 9. Combine All Variables Project Performance PV(BCWS) AC(Actual Cost) EV(BCWP) 200 180 160 PV 140 120 $000 100 EV 80 60 AC 40 20 0 1 2 3 4 5 6 7 8 9 10 11 12 PV(BCWS) 10 20 25 40 62 80 98 125 137 149 160 175 AC(Actual Cost) 30 48 52 55 60 65 70 72 EV(BCWP) 28 60 62 70 72 80 82 92 Weeks 9
- 10. Variance Computations • Cost Variance (CV)=EV-AC • Schedule Variance (SV)=EV-PV • Negative values are unfavorable • Positive values are favorable 10
- 11. Performance Indices • Cost Performance Index (CPI)=EV/AC • Schedule Performance Index (SPI)=EV/PV • <1= unfavorable • >1=favorable 11
- 12. Earned Value • Integrates schedule & cost data • Explains causes of variances • Encourages objective measurement of progress • Measures performance 12
- 13. Problem • Given: • EV = $5,000 • PV = $10,000 • AC = $15,000 • Solve: • CV = • SV = • CPI = • SPI = 13
- 14. Problem • Given: • EV = $5,000 = Earned Value • PV = $10,000 • AC = $15,000 • Solve: • CV = • SV = • CPI = • SPI 14
- 15. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 • AC = $15,000 • Solve: • CV = • SV = • CPI = • SPI = 15
- 16. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value • AC = $15,000 • Solve: • CV = • SV = • CPI = • SPI = 16
- 17. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BCWS • AC = $15,000 • Solve: • CV = • SV = • CPI = • SPI = 17
- 18. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BCWS • AC = $15,000 = Actual Cost • Solve: • CV = • SV = • CPI = • SPI = 18
- 19. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost • Solve: • CV = EV-AC • SV = • CPI = • SPI = 19
- 20. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost • Solve: • CV = EV-AC = 5,000-15,000 • SV = • CPI = • SPI = 20
- 21. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost • Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = • CPI = • SPI = 21
- 22. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost • Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV • CPI = • SPI = 22
- 23. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost • Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 • CPI = • SPI = 23
- 24. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost • Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 = -5,000 • CPI = • SPI = 24
- 25. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost • Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 = -5,000 • CPI = EV/AC • SPI = 25
- 26. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost • Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 = -5,000 • CPI = EV/AC = 5,000/15,000 • SPI = 26
- 27. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost • Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 = -5,000 • CPI = EV/AC = 5,000/15,000 = .33 • SPI = 27
- 28. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost • Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 = -5,000 • CPI = EV/AC = 5,000/15,000 = .33 • SPI = EV/PV 28
- 29. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BSWS • AC = $15,000 = Actual Cost • Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 = -5,000 • CPI = EV/AC = 5,000/15,000 = .33 • SPI = EV/PV = 5,000/10,000 29
- 30. Problem • Given: • EV = $5,000 = Earned Value = BCWP • PV = $10,000 = Planned Value =BCWS • AC = $15,000 = Actual Cost • Solve: • CV = EV-AC = 5,000-15,000 = -10,000 • SV = EV-PV = 5,000-10,000 = -5,000 • CPI = EV/AC = 5,000/15,000 = .33 • SPI = EV/PV = 5,000/10,000 = .5 30
- 31. Other Terms & Computations • BAC: Budget at Completion: The original total budget for a project • EAC: Estimate at Completion = BAC/CPI (CPI = Cost Performance Index) • ETC: Estimate to Complete: EAC-AC • Variance at Completion: BAC-EAC 31
- 32. Earned Value • Title: Earned Value Management • Filename: Earned Value Management Lecture 2009eMY31 • Author: Ron Gottardi • Author Affiliation: Drexel University, Goodwin College of Professional Studies • Course: CT431-120 Project management • Date: May 31, 2009 • Copyright 2009 Ron Gottardi 32