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What are earned value analysis?

 

• Most common technique for performance measurement. 

 

• Integrates the project scope, cost, and schedule measures to assist the project management team to assess project performance from initiation through closeout. 

 

• Involves calculating: 

 

◦ *Planned Value (PV): The authorized budget assigned to scheduled work. It is also known as performance measurement baseline (PMB)/ budgeted cost of work scheduled (BCWS). 

 

◦ *Actual Cost (AC): The realized cost incurred for the work performed  on an activity during a specific time period. It is also known as actual cost of work performed (ACWP). 

 

◦ *Earned Value (EV): The measure of work performed expressed in terms of the budget authorized for that work. It is also known as budgeted cost of work performed (BCWP). 

 

Please note that more details on Earned Value will be discussed in  our chapter notes on Project Cost Management. 

 

 

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Question added by hassan shalaby , اخصائي تسويق ومبيعات، ومدرب مهارات معتمد من جامعة نوتنجهام بالمملكة المتحدة وجامعة عين شمس بالقاهرة , Galal Al , Sharif _Trading
Date Posted: 2016/12/16
Khaliq Raza MBA   MS   CFE  AFA
by Khaliq Raza MBA MS CFE AFA , Finance Manager , Vertex Trading

Agreed with exerts answers....like @ Binil Paul , @ waseem Wali

 Thanks

waseem Wali
by waseem Wali , Experience Senior , Colony Group Limited

The EVM is commonly used method of performance measurement and integrates project scope,cost and schedule measure to help the project management team access project performance 

EVM is performed on work packages and control account of WBS.

Hossam Ghanem
by Hossam Ghanem , Head of PMO , مَدَرْ للاستثمار

 

 

 

Earned value (EV) is the value of the work completed to date as it compares to the authorized budgeted amount assigned to the work component

 

Binil Paul
by Binil Paul , Sr. Planning Engineer , KEO International Consultants

Earned Value in P6

Some benefits of calculating Earned Value in P6 are the ability to caluclate activity percent complete and view in graphical form to predict obstacles early in a project schedule; forecasting project progress more effectively; and developing an early understanding of progress according to budget and schedule to identify problems as they arise.

Actual Cost (ACWP)

Actual Cost (ACWP) is the actual total cost incurred on the activity as of the project data date. ACWP is the same as the Actual Total Cost.

  • ACWP = Actual Labour Cost + Actual Non-Labour Cost + Actual Material Cost + Actual Expense Cost

Budget At Completion (BAC)

This is always the Total cost from the Baseline, calculated using the Baseline Budgeted Values or Baseline At Completion values depending upon the ‘Earned Value Calculation’ setting (Admin, Admin Preferences, Earned Value).

If the ‘Earned Value Calculation’ is set to ‘Budgeted Values with Planned dates’ or ‘Budgeted Values with Current Dates’:

  • BAC = BL Budgeted Labour Cost + BL Budgeted Non-Labour Cost + BL Budgeted Material Cost + BL Budgeted Expense Cost.

If the ‘Earned Value Calculation’ is set to ‘At Completion Values with Current Dates’:

  • BAC = BL At Completion Labour Cost + BL At Completion Non-Labour Cost + BL At Completion Material Cost + BL At Completion Expense Cost.

Cost Performance Index (CPI)

A CPI greater than 1 means that Earned Value is greater than the actual amount spent. A CPI of less than 1 means that the Earned Value is less than the actual amount spent.

  • CPI = EV / Actual Cost

Cost Variance (CV)

Cost Variance is the difference between the Earned Value and the actual cost of that activity.

  • CV = EV – Actual Cost

Earned Value Cost (BCWP or EV)

Earned Value Cost (EV) is the portion of the budgeted total cost of the activity that is actually completed as of the project data date. Also known as the Budgeted Cost of Work Performed for the activity. The method for computing the performance percent complete depends on the Earned Value technique selected for the activity’s WBS.

  • EV = BAC * Performance % Complete

Estimate At Completion (EAC)

EAC is the estimated cost at completion for the activity.

  • EAC = Actual Cost + ETC.

Estimate to Complete (ETC)

Estimate to Complete is the estimated cost left to complete on the activity. The calculation can be customized at the WBS level (On the ‘Earned Value’ tab in the WBS view).

It can be computed as either:

  • ETC = Remaining Total Cost for the activity
  • ETC = PF * (BAC – EV)

Where ‘PF’ is a multiplier to weight the ETC calculation.This can be either ‘1’, ‘1/CPI’ or ‘1/(SPI * CPI)’ or user defined amount.

Planned Value Cost (BCWS or PV)

Planned Value Cost (PV) is the portion of the budgeted total cost of the activity that is scheduled to be completed as of the project data date according to the baseline dates. Also known as the Budgeted Cost of Work Scheduled for the activity. The Schedule % Complete specifies how much of the activity’s original duration has been completed so far based on the baseline dates.

  • PV = BAC * Schedule % Complete

Schedule Performance Index (SPI)

A SPI greater than 1 means that Earned Value is greater than the Planned Value. A SPI of less than 1 means that the Earned Value is less than the Planned Value.

  • SPI = EV / PV

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