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Earned Value Analysisby
John Cornman
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Introduction
• “Earned Value Analysis” is an industry standard way to measure a project’s progress, forecast its completion date and final cost, and provide schedule and budget variances along the way.
• Based on just 3 data points, it can provide consistent, numerical indicators with which you can evaluate and compare projects.
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The 3 fundamental metrics
• Budgeted Cost of Work Performed.
• Budgeted Cost of Work Scheduled.
• Actual Cost of Work Performed.
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Budgeted Cost of Work Performed
• This is the “Earned Value.”
• Abbreviated as BCWP.
• For completed work, it is the cost originally budgeted to accomplish that work.
• “How much work was actually done?”
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Budgeted Cost of Work Scheduled
• Abbreviated BCWS.
• It is the total budgeted cost up to the analysis date.
• Approximated by the total budget multiplied by the fraction of total project duration at the analysis date.
• “How much work should have been done?”
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Actual Cost of Work Performed
• Abbreviated ACWP.
• What it actually cost to accomplish all the work completed as of the analysis date.
• “What did the work that was actually done actually cost?”
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Derived Metrics
• Schedule Variance (SV)
• Schedule Performance Index (SPI)
• Cost Variance (CV)
• Cost Performance Index (CPI)
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A Few More Acronyms
• BAC - Budget At Completion • = Total Original Budgeted Cost• Same as BCWS at completion
• EAC - Estimate At Completion• = Cumulative Actuals + Estimate-To-Complete
• VAC - Variance At Completion• = Forecast of final cost variance
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Doing The Math• SV = BCWP - BCWS
• Negative means Behind Schedule
• SPI = BCWP / BCWS• Less than 1.00 means Behind Schedule
• CV = BCWP - ACWP• Negative means Over Budget
• CPI = BCWP / ACWP• Less than 1.00 means Over Budget
• EAC = BAC / CPI
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An Example: Lemonade
• Make 1,000 cups over 50 days
• Steady rate of 20 cups per day
• Budgeted cost per cup is $0.50
• Total project budget is $500
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Lemonade Progress
• At end of day 10:
• 150 cups have been made
• Total actual cost is $90 (ACWP)
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Lemonade Status
• BCWS = $100• 10 days x 20 cups per day x .50/cup budget
• BCWP = $75 (Earned Value)• 150 cups x .50/cup budget
• SV = BCWP - BCWS = -$25• SPI = BCWP / BCWS = 0.75• CV = BCWP - ACWP = $75 - $90 = -$15• CPI = BCWP / ACWP = 0.833
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Lemonade Forecast
• EAC = BAC / CPI = $500 / 0.833 = $600
• VAC = BAC - EAC = $500 - $600 = $100 (unfavorable)
• Schedule at Completion =50 / SPI = 50 / 0.75 = 66.67 days
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MS Project 98 Support
ID Task Name BCWS BCWP ACWP SV CV EAC BAC VAC
1 MS Project 98 Example $1,920.00 $840.00 $960.00 ($1,080.00) ($120.00) $2,760.00 $2,400.00 $360.00
F S SNo
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Five Simple Criteria forEarned Value Applications
1.Define (scope) the project. . .with a WBS
2.Plan and schedule the project scope
3.Budget cost account plans to functions
4.Establish and maintain a performance baseline
5.Monitor performance and forecast final results
Fleming & Hoppleman. 1996. Earned Value Management. PMI
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Earned Value Management
http://www.acq.osd.mil/pm/