earned value refresher by robert perrine, pmp copyright reserved

Earned Value Refresher

By Robert Perrine, PMPhttp://www.robertperrine.biz

Copyright reserved

Copyright, Robert Perrine, PMP

2004 - 2006, Irvine, California, USA. Offered as is, with no warranty regarding the accuracy or

suitability of this material. Copyright reserved. Please, however free to copy and share this document with the following restrictions.

1. You may not charge for use or distribution of this material.

2. Your usage of this material is conditioned upon your compliance with the PMI Code of Ethics.

3. All distributions must be made with the intent to further the collected wisdom of humanity.

4. You may not remove my name or my copyright notices from these documents.

Overview Basics of EV Work a few quick problems Apply EV to more realistic problems

Basics of EV

Basics of EV – EQUATIONSCost Performance Index CPI = EV / AC

Cost Variance CV = EV - AC

Earned Value (for a task) EV = PV * %Complete

Estimate To Complete ETC = EAC - AC

Schedule Performance Index SPI = EV / PV

Schedule Variance SV = EV - PV

Variance At Completion VAC = BAC - EAC

Estimate At Completion (EAC) EAC has a separate set of equations

Basics of EV –Estimate At Completion

EAC = AC + ETC Re-Estimated

EAC = AC + (BAC - EV) Atypical

EAC = AC + ((BAC - EV) / CPI) Typical

EAC = BAC / CPI Typical

Basics of EV – Old Vocabulary

ACWP Actual Cost of Work Performed replaced by AC

BCWP Budgeted Cost of Work Performed replaced by EV

BCWS Budgeted Cost of Work Scheduled replaced by PV

Earned Value Basics of EV Work a few quick problems Apply EV to more realistic problems

EV Problems – Scenario You are the project manager for a $250,000

upgrade to your company’s internet site. The current project status is shown on next slide. The next board meeting is scheduled for two

months from today. The CEO of your company will demonstrate your

new internet site to the board and to the investors attending that meeting.

EV Problems – Project Status

Task Description PV EV AC

1.0.0 Operating system $25,000 $23,000 $27,000

2.0.0 Database $90,000 $85,000 $80,000

3.0.0 Web server $10,000 $9,000 $9,000

4.0.0 Firewall $8,000 $8,000 $11,000

5.0.0 Internal testing $10,000 $6,000 $2,000

6.0.0 “Beta” customers $12,000 $1,000 $2,000

7.0.0 Marketing $40,000 $5,000 $4,000

EV Problems – Question 1 Use the Project Status data, show above.

Which task is on schedule?A) 1.0.0B) 2.0.0C) 3.0.0D) 4.0.0

What is your answer ? Why ?

EV Problems – Question 1



2.0.0 Database $90,000 $85,000 $80,000

3.0.0 Web server $10,000 $9,000 $9,000

4.0.0 Firewall $8,000 $8,000 $11,000


6.0.0 “Beta” customers $12,000 $1,000 $2,000

7.0.0 Marketing $40,000 $5,000 $4,000

EV Problems – Question 2 You are the project manager for a $250,000 upgrade to

your company’s internet site. The current EV data is shown in Table 1, above. The next board meeting is scheduled for two months from today. The CEO of your company will demonstrate your new internet site to the board and to the investors attending that meeting. Which task has the largest schedule variance? A) 2.0.0B) 5.0.0C) 6.0.0D) 7.0.0



Task Description PV EV SV

1.0.0 Operating system $25,000 $23,000 -2,000

2.0.0 Database $90,000 $85,000 -5,000

3.0.0 Web server $10,000 $9,000 -1,000

4.0.0 Firewall $8,000 $8,000 $0

5.0.0 Internal testing $10,000 $6,000 -4,000

6.0.0 “Beta” customers $12,000 $1,000 -11,000

7.0.0 Marketing $40,000 $5,000 -35,000

EV Problems – Question 3 Use Table 1, shown above. What is the CPI

on task 7.0.0? A) 1.250B) 0.800C) 8000D) 0.125




7.0.0 Marketing $40,000

$5,000 $4,000

CPI = EV / AC = 5,000 / 4,000 = 1.250



7.0.0 Marketing $40,000

$5,000 $4,000

CPI = EV / AC = 5,000 / 4,000 = 1.250Is Task 7.0.0 under-budget so far? YES



7.0.0 Marketing $40,000

$5,000 $4,000

CPI = EV / AC = 5,000 / 4,000 = 1.250Is Task 7.0.0 under-budget so far? YESIs Task 7.0.0 on-schedule so far?NO, but who asked


your company’s internet site. The current EV data is shown in Table 1, above. The next board meeting is scheduled for two months from today. The CEO of your company will demonstrate your new internet site to the board and to the investors attending that meeting. The CEO has just called and asked you for the “percent completion” as of today. What is your answer? A) 45% B) 50%C) 55%D) 60%

EV Problems – Question 4 Analyze the Question

What does “Percent Complete” mean? Hours worked ? Miles of highway, lines of code ?

Basic EV equation EV = PV * (%Complete) Applies to a Task Also applies to the project

EV Problems – Question 4 Identify a Strategy For a task

EV = PV * (%Complete) %Complete = EV / PV When expressed as a decimal it is SPI.

For a Project %Complete = SUM(EV) / SUM(Project PV)

EV Problems – Question 4 EV is based upon “A Point in Time”

SPI = EV / PV AT THIS POINT IN TIME


EV = PV * (%Complete) %Complete = EV / PV

For a Project %Complete = SUM(EV) / SUM(Project PV) What is the total PV for a project?



For a Project %Complete = SUM(EV) / SUM(Project PV) What is the total PV for a project? BAC



For a Project %Complete = SUM(EV) / SUM(Project PV) What is the total PV for a project? BAC What is the BAC for this project ?



For a Project %Complete = SUM(EV) / SUM(Project PV) What is the total PV for a project? BAC What is the BAC for this project ? BAC = $250,000

EV Problems – Question 4 What do we know

%Complete = Sum(EV) / BAC BAC = $250,000



What else do we need to find ?



What else do we need to find ? Sum(EV)



What else do we need to find ? Sum(EV) = $137,000




What is the ANSWER ?




What is the ANSWER ? %Complete = 137,000 / 250,000 = 0.548



What is your answer ?



What is your answer ? C


Here’s another one


your company’s internet site. The current EV data is shown in Table 1, above. The next board meeting is scheduled for two months from today. The CEO of your company will demonstrate your new internet site to the board and to the investors attending that meeting. The CFO has just called and asked for your revised estimate on the total cost of the project. You review the data and realized that, aside from some hardware price increases initially, the remainder of the project plan is accurate. What is your revised estimated total project cost?A) $252,000 B) $250,000C) $248,000D) $246,350


Analyze the Question What is the EV name for

“revised estimated total project cost”?



“revised estimated total project cost”? EAC “Estimate At Completion”



“revised estimated total project cost”? EAC “Estimate At Completion” What are the formulas for EAC ?

EV Problems – Question 5 EAC










Which one fits this problem ? Why ?






Which one fits this problem ? Why ?What do we need to find ?

EV Problems – Question 5 Totals



2.0.0 Database $90,000 $85,000 $80,000

3.0.0 Web server $10,000 $9,000 $9,000

4.0.0 Firewall $8,000 $8,000 $11,000


6.0.0 “Beta” customers $12,000 $1,000 $2,000

7.0.0 Marketing $40,000 $5,000 $4,000

SUM 137,000 135,000

EV Problems – Question 5 Calculate the Answer

EAC = AC + (BAC - EV) = 135,000 + (250,000 – 137,000)

= 135,000 + 113,000 = 248,000

EV Problems – Question 5 Find Your Answer A) $252,000

B) $250,000C) $248,000D) $246,350

Earned Value – Summary A few formulas to memorize Know the vocabulary – new and old EAC has a few variations

earned value refresher by robert perrine, pmp copyright reserved

Documents

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ev problems question

task ev

basics of ev slide

basic ev equation ev

ev problems scenario

value basics of ev

basics of ev estimate