Earned Value Management

1. Earned Value Management How to apply Earned Value Management to measure the Performance of your Project alphaPM Inc. www.alphaPM.com

2. Project Performance Tracking (Project Dashboard)

3. How To Earned Value Management Overview Earned Value Management (EVM) is a management methodology for integrating scope, schedule andresources, and for objectively measuring project performance and progress. Performance is measured by determining the budgeted cost of work performed (i.e. earned value) and comparing it to the actual cost of work performed (i.e. actual cost). Progress is measured by comparing the earned value to the planned value. Source: A Guide to the Project Management Body of Knowledge (PMBOK Guide) Third Edition 2004 Example: Project Budget: $400K Project Schedule: 4 months (= Baseline Duration) At the 3 month checkpoint: Spent: $200K Work completed: $100K Earned Value Management helps you to report how the project is doing in terms of cost and schedule?

4. Example:Project Budget: $400KProject Schedule: 4 monthsAt the 3 month checkpoint:Spent: $200KWork completed: $100K Earned Value ManagementTerms and Formulas Revised Total Duration Baseline Duration/Schedule Performance Index 4/0.33 = 12 months

5. 3 MonthCheckpoint Budget PV Actual Cost Earned Value Example: Project Budget: $400K Project Schedule: 4 months At the 3 month checkpoint: Spent: $200K Work completed: $100K Earned Value ManagementChart for project example CV = EV – AC = (100K) SV = EV – PV = (200K) CPI = EV/AC = (50%) SPI = EV/PV = (33%) Revised Total Duration = Baseline Duration/SPI = 4/0.33 = 12 months

6. How To Exercise Report the Performance for the Project at the 10 day point. (Assume a labour rate of $1,000/day) Step 1: Determine the value of the three variables needed to measure the project performance at the 10 day point (all activities are sequential) Planned Value: PV = Earned Value: EV = Actual Cost AC = Planned Value: PV = $10,000 {2,000 + 4,000+ 4,000 since Jim should have completed 4 days of coding at the 10 day point} Earned Value: EV = $9,000 {2,000 + 4,000 + 3,000 since Jim is only 30% complete} Actual Cost: AC = $12,000 (4,000 + 3,000 + 5,000 since that is the actual amount that all have spent} Click here when youhave your answer

7. How To Exercise (continued) Report the Performance for the Project at the 10 day point. (Assume a labour rate of $1,000/day)We now know that Planned Value (PV) = $10,000 Earned Value (EV) = $ 9,000 Actual Cost (AC) = $12,000 Step 2: Calculate the Earned Value Performance IndicesCost Performance Index (CPI): CPI = EV/AC Schedule Performance Index (SPI): SPI = EV/PV Cost Performance Index (CPI): CPI = EV/AC = $9.000/$12,000 = 0.75 or 75% Schedule Performance Index (SPI): SPI = EV/PV = $9,000/10,000 = 0.90 or 90% Click here when youhave your answer

8. Project Performance Tracking (Project Dashboard)

9. An Easy Way to Remember the Formulas Three Variables: EVPV AC S C S C Four Formulas

10. An Easy Way to Remember the Formulas Three Variables: EVPV AC SV CV SPI CPI = = = = EV EV EV EV - - P A P A / / Four Formulas

11. An Easy Way to Remember the Formulas Three Variables: EVPV AC SV CV SPI CPI = = = = EV EV EV EV - - PV AC PV AC / / Four Formulas

12. Earned Value Management How to apply Earned Value Management to measure the Performance of your Project alphaPM Inc. www.alphaPM.com