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Earned Value Analysis by John Cornman For Details -- Lewis, Ch 10. 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.

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introduction
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.
the 3 fundamental metrics
The 3 fundamental metrics
  • Budgeted Cost of Work Performed.
  • Budgeted Cost of Work Scheduled.
  • Actual Cost of Work Performed.
budgeted cost of work performed
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?”
budgeted cost of work scheduled
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?”
actual cost of work performed
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?”
derived metrics
Derived Metrics
  • Schedule Variance (SV)
  • Schedule Performance Index (SPI)
  • Cost Variance (CV)
  • Cost Performance Index (CPI)
a few more acronyms
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
doing the math
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
an example lemonade
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
lemonade progress
Lemonade Progress
  • At end of day 10:
  • 150 cups have been made
  • Total actual cost is $90 (ACWP)
lemonade status
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
lemonade forecast
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
five simple criteria for earned value applications
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/