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Earned Value Management. How to apply Earned Value Management to measure the Performance of your Project. alphaPM Inc. www.alphaPM.com. Project Performance Tracking (Project Dashboard). How To Earned Value Management Overview.

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earned value management

Earned Value Management

How to apply Earned Value Management to

measure the Performance of your Project

alphaPM Inc. www.alphaPM.com

how to earned value management overview
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?

earned value management terms and formulas
Example:Project Budget: $400KProject Schedule: 4 monthsAt the 3 month checkpoint:Spent: $200KWork completed: $100KEarned Value ManagementTerms and Formulas

Revised Total Duration

Baseline Duration/Schedule Performance Index

4/0.33

= 12 months

earned value management chart for project example
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

how to exercise
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

how to exercise continued
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

an easy way to remember the formulas
An Easy Way to Remember the Formulas

Three Variables: EVPV AC

S

C

S

C

Four Formulas

an easy way to remember the formulas1
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

an easy way to remember the formulas2
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

earned value management1

Earned Value Management

How to apply Earned Value Management to

measure the Performance of your Project

alphaPM Inc. www.alphaPM.com

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