track project performance - earned value management
DESCRIPTION
Earned Value Management (EVM) is a project management methodology used to track project performance as well as forecast future performance. This presentation will walk you through the calculations for EVM as well as performance reportingTRANSCRIPT
Earned Value Management (EVM)
Measure Project Performance
Earned Value Management (EVM)
Earned Value Management (EVM)Earned Value Management (EVM) is a project management methodology used to track project performance as well as forecast future performance. EVM integrates the scope baseline, schedule baseline and cost to provide performance measurements. Results can be expressed in dollars and/or percentage.
EVM can be used to report current/past project performance, and predict future project performance based on current/past performance.
Variance Analysis Forecasting
Current/Past Performance Future Performance
PART 1 - BUILDING BLOCKSEarned Value Management (EVM)
Earned Value Management (EVM)
Earned Value Management (EVM)Starts with 3 building blocks that will be used in all EVM calculations.
Budgeted amount planned to be spent at a point in time of the project
Planned Value(PV)
Earned Value(EV)
Actual Cost(AC)
Measurement of completed work according to the budget at a point in time of the project lifecycle
Cost incurred for the work performed at a point in time of the project lifecycle
Earned Value Management (EVM)
Earned Value Management (EVM)Scenario:You are assigned to manage a 12 month project estimated to cost $36,000 at the end of the project. Today is the end of month 3 and you are 20% complete. According to the Finance Department you have spent $7,500 to date.
Planned Value (PV)1. Calculate % Planned. 3 months / 12 months = .25 2. Calculate $ Planned. $36,000 * .25 = $9,000
Planned Value(PV)
Earned Value(EV)
Actual Cost(AC)
Earned Value (EV)1. Determine % Complete = .202. Calculate $ Earned = 36,000 * .20 = 7,000
Actual Cost (AC)1. Actual cost provided = $7,500
PART 2 - VARIANCE ANALYSISEarned Value Management (EVM)
Earned Value Management (EVM)
Earned Value Management (EVM)Variance Analysis can be used to monitor project performance based on schedule and cost. Each method can be expressed in a dollar value or percentage.
Schedule Variance• Schedule Variance (SV)
Project schedule performance expressed in dollars
• Schedule Performance Index (SPI) Project schedule performance expressed in a percentage
Cost Variance• Cost Variance (CV)
Project cost performance expressed in dollars
• Cost Performance Index (CPI) Project cost performance expressed in a percentage
Earned Value Management (EVM)
• Schedule Variance (SV) –Project performance expressed in dollars.SV = EV – PVSV = 7,000 – 9,000SV = (2,000)
• Schedule Performance Index (SPI) – Project performance expressed as a percent.SPI = EV / PVSPI = 7,000 / 9,000SPI = .78
Earned Value Management (EVM)Schedule Variance Analysis uses EV and PV to calculate a variance to the project schedule.
Earned Value Management
Planned Value PV $9,000
Earned Value EV $7,000
Actual Cost AC $7,500
Earned Value Management (EVM)
• Cost Variance (CV) –Project performance expressed in dollars.CV = EV – ACCV = 7,000 – 7,500CV = (500)
• Cost Performance Index (CPI) – Project performance expressed as a percent.CPI = EV / ACCPI = 7,000 / 7,500CPI = .93
Earned Value Management (EVM)Cost Variance Analysis uses EV and AC to calculate a variance to the project budget (cost).
Earned Value Management
Planned Value PV $9,000
Earned Value EV $7,000
Actual Cost AC $7,500
Earned Value Management (EVM)
PART 3 - FORECASTINGEarned Value Management (EVM)
Earned Value Management (EVM)
Earned Value Management (EVM)We can also use EVM to forecast future project spending. Estimate at Completion (EAC) can be calculated using the 3 following methods:
Project will continue to perform at the budgeted rateEAC = AC + (BAC – EV)
Budgeted Rate
Current CPI
CurrentCPI & SPI
Project will continue to perform at the current CPI:EAC = BAC / CPI
Project will continue to perform at the current CPI & SPI:
EAC = AC + [(BAC – EV) / (CPI * SPI)]
Estimate at Completion (EAC)
Earned Value Management (EVM)
Estimate at Completion (EAC) – Budgeted Rate:EAC = AC + (BAC – EV)EAC = 7,500 + (36,000 – 7,000)EAC = 7,500 + 29,000EAC = $36,500
Earned Value Management (EVM)Forecasting using Estimate at Completion (EAC) at the Budgeted rate, assumes the project will continue to perform at the currently budgeted rate.
Earned Value Management (EVM)
Estimate at Completion (EAC) – Current CPIEAC = BAC / CPIEAC = 36,000 / .78EAC = $46,153.84
Earned Value Management (EVM)Forecasting using Estimate at Completion at the current CPI, assumes the project will continue to perform at the Cost Performance Index (CPI)
Earned Value Management (EVM)
Estimate at Completion (EAC) – Current CPI & SPIEAC = AC + [(BAC – EV) / (CPI * SPI)]EAC = 7,500 + [(36,000 – 7,000) / (.78 * .93)]EAC = 7,500 + [29,000 / .7254]EAC = 7,500 + 39,977.94EAC = 47,477.94
Earned Value Management (EVM)Forecasting using Estimate at Completion at the current CPI & SPI, assumes the project will continue to perform at the Cost Performance Index (CPI) and Schedule Performance Index (SPI)
Earned Value Management (EVM)
To Complete Performance Index (TCPI)
Based on Balance at Completion: TCPI = [(BAC – EV) / (BAC - AC)]TCPI = [(36,000 – 7,000) / (36,000 – 7,500)]TCPI = (29,000) / (28,500)TCPI = 1.01
Earned Value Management (EVM)To Complete Performance Index (TCPI) Measure of schedule performance on a project.
Earned Value Management (EVM)
To Complete Performance Index (TCPI)
Based on Estimate to Complete: TCPI = (BAC - EV) / (EAC – AC)TCPI = (36,000 – 7000) / (36,500 – 7,500)TCPI = 29,000 / 29,000TCPI = 1.0
Earned Value Management (EVM)To Complete Performance Index (TCPI) Measure of schedule performance on a project.
PART 4 - PERFORMANCE REVIEWSEarned Value Management (EVM)
Earned Value Management (EVM)
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
PV 3000 6000 9000 12000 15000 18000 21000 24000 27000 30000 33000 36000
EV 3240 5400 7200 10000 13000 15000 NaN NaN NaN NaN NaN NaN
AC 3500 7000 10000 14000 17500 21000 NaN NaN NaN NaN NaN NaN
2,500
7,500
12,500
17,500
22,500
27,500
32,500
37,500
Earned Value Management (EVM)Performance Reviews
Planned Value PV
Actual CostAC
Earned Value EV
Time
Cos
t
BAC
EACForecastingVariance AnalysisStatus Date
Variance Analysis: We can graph the project performance to show the project is currently behind schedule and over budgetForecast: We can also graph the estimated future performance to show the project will exceed the budget.
APPENDIX – EVM QUICK REFERENCEEarned Value Management (EVM)
Earned Value Management (EVM)
Earned Value Management – Quick ReferenceName Description Equation
Planned Value PV Budgeted amount planned to be spent Budgeted Rate * % Planned
Earned Value EV Measurement of completed work according to the budget
% Complete * BAC
Actual Cost AC Cost incurred for the work performed
Budget at Completion BAC Total Planned Value for the project
Cost Variance CV The difference in budgeted amount and actual spend at a given time.
CV = EV - PV
Schedule Variance SV The difference in Planned value and earned value indicating if the project is ahead or behind schedule
SV = EV - PV
Variance at Completion VAC The difference between the planned budget at completion and estimate to complete
VAC = BAC - EAC
Cost Performance Index CPI Measurement of Cost efficiency expressed as a percentage
CPI = EV / PV
Schedule Performance Index SPI Measurement of schedule efficiency expressed as a percentage
SPI = EV / PV
Estimate at Completion EAC Estimated cost to complete the projectBased on current CPIBased on budgeted rateBased on current CPI & SPI
EAC = BAC/CPIEAC = AC + (BAC – EV)EAC = AC + [(BAC – EV) / (CPI * SPI)]
Estimate to Complete ETC Expected cost to complete work remaining ETC = EAC - AC
To Complete Performance Index
TCPI Measurement of performance required to meet the project goals. Expressed as a percentage.
EAC = AC + [(BAC – EV) / (CPI * SPI)]TCPI = [(BAC – EV) / (BAC - AC)]