7. Earned Value Analysis

There are three critical areas that need to be planned, monitored, and controlled so that a project can be successful. These are:

• Time (schedule of the tasks and project)

• Resources (budget, people, material)

• Work specifications (outline of tasks and deliverables)

These areas can be charted using the Earned Value Analysis (EVA) method or the Earned Value Management (EVM) method (Hickey, 2021).

Earned Value Analysis (EVA) is a method or set of calculations that are used to measure the work being carried out on the project in relation to cost, schedule and works completed, to see how well that project is progressing. The project manager can then use these calculations to determine or forecast a projects total completion date and cost. This method can be used at various intervals within the project cycle (Reichel, 2006).

Earned Value Analysis can be represented within an Earned Value Chart (EVA). It displays the performance measures which was calculated using the variance between cost, schedules and works to be completed.

Below is an example of an EVC:

@project-management-basics.com

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The Earned Value Management (EVM) method uses set data sources to compares the budget value of work, earned value of work and actual completion of work.

This is achieved by using the below criteria in calculation format.

• Planned Cost (PC)

• Actual Cost (AC)

• Earned Value (EV)

The most beneficial calculations to do are:

Schedule Performance Index (SPI) - this measures the progress being made through the project and at what point you expect her certain progress to be made. It uses the EV amount and divides this by the PC amount. A greater value (more than 1) indicates more work has completed than planned and vice versa.

Cost Performance Index (CPI) - this measures the value of work against the actual cost of the work. It used the EV amount and divide this by the AC amount. A greater value (more than 1) indicates that costs are less than budgeted and vice versa.

Estimated at Completion (EAC) - this provides estimate of overall costs by the end of the project. It uses the total actual project budget and divide it by the CPI amount previously calculated (Hickey, 2021).

Another form of the Baseline Budget (which is a projected cost of the project) is the Budgeted Cost of Word Scheduled (BCWS). This schedule assigns a cost to every task/summary task.

This is calculated as:

BCWS = Total Budgeted Cost * Scheduled Project Percentage

Let’s look at an example, outlined below by Task Management Software (2021), to see what this means in reality.

BCWS is depicted in the below chart by the blue line.

@SlideServe

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References

Hickey, R. (2021). Earned Value Analysis. URL: Project Management (learning101.ie). [Accessed on 18.11.2021]

Reichel, C. W. (2006). Earned value management systems (EVMS): "you too can do earned value management" Paper presented at PMI® Global Congress 2006—North America, Seattle, WA. Newtown Square, PA: Project Management Institute.

Task Management Software. (2021), Budgeted Cost of Work Scheduled (BCWS) per Project (Planned Value). URL: Budgeted Cost of Work Scheduled (BCWS) per Project (Planned Value) (taskmanagementsoft.com). [Accessed on 18.11.2021]