1.
EARNED VALUE MANAGEMENT
ASHIF A R
ashifmsd@gmail.com
Ph No. - 9745350127

2.
INTRODUCTION
• Project management technique for measuring project progress in an
objective manner.
• Combine measurements of scope, schedule, and cost in a single integrated
system.
• Provides an early warning of performance problems.
• Improve
• the definition of project scope,
• prevent scope creep,
• communicate objective progress to stakeholders,
• keep the project team focused on achieving progress.

3.
Elements of Project Control
• Creation of a Baseline Schedule
• Measurement of Performance
• Effective Corrective Actions

4.
Project Monitoring

5.
Project Monitoring
• Planning and scheduling play an important role in project management
• But without monitoring the project, chances of completing the project
on schedule is difficult
• Two parameters are monitored
• Cost
• Time
• The following graph shows the Time-cost relationship for a project

6.
Project Monitoring
Cost
Cost over-run with schedule
Time
Time over-run
Ideal
Curve
This graph shows Project Progress

7.
Concepts of Earned Value

8.
Concept of Earned Value
• Consider the following example:
• Wall construction
Wall is divided into 4 sections
For 4-sections - 100 man-hours are required
Hence if 2-sections are completed,
(2/4) × 100
= 50 man-hours
• We say that 50 man-hours have been EARNED
• The actual man-hours spent to construct these two sections can be
more than or less than the EarnedValue of man-hours

9.
Concept of Earned Value
• Wall construction
If 4 sections cost Rs. 1000/-
then the cost of constructing 2 sections = Rs. 500/-
We say that Rs. 500/- is the EARNED value of money
The actual cost incurred in constructing these two sections can be more than or less than the
Earned Value of money
It is important to note that Earned Value is based on the Actual quantities installed or Actual
quantity of work done
Hence output is considered in the Earned Value concept

10.
Concept of Earned Value
• Calculation of Earned Value
• Earned Value of man-hours or money for an activity can be
calculated as follows:

11.
Components of Earned Value

12.
Components of Earned value Analysis
• Budgeted Cost ofWork Scheduled (BCWS)
• It is the budgeted cost of work scheduled to be performed
• It is also called the Planned Value (PV)
• It tells how much work have been completed

13.
Components of Earned value Analysis
• Budgeted Cost ofWork Performed (BCWP)
• It is the budgeted cost of work actually performed
• The Earned Value for the work actually completed
• It tells how much work is actually completed

14.
Components of Earned value Analysis
• Actual Cost ofWork Performed (ACWP)
• It is the amount actually spent on the work completed
• This could be more or less than the Earned Value

15.
Components of Earned value Analysis
• Scheduled Variance (SC)
• It compares work completed vs work planned
• It helps to identify whether the project is ahead or behind schedule
• Negative value indicated that the project is behind schedule

16.
Components of Earned value Analysis
• Scheduled Performance Index (SPI)
• It helps to identify whether the project is ahead or behind schedule
• Less than 1 indicates that the project is behind schedule
• It can be used to forecast how long it will take for the project to complete

17.
Components of Earned value Analysis
• Cost Variance (CV)
• It compares what was planned to be spent on the work completed vs. what was
actually spent
• It helps to identify whether the project is ahead or behind schedule
• Negative value indicates that the project is over budget

18.
Components of Earned value Analysis
• Cost Performance Index (CPI)
• It helps to identify weather the project is above or below budget
• Less than 1 means the project is over budget
• It can be utilised to forecast how much amount will be required to complete
the project

19.
Components of Earned value Analysis
• Budget at Completion (BAC)
• It is the amount that was originally budgeted to complete the project

20.
Components of Earned value Analysis
• Estimate at Completion (EAC)
• It is the estimated amount required to complete the project

21.
Components of Earned value Analysis
http://www.iceincusa.com/16CSP/content/4_ev/gifs/image1.gif (17.01.2007)