Earned Value Analysis Concept & Application

1. Earned Value Analysis
Concept and Application
Presented by
Ahmed Rami Elsherif
27/12/2012

2. Concept
Earned Value Analysis (EVA). Is a Project Management
control technique which integrates Scope, Schedule
and Cost data 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) and the planned cost of work performed
(i.e. planned cost).

3. Definitions
Concept
Abbre
viation
Description
Budget at Completion BAC Baseline cost of 100% of the project.
Actual Cost AC Total costs actually incurred so far.
Earned Value EV
Amount of budget earned so far based on
physical work accomplished, without
reference to actual costs.
Planned Value PV
The budget for the physical work scheduled
to be completed by the end of the time
period.

4. Metrics
Concept
Abbre
viation
Description
Cost Variance CV
Measure of cost overrun.
CV = EV – AC
Schedule Variance SV
Measure schedule slippage.
SV = EV – PV
Cost Performance Index CPI
Cost efficiency ratio.
CPI = EV/AC
Scheduled Performance
Index
SPI
Schedule efficiency ratio.
SPI = EV/PV
Estimate at Completion EAC
Expected total cost based on the current
cost and schedule efficiency ratios.
EAC = AC+((BAC-EV)/(CPI*SPI))

5. For example
The project is to build a 4 wall room. The cost per wall is 100 SAR
and it will take 1 day to construct 1 wall. At the end of the 3 day we
have finished 2.5 walls and our actual cost is 280 SAR then our
values are :
Budget at Completion (BAC) = 400 SAR
Actual Cost (AC ) = 280 SAR
Earned Value (EV) = 250 SAR
Planned Value (PV) = 300 SAR
And based on the above data we can calculate the following:

6. Calculated Metrics
Cost Variance is CV = EV – AC = 250 – 280 = -30
we are over budget by 30 SAR
Scheduled Variance is SV = EV – PV = 250 – 300 = -50
we behind scheduled by 50 SAR
Cost Performance Index is CPI = EV / AC = 250 / 280 = .89
For each 1 SAR we spend we gain .89 halalas
Schedule Performance Index is SPI = EV / PV = 250 / 300 = .83
We are behind schedule by 17 %.
Estimate at Completion is EAC = AC+((BAC-EV)/(CPI*SPI)) = 483
If we continue with the same efficiency rates, we might end up with
a total cost of 483 SAR.

7. Proposal
Recent research studies have shown that the tools and
techniques of Earned Value Analysis have positive impact on
improving project controls on Scope, Cost and Schedule and
are good predictors of project success.
Popularity of EVA has grown significantly in recent years for
which we would like to recommend using it for ATCO
projects (i.e. construction, big projects in EWE, EWF).
For that we have developed a simple module in the EIS
where project managers will enter the EV parameters which
the system will combine with data booked in accounts and
calculates the EV metrics.
Data from RAS ALKHER project is entered in the system for
testing.

8. Steps in EIS
1. Login to EIS by assigned operational staff.
2. Process the EV report of his particular division.
3. Enter the EV values of the Month and any comments
regarding the variances.
Graphical
Presentations
4. Use the data and reports in the monthly project status
reporting.
Project EV data entered
by Operations on a
monthly basis
Projects status
dashboard report

9. Proposed Plan
1. Agree with you if this is a suitable solution.
We can discuss this by taking RAS ALKHER
project data which is already entered in the
system as an example.
2. If Yes share it with operations for feedback
on possible enhancements or
improvements.
3. Identify users in each divisions and do
training.
4. Start using the new process.