EARNED VALUE
ANALYSIS
BY
Prof. Nagesh
Suryawanshi

Advantages
Earned value analysis is the project
management tool that is used to
measure project progress.
 It compares the actual work completed at
any time to the original budget and
schedule.
 It forecasts the final budget and schedule
and analyzes the path to get there.
It gives you the essential early warning
signal that things are going awry (wrong).
2

Terms Used
1.Planned Value (PV)
 Planned Value, also known as Budgeted Cost of
Work Scheduled (BCWS), is defined as the amount
of the task that is supposed to have been
completed.
 It is in monetary terms as a portion of the task
budget.
2.Earned Value (EV)
 Earned Value, also known as Budgeted Cost of Work
Performed (BCWP), is the amount of the task that is
actually complete.
 It is, again, in monetary terms as a portion of the
task budget.
3

3. Actual Cost (AC):
 The Actual Cost, also known as Actual
Cost of Work Performed (ACWP), as you
might guess, is the actual cost of the
work.
 Generally employee hours need to be
converted into a cost, and all project
costs need to be added up, such as the
labour cost, material cost , equipment
cost etc.
4

Indicators
1.Schedule Variance (SV)
 The Schedule Variance represents the schedule status of
the project.
 SV = EV – PV
2.Cost Variance (CV)
 The Cost Variance represents the cost status of the
project.
 CV = EV – AC
 SV and CV are the minimum requirement and work well
for small projects, there are other variables that are
derived from them which you might want to calculate:
5

Other status indicators
 Schedule Performance Index (SPI): The
schedule variance expressed in percentage
terms,
 for example, SPI = 0.8 means the project 20%
behind schedule.
 SPI = EV / PV
 Cost Performance Index (CPI): The cost
variance expressed in percentage terms,
 for example, CPI = 0.9 means the project is 10%
over budget.
 CPI = EV / AC
6

Interpretations
The first two calculations (SV and CV)
give you the basic indicator of project
progress.
A negative value indicates an
undesirable situation.
If the schedule variance (SV) is
negative, you are behind schedule.
If the cost variance (CV) is negative,
you are over budget.
7

:
Interpretation of CPI and SPI
 You interpret CPI results as below:
 CPI less than 1.0 indicates the project is
overspending funds.
 CPI equals 1.0 than the project is on target.
 CPI greater than 1.0 says the project is under
budget.
 You interpret SPI results as below:
 SPI less than 1.0 indicates the project is behind the
schedule
 SPI equals 1.0 than the project is as per schedule .
 SPI greater than 1.0 says the project is ahead the
schedule.
8

Indicators and formulae's
9

Que. It was supposed to complete 5 cubic
meter excavation in eight hrs. Review was taken
after 6 hrs., it was expected to complete 75 %
after 6 hrs. but actually work completed is 60 % .
The actual cost spent to complete the work is
Rs.13,000/- assume the cost require to
excavate one cubic meter per hour is Rs.500.
Calculate the different indices and interpret the
result obtained.
Ans: From the given Data:
Task Excavation budget=5 x 500 x 8= Rs.20,000/-
 PV=75/100 x20,000=15,000/-
 EV=60/100 x 20,000=12,000/-
 AC=Rs.13,000/-
Example
10

 1.CV=EV-PV
 =12000-15000
 = Rs.-3000/-
 2.SV=EV-AC
 =12000-13000
 =Rs. -1000/-
 3.SPI=EV/PV
 =12000/16000
 =0.75
 4.CPI=EV/AC
 =12000/13000
 =0.92
11

Interpretation of results
 First two indicators:
 CV=Cost variance negative it means the
activity excavation is over the budget.
 SV= Schedule variance is also negative
indicates that activity excavation is
behind the schedule.
 Indicators third and fourth:
 SPI is 0.75 (less than 1), indicates that the
excavation is 25 % behind than the
schedule and
 CPI found 0.92(less than 1),indicates its
over budget by 8%.
12