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Earned value management for Beginners

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Earned value management for Beginners

  1. 1. Earned Value Management (EVM) Shenin Hassan 2015
  2. 2. Outline • Introduction • Basic Elements of EVM • Performance Analysis and Forecasting • Guidance for the use of Key EVM Practices
  3. 3. Introduction • Feedback of the Project is critical – Identify problems – Early decision making • EVM is one of the most effective “performance measurements and feedback tools”
  4. 4. EVM • “Management with Lights On” – Illumine where a project is and where it is going compared to where it was supposed to be • Patterns and Trends in the past can be good predictors of the future
  5. 5. EVM • Part of Monitoring and Controlling – Scope – Schedule & – Cost • Includes – Measuring – Analysing – Forecasting – Reporting EVM Scope Time Cost Quality & Risk
  6. 6. What’s the Project Status? Are we on Schedule? Late by 2 Weeks Mmm…so?...what’s the new finish date? Couple of Changes…not only schedule…cost…
  7. 7. EVMS Answers to When is the project likely to be completed? Are we currently under or over our budget? How efficiently are we using our resources?
  8. 8. Critical Data Elements of EVM Planned Value - PV Earned Value - EV Actual Cost - AC
  9. 9. Planned Value • Amount of resources (expressed in budget- numbers) that are EXPECTED (PLANNED) to accomplish a specific piece of work – Budgeted Cost of Work Scheduled (BCWS) – Spend Plan – Cost Estimate Amount of resources ($) that are expected to be consumed to accomplish a specific piece of work scope.
  10. 10. Example: Planned Value (PV) Task Budget Jan Feb Mar Apr 1 12 6 6 2 20 8 12 3 28 7 21 PV 60 6 14 19 21 CUM 6 20 39 60 Total PV = 60 Total PV is called Budget at Completion (BAC)
  11. 11. Earned Value (EV) • Amount of work accomplished at a given point in time. • Budgeted Cost of Work Performed (BCWP) Snapshot of work progress at a given point in time
  12. 12. Example: Earned Value (EV) as of March Task Budget Jan Feb Mar Apr 1 12 6 6 2 20 8 12 3 28 7 21 PV 60 6 14 19 21 CUM 6 20 39 60 EV 20 6 14 0 CUM 6 20 20 NO Work Performed (as per PLAN) in March For instance, in construction projects – no physical work might happen as per the plan, however money is spent on certain equipments and tools (rented crane, idle laborers for e.g.)
  13. 13. Actual Cost • Amount of resources expended in a specific time period to accomplish a task(s). • Actual Cost of Work Performed (ACWP) • Resource Expenditure against Planned Work Amount of money spent in a specific period of time
  14. 14. Example: Actual Cost (AC) as of March Task Budget Jan Feb Mar Apr 1 12 6 6 2 20 8 12 3 28 7 21 PV 60 6 14 19 21 CUM 6 20 39 60 EV 20 6 14 0 CUM 6 20 20 AC 25 6 14 5 6 20 25
  15. 15. Summary Task Budget Jan Feb Mar Apr 1 12 6 6 2 20 8 12 3 28 7 21 PV 60 6 14 19 21 CUM 6 20 39 60 EV 20 6 14 0 CUM 6 20 20 AC 25 6 14 5 6 20 25 • PV(As of Mar) = 39 • EV (As of Mar) = 20 • AC (As of Mar) = 25 • Total PV = 60 • Total PV is called Budget at Completion (BAC)
  16. 16. Answering Project Management Questions Are we ahead or behind schedule? (VARIATION) How efficiently are we using time? (PERFORMANCE INDEX) When are we likely to finish work? (ESTIMATION/ FORECASTS) Are we under or over our budget? (VARIATION) What is the project likely to cost? (ESTIMATION/ FORECASTS) What will the remaining work cost? (ESTIMATION/ FORECASTS) How efficiently we must use our remaining resources ? (PERFORMANCE)
  17. 17. Analyzing Performance based on VARIANCE INDICES (EFFICIENCY) FORECASTS
  18. 18. Variance Variance During the Project – at a point in time At Completion • Variance – Schedule Variance – Cost Variance • Both “during the course” of the project and at the “end” of the project
  19. 19. Variance Types Schedule Variance Cost Variance Variance at Completion
  20. 20. Variance Are we ahead or behind schedule? – Schedule Variance (SV) SV = EV – PV Are we under or over budget? – Cost Variance ( CV) CV = EV- AC Will we be under or Over Budget (at the end)? – Variance at Completion (VAC)
  21. 21. Project Management Question EVM Performance Measures Formula Time-wise Schedule Analysis & Forecasting Are we ahead or behind schedule? Schedule Variance SV= EV- PV How efficiently are using time? Schedule Performance Index (SPI) SPI = EV/ PV When are we likely to finish work? Time Estimate at Completion (EACt) EACt = BAC/ SPI Cost-wise Cost Analysis & Forecasting Are we under or over budget? Cost Variance (CV) CV = EV - AC How efficiently are we using our resources? Cost Performance Index (CPI) CPI = EV/AC How efficiently must we use our remaining resources? To-complete Performance Index (TCPI) TCPI = (BAC-EV)/ (BAC- AC) What is the Project likely to cost? Estimate at Completion (EAC) EAC = BAC/CPI Will we be under of over budget? Variance at Completion (VAC) VAC = BAC-EAC What will the remaining work cost? Estimate to Complete (ETC) ETC = (BAC-EV)/ CPI
  22. 22. PMI Global Standard © 2005 PMI Page - 16
  23. 23. Elements Budget May June July August Professional Development 1500 300 (Buy 2 Books – 150 Each) 500 Enroll for a short course worth 500 300 (Buy 2 Books– 150 Each) 400 (Buy 2 Books– 200 Each) Home 12,000 3000 3000 3000 3000 Entertainment 1500 500 200 300 500 PV 15,000 (BAC) 3800 3700 3600 3900 CUM 3800 7500 11,100 15,000 EV 20 Bought 2 books Enrolled for a short course Short course continued to July – so did not touch what was planned in

Notas del editor

  • Budgeted Cost of Work Scheduled (BCWS)

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