Earned Value
Analysis
- an
aid in defining the status of a project.
by Sean McEvoy, Chief Information Officer of ETP
EVA is
an acronym for Earned Value Analysis. It is a method of using the value of the work
already completed on the project to indicate what will be the actual schedule and cost
figures at the completion of the project.
EVA is
a general term for the formal Cost/Schedule Status Reporting (C/SSR) requirements
originally defined by the US Department of Defence. All US Government Departments now
insist upon C/SSR when commissioning projects and private organisations are beginning to
insist that their external contractors do likewise.
The
primary measurements used in C/SSR are:
 | Budgeted Cost of
Work Scheduled (BCWS): the value of the original planned work. |
| Budgeted Cost of
Work Performed (BCWP): the value of the completed work. This is the Earned Value.
|
| Actual cost of
Work Performed (ACWP): the actual cost of the completed work. |
Following from these 3 primary measurements we can examine a number of useful
indicators:
| Schedule variance
(SV): (BCWP - BCWS) A negative value indicates the project is over budget or behind
schedule, or both! |
| Schedule Variance
Percent (SV%): (BCWP.100/BCWS) The variance from BCWP, as a percentage, between what
has actually been earned. by now what should have been earned. |
| Cost Variance
(CV): (BCWP - ACWP) A negative value indicates being over budget. |
| Cost Variance
Percent (CV%): (BCWP.100/ACWP) The variance from BCWP, as a percentage, between what
has actually been earned by now and what it has cost. |
Using these base measurements plus the variances we can calculate some completion
figures.
| Budget at
completion (BAC): This is the final value of the BCWS, the figure we expect the
project to cost if all goes according to plan. |
| Estimated cost at
completion (EAC): This is the BAC minus the-current CV. In other words, the cost of
the project' in the unlikely event of the remainder of the project going exactly according
to plan. |
| Calculated cost at
completion (CAC): This is the BAC divided by the current CV%. In other words, the cost
of the project if the remainder of the project goes the same way as the project to date.
|
Using events on an actual programming project as an example, we will use EVA to help us
monitor the status'
The table below gives the planned figures for work and cost for a 12 month project. (The
cost figures are calculated from the daily rates of the programmers but all figures have
been rounded and simplified for clarity). For simplicity, BCWS can be considered as the
planned cumulative cost (Fig.1)
| Plan |
End
Jan |
End
Feb |
End
Mar |
End
Apr |
End
May |
End
June |
| Monthly Work |
50
|
100
|
150
|
150
|
150
|
150
|
| Cumul. Work |
50
|
150
|
300
|
450
|
600
|
750
|
| |
|
|
|
|
|
|
| Monthly Cost |
500
|
1000
|
1500
|
1500
|
1500
|
1500
|
| BCWS |
500
|
1500
|
3000
|
4500
|
6000
|
7500
|
| |
|
|
|
|
|
|
| |
End
July |
End
Aug |
End
Sept |
End
Oct |
End
Nov |
End
Dec |
| Monthly Work |
150
|
150
|
150
|
150
|
100
|
50
|
| Cumul. Work |
900
|
1050
|
1200
|
1350
|
1450
|
1500
|
| |
|
|
|
|
|
|
| Monthly Cost |
1500
|
1500
|
1500
|
1500
|
1000
|
500
|
| BCWS |
9000
|
10050
|
12000
|
13500
|
14500
|
15000
|
(Fig
1) |
Having
planned the project, we can now execute it. At the end of each month we input the actual
work figures for the programmers and the % complete figures for each task. These figures
directly give us the ACWP and the BCWP. The remaining Earned Value fields are then
calculated and these give the 'project manager a month to month indication of the status
of the project.
The
following is a summary of what happened in the project each month for the first 6 months
and the spreadsheet below gives the Earned Value figures resulting from this.
January
Actual work (ACWP=300) less than planned (i.e. ACWP < BCWS)
Schedule is slow but EV is fine (i.e. SV% < 100 but CV% = 100 because BCWP = ACWP)
This situation has arisen because we were slow at assigning people to the project.
February
Work exactly as planned.
Schedule still slow, EV still fine.
At this point we will allocate some extra work at weekends to try an recoup some of the
lost schedule.
March
Work for month greater than planned.
Schedule doesn't come in much as some problems were encountered. At this point we are both
over budget and behind schedule. We will continue the extra working.
April
Work greater than planned.
Schedule has now come back on plan.
We will revert to normal working.
May
Work slightly more than planned (some tasks were underestimated).
Schedule fine.
June
Work to plan.
Schedule to plan.
A most unusual month!
| Actual |
End
Jan |
End
Feb |
End
Mar |
End
APR |
End
May |
End
June |
| Monthly Cost |
500
|
1000
|
1500
|
1500
|
1500
|
1500
|
| BCWS |
500
|
1500
|
3000
|
4500
|
6000
|
7500
|
| |
|
|
|
|
|
|
| BCWP(EV) |
300
|
1000
|
1600
|
1600
|
1500
|
1500
|
| ACWP |
300
|
1000
|
1800
|
1800
|
1600
|
1500
|
| |
|
|
|
|
|
|
| Cumul. EV |
300
|
1300
|
2900
|
4500
|
6000
|
7500
|
| Cumul. ACWP |
300
|
1300
|
3100
|
4900
|
6500
|
8000
|
| CV |
0
|
0
|
200
|
-400
|
-500
|
-500
|
| SV |
200
|
200
|
-100
|
0
|
0
|
0
|
| CV% |
100%
|
100%
|
93.6%
|
91.8%
|
92.3%
|
93.7%
|
| SV% |
60%
|
87%
|
96.7%
|
100%
|
100%
|
100%
|
| BAC |
15000
|
15000
|
15000
|
15000
|
15000
|
15000
|
| EAC |
15000
|
15000
|
15200
|
15600
|
16100
|
16600
|
| CAC |
15000
|
15000
|
16034
|
16333
|
16250
|
16000
|
Fig
2 |
The
situation at the end of the 6 month period is that our project is back on schedule but at
an increased cost. Note the changing values of EAC and CAC as we go through from January
to June.
