4: Earned Value Analysis

Question 1

What does EVA use to measure project performance?

Answer 1

Planned cost

Actual cost

Earned value

Question 2

What is planned cost sometimes referred to as?

Answer 2

Budgeted cost of work scheduled (BCWS)

Question 3

What is actual cost sometimes referred to as?

Answer 3

Actual cost of work performed (ACWP)

Question 4

What is earned value sometimes referred to as?

Answer 4

Budgeted cost of work performed (BCWP)

Question 5

What is the formula for cost variance?

Answer 5

Earned Value (EV) - Actual Cost (AC)

Question 6

What is the formula for schedule variance?

Answer 6

Earned Value (EV) - Planned Cost (PC)

Question 7

What is the formula for Cost Performance Index (CPI)

Answer 7

CPI = Earned Value / Actual Cost

Question 8

What is the formula for Schedule Performance Index (SPI)

Answer 8

SPI = Earned Value / Planned Cost

Question 9

How do you interpret CPI & SPI?

Answer 9

If the index values are less than 1.0, then the project is lagging behind, if the values are greater than 1.0, then the project is outperforming the plan.

Question 10

What is the formula for forecasting the final cost?

Answer 10

Final Cost = Budgeted Cost / CPI

Question 11

What is the formula for forecasting the final duration?

Answer 11

Final Duration = Original Duration / SPI

Question 12

What are the limitations to EVA? (3)

Answer 12

• Assumes money is spent linearly and prorated based on time (not the case).
• Costs in terms of money spent is accurate, however, judgement of task or project progress are subjective and therefore so are costs associated with the schedule.
• Predictions for the future are based on extrapolations of what has occurred so far. Often what has happened does not represent accurately what will happen in the future.

Question 13

What should you comment on when asked to give your views on the health of a project at a certain point? (5)

Answer 13

• Stage of the project
• Whether delay is critical or not
• Whether under/over cost or time is insurmountable or not
• Any CE’s or loss in profit due to over spend/time
• If more data should be captured at this stage

Question 14

Describe in greater detail what should be considered when talking about the health of a project if the project is at an early stage.

Answer 14

At an early stage any overspend or overrun may be due to weather or unexpected conditions. The existing trend may not be representative of the future trend.

Question 15

Describe in greater detail what should be considered when talking about the health of a project if the project is delayed.

Answer 15

Whether delay is to critical tasks or not. The SPI being negative does not necessarily mean the total project duration will be extended, as non-critical tasks may be delayed.

This is a weakness of SPI tracking.

Question 16

Describe in greater detail what should be considered when talking about the health of a project if the project is over in terms of cost or time.

Answer 16

Whether or not the cost/time overspend is insurmountable and whether further close tracking would be necessary to see if the current trend is short lived.

Question 17

Describe in greater detail what should be considered when talking about the health of a project if the project continues to overspend or overrun.

Answer 17

If the overspend/overrun is significant, CE’s could be triggered resulting in a loss of profits. Therefore interventions should be considered to bring the project back on track.

Question 18

Describe in greater detail what should be considered when talking about the health of a project if there is not much tracking information relating to a project.

Answer 18

Further information should be gathered from the site relating to the status of a project to better inform decisions.

Question 19

How should you compare the performance or health of a project between two points in time?

Answer 19

Comment on the trends in cost and time performance and whether or not they have improved or worsened.

Additionally, comment on the % completion of the project (related to original duration) and whether or not a trend should have settled.

Question 20

Discuss the need to consider individual tasks on a project when analysing Earned Value data (SPI).

Answer 20

• Tasks can be critical or non critical.
• Critical tasks need to be monitored for SPI values < 1.0 as these result in delay.
• Non-critical tasks do not result in delay.
• As a result, the overall SPI can be < 1.0 but not actually delayed due to non-critical tasks skewering the figures.

Question 21

Discuss the need to consider individual tasks on a project when analysing Earned Value data (CPI).

Answer 21

• If a non-critical task has completed with a CPI <1.0 then this will affect the overall CPI even if other tasks are completed on budget, therefore a value fore CPI <1.0 can be put into context if previous tasks are known to be over budget.

Question 22

Discuss the need to consider individual tasks on a project when analysing Earned Value data (continued).

How should SPI & CPI values be compared?

Answer 22

They should be compared relatively to their equivalent values from previous reports to look for improvement or worsening in project performance.

Tracking information from individual tasks should also be considered to for a balanced view of the projects health.