Earned Value

Question 1

what is earned value?

Answer 1

earned value, as a quantity,represents the amount of work achieved at any given point in time

• every task in the project has an earned value associated with it at any given time
• earned value of each task is zero at the start
• when a task is complete, its earned value is declared to be the amount equal to the amount allocated to the task

Question 2

how do you calculate earned value?

Answer 2

earned value = total budget x %complete

earned value (task) = total budget (task) x %complete (task)

Question 3

PC =

Answer 3

planned cost the amount that is planned to have spent at any particular time

Question 4

AC =

Answer 4

actual costs of the work

Question 5

How is EV used?

Answer 5

• record is made of each task and progress made (% complete)
• EVs are calculated and added up
• ACs are recorded and added up
• Plotted against Planned cost (PC) on S-curve)
• This can show whether project is on time/on budget

Question 6

what three variances can be calculated from EV data

Answer 6

CV = cost variance SV (cost) = schedule variance SV (time) = schedule variance

Question 7

what is CV

Answer 7

the difference between the value of the work performed and the money spent on it CV = earned value - actual costs

Question 8

SV (cost)

Answer 8

difference between what was planned to have been achieved in terms of value delivered and what has actually been achieved
SV (cost) = earned value - planned cost

Question 9

SV (time)

Answer 9

shows how far behind (or ahead) the project or activity is, compared to what was planned SV (time) = original duration - time now

Question 10

what are performance indicies?

Answer 10

• when quantities used to calculate variances are combined to give performance indicies
• e.g. CPI - cost performance
• SPI (cost-based) -schedule performance
• value close to 1.0 represents planned situation
• value < 1 is a problem
• value > 1 is desirable (better than planned)

Question 11

CPI =

Answer 11

CPI = earned value/ actual cost

Question 12

SPI (cost based)

Answer 12

SPI (cost-based) = earned value/ planned budget

Question 13

SPI (time)

Answer 13

SPI (time) = original duration/actual time achieved

Question 14

what is forecasting ?

Answer 14

To predict the state of the project at completion using baseline plan and earned value data, principally one of the variances or performance indicies

Question 15

advantages of EVA

Answer 15

• shows time and cost on one report
• trends can be identified and corrective action taken
• cost and schedule variances can used for forecasting
• enables calculation of overall % completion of project which is of interest to senior managers

Question 16

limitations of EVA

Answer 16

• analysis is only meaningful if baseline budget estimate is robust (a good representation of the work)
• does not represent a full picture of how close the project is to fulfilling its objectives (e.g. meeting customer requirements)
• over optimistic reporting on progress reports

Question 17

What is BAC?

Answer 17

Budget at completion

It is synonomous with total budget

Every Task, Workpackage and Project has its own BAC, which is the maximum amount of effort that the plan says will be used for its completion.

Question 18

The earned value of a task is calculated by which formula?

Select one:

A. Planned budget x percentage task complete.

B. Total task budget x percentage task complete.

C. Total project budget x percentage task complete.

D. Actual cost x percentage task complete.

Answer 18

B. Total task budget x percentage task complete

Remember, to get a statistic that reports progress, we need to compare it against a baseline figure. So we multiply % complete by baseline figure, (task budget).

Question 19

When would you use variances to forecast?

Answer 19

Assumption 1: things will go as planned

Use when less than 30% of project is done

Question 20

When would you use performance indicators to forecast?

Answer 20

Assumption 2: Things will go as they are going now

Data about performance will be representative of likely future

When over 30% of project is complete

Question 21

How to forecast final project duration using assumption 1

Answer 21

final project duration = planned project time - schedule variance

Question 22

How to forecast final cost and cost overrun using assumption 1

Answer 22

estimated final cost = budget - cost variance

cost overrun = estimated final cost - budget

Question 23

How to forecast final project cost using assumption 2 and overrun

Answer 23

final project cost = budget/CPI

overrun = esimated final cost - budget

Question 24

How to calculate final project duration using assumption 2

Answer 24

estimated final project duration = planned completion time / SPI(cost)