Earned Value Management Flashcards
what is the definition of Earned Value Management
Earned value management (EVM) is a project control process based on a structured approach to planning, cost collection and performance measurement. It facilitates the integration of project scope, time and cost objectives and the establishment of a baseline plan for performance measurement.”
why is earned value needed
Most organisations already have methods in place to measure actual expenditure against planned expenditure. This analysis only provides part of the story. EVM adds a third dimension, the value of work performed to date (i.e. Earned Value). Another way to think of Earned Value is “useful work done”
what 8 elements need to be in place for EVM to be effectively applied
- a work breakdown structure WBS
- assigned responsibilities for each task
- allocation of direct cost budget via the WBS
- all tasks scheduled
- a method of measuring achievement for each task
- cost and achievement data collected t regular planned intervals
- a time phased budget baseline plan
- baseline changes managed through change control
what does the success of EVM relies on
EVM relies on both the accuracy of the baseline input and the accuracy of the progress measurement data provided.
what 6 questions regarding present project status does EVM give insight into
- How does the useful work done (EV) compare against the Actual Cost (AC)?
- Has the effort required to achieve this work cost more or less than planned? (CV – Cost Variance)?
- How efficiently is the budget, whether money or effort, being managed (CPI – Cost Performance Index)?
- How does the useful work done (EV) compare against the Planned Cost (PC) of work at this point in the project?
- Is the project ahead or behind the planned schedule at this present point in time? (SV – Schedule Variance)?
- How efficiently is the time being managed (SPI – Schedule Performance Index)?
what 6 indicators does EVM provide on future project performance
- ongoing performance of the project based on present performance
- eventual cost and schedule variance as well as likely performance trends
- measures of cost and schedule efficiency (CPI and SPI)
- final outturn cost (Estimate at Complete – cost: EAC)
- final duration of the project (Estimated Final Duration: ETC)
- what type of corrective action is required to improve or rectify project performance
what 4 components are identified by EVM either in planning or through monitoring and control:
- Budget at Completion -
BAC - Planning - The sum total of the time-phased budgets for the project (i.e. the total Planned Cost).Performance Measurement Baseline (PMB) - Planned Duration - PD -Planning - Estimated final duration of the project
- Planned Cost - PC - Planning - Planned cost of work that should have been achieved at a specific point in time. Also known as:
PV – Planned Value
BCWS – Budgeted Cost of Work Scheduled - Actual Cost - AC - During Implementation - Cumulative cost of work accrued on the project so far. Also known as: ACWP – Actual Cost of Work Performed
what is the calculation used to determine Earned Value - EV
EV =
% Complete x Budget
Value of work performed expressed in terms of budget assigned to that work. Also known as:
BCWP – Budgeted Cost of Work Performed
what is the calculation used to determine Cost Variance - CV
CV = EV – AC
Difference between the value of the work performed and the actual costs incurred. A negative number indicates poor performance whereas a positive number indicates favourable performance.
what is the calculation used to determine Schedule Variance - SV
SV = EV – PC
Difference between the value of the work performed and the planned cost of the work that should have been performed at this point in time.
A negative number indicates poor performance whereas a positive number indicates favourable performance.
what is the calculation used to determine Cost Performance Index - CPI
CPI = EV / AC
Cost efficiency ratio that measures work accomplished against costs incurred at a specific point in time. Number above 1 indicates favourable performance; below 1 indicates poor performance.
what is the calculation used to determine Schedule Performance Index - SPI
SPI = EV / PC
Schedule efficiency ratio that measures work accomplished against work planned at a specific point in time.
Number above 1 indicates favourable performance; below indicates poor performance.
what is the calculation used to determine Estimated Cost at Completion (Cost) - EAC
EAC = BAC / CPI
Projected final cost for the project (also known as the projected outturn cost)
what is the calculation used to determine Estimated Final Duration
(or Estimated Time to Complete) - FD (also known as EACT or ETC)
FD = PD / SPI
Projected final duration for the project
what are 2 of the more commonly used methods of graphical EVM reporting
- Control Charts
2. ‘Bull’s-eye’ Charts
