ISSN: 2277-3754

International Journal of Engineering and Innovative Technology (IJEIT)

Volume 1, Issue 4, April 2012

Cost Controlling Using Earned Value Analysis in

Construction Industries
Sagar K. Bhosekar, Gayatri Vyas
Abstract - Most of the construction projects suffer from cost
and time overruns due to a multiplicity of factors. Earned value
management (EVM) is a project performance evaluation
technique that has origins in industrial engineering, but which
has been adapted for application in project management. The
earned value analysis gives early indications of project
performance to highlight the need for eventual corrective action.
This study is to present and discuss the main parameters involved
in the calculation of Earned Value Analysis (EVA) in the cost
management of civil construction projects. The purpose of this
dissertation is in 3-fold. Firstly, Earned Value Analysis software
is developed in Visual studio 2008, SQL Server 2005, .Net (C#
language). Next Comparison of selected parameters between M.S
Project 2007, Primavera P6 and developed software is done.
Therefore, it can be concluded that the software could be used in
a wide range of projects for Earned Value Analysis calculation.
Keywords: Project Management, Construction planning,
Earned Value Analysis, Project scheduling, Earned Value
Management, Cost Variance.

I. INTRODUCTION
Earned Value analysis is a method of performance
measurement. Earned Value is a program management
technique that uses work in progress to indicate what will
happen to work in the future. Earned Value is an
enhancement over traditional accounting progress measures.
Traditional methods focus on planned accomplishment
(expenditure) and actual costs. Earned Value goes one step
further and examines actual accomplishment. This gives
managers greater insight into potential risk areas. With
clearer picture, managers can create risk mitigation plans
based on actual cost, schedule and technical progress of the
work. It is an early warning program/project management
tool that enables managers to identify and control problems
before they become insurmountable.
It allows projects to be managed better on time, on
budget. Earned Value Management System is not a specific
system or tool set, but rather, a set of guidelines that guide a
companys management control system. In the case of cost
overrun, project management team may execute a value
engineering program for cost reduction either reducing
scope and quality in some sections of project or providing
additional budget to cover overrun cost. Similarly, for time
overrun case, the may plan some program such as fast
tracking or time crashing for time reduction. Therefore, the
role of EVM as well as correct and on time forecasting is
very important to achieve project goals. This research
includes implementation and improvement on EV to achieve
a forecasting EAC based on statistical and econometrics
techniques and traditional EV indexes as well. This paper
discusses effectiveness of developed software of Earned
Value Analysis with MS Project and Primavera P6.

II. EARNED VALUE ANALYSIS CONCEPT

Earned Value is a program management technique that uses
work in progress to indicate what will happen to work in
the future. EVA uses cost as the common measure of project
cost and schedule performance. It allows the measurement
of cost in currency, hours, worker-days, or any other similar
quantity that can be used as a common measurement of the
values associated with project work. EVA uses the
following project parameters to evaluate project
performance:

Planned Value

Earned Value

Actual Value
As noted, there are many ways to calculate the EV, PV
and AC of work packages that are in progress. Comparison
of those figures can serve to identify specific work packages
in which performance and progress is inadequate or
advanced, which will hopefully lead to remedial action by
the project manager and team. Cost and schedule
performance should be measured and analyzed as feasible
with regularity and intensity consistent with project
management need including the magnitude of performance
risk. Analysis should be progressive and should follow the
principle of management by exception. Variance thresholds
should be established in the planning phase and should be
used to guide the examination of performance [2].

Fig: 1.Standard Earned Value Analysis Graph.

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ISSN: 2277-3754
International Journal of Engineering and Innovative Technology (IJEIT)
Volume 1, Issue 4, April 2012
Name

Table 1.Parameter of Earned Value Analysis

Formula
Interpretation

Cost variance (CV)

EV AC

NEGATIVE is over budget, POSITIVE is

under budget.

Schedule Variance (SV)

EV PV

NEGATIVE is behind schedule, POSITIVE

is ahead of schedule.

Cost Performance Index (CPI)

EV / AC

Less than 1 poor performance Greater than 1

good performance.

Schedule Performance Index

(SPI)

EV / PV

Less than 1 poor performance Greater than 1

good performance.

Estimate At Completion(EAC)

BAC / CPI
AC + ETC

As of now how much do we expect the total

project to cost Rs_____.
Used if no variances from the BAC have
occurred.
Actual plus a new estimate for remaining
work. Used when original estimate was
fundamentally flawed.
Actual to date plus remaining budget. Used
when current variances are atypical.
Actual to date plus remaining budget
modified by performance. When current
variances are typical.

Estimate To Complete (ETC)

EAC AC

Variance At Completion (VAC)

BAC EAC

How much more will the project cost?

How much over budget will we be at the end
of the project?

Earned value project management is a well-known

management system that integrates cost, schedule and
technical performance. It allows the calculation of cost and
schedule variances and performance indices and forecasts of
project cost and schedule duration. The earned value method
provides early indications of project performance to
highlight the need for eventual corrective action [15].
III. DETAILS OF SOFTWARE
Taking lead from the literature review the present study
aims at evaluating Earned Value Analysis function of three
software namely Microsoft Project 07, Primavera 6 and
Develop Software. The following sections explain the
software in brief.
A. M.S. Project 07(MSP)
Microsoft Project (or MSP or WinProj) is a project
management software program which is designed to assist
project managers in developing plans, assigning resources to
tasks, tracking progress, managing budgets and analyzing
workloads. The application creates critical path schedules,
and critical chain and event chain methodology with thirdparty add-ons. Cost Variance and Schedule Variance are
visualized in a Report.

A. Earned Value analysis Using M.S. Project

B. Primavera 6
Primavera 6 manages and controls activities related to
project management as well as portfolio management.
Resources representing labour, materials and equipment are
used to track time and costs for the project. Slippages of
projects activities are updated resulting in the adjustment of
time related bars. It requires Data Base of Oracle My SQL.
C. Developed Software
The Earned value analysis software developed in Visual
studio 2008, SQL server and .NET (C#) language. And it
provides robust project scheduling and management
functionality. Features available are Planning, Scheduling,
Cost Management and Project review.
IV. CASE STUDY
The Case Study of Residential Project has been taken,
using the information of an actual project its cost and
scheduling.
The Built-up Area of residential building is 120 sq.m

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ISSN: 2277-3754
International Journal of Engineering and Innovative Technology (IJEIT)
Volume 1, Issue 4, April 2012

Fig 2 Scheduling activity, relationship SS, FS, FF, SF, Start Date, Finish Date

Fig 3.Resource sheet, Resource allocation for each activity

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ISSN: 2277-3754
International Journal of Engineering and Innovative Technology (IJEIT)
Volume 1, Issue 4, April 2012

Fig 4.Tracking schedule

B. Earned Value analysis in Prima Vera

Fig 5 Scheduling activity

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ISSN: 2277-3754
International Journal of Engineering and Innovative Technology (IJEIT)
Volume 1, Issue 4, April 2012

Fig 6 Resource allocation

Fig 7 Tracking schedule

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ISSN: 2277-3754
International Journal of Engineering and Innovative Technology (IJEIT)
Volume 1, Issue 4, April 2012

Fig 8 Earned Value Analysis

Fig 9 Graphical presentation of Earned Value Analysis

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ISSN: 2277-3754
International Journal of Engineering and Innovative Technology (IJEIT)
Volume 1, Issue 4, April 2012
C. EARNED VALUE ANALYSIS IN DEVELOPED SOFTWARE

Fig 10 Scheduling Activity, Relationship SS, FS, FF, SF, Start Date, Finish Date

Fig 11 Earned Value Analysis and SV(t)

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ISSN: 2277-3754
International Journal of Engineering and Innovative Technology (IJEIT)
Volume 1, Issue 4, April 2012

Fig 12 Graph generated by Developed software

P6, Developed software.[parameters- SV(t), CV ,CPI,

PV, EV, AC, PD, AD] .

V. RESULTS
In this study 8 parameters where consider for
effectiveness of Developed Software, for this purpose
comparison was done between M.S Project, Primavera

Table 1: Comparison Between M.S Project, Primavera P6, Developed Software.

Sr.no
1

TITLE

PARAMETER

MS PROJECT

PRIMAVERA P6

Case Study
Mahindra Tech

Planed Duration

159 days

159 days

DEVELOP
SOFTWARE
159 days

Actual Duration

166 days

166 days

166 days

PV

Rs.15,47,600

Rs.15,47,600

Rs.15,47,600

AC
EV
CV

Rs.16,24,400
Rs.15,47,600
0.93

Rs.16,24,400
Rs.15,47,600
0.93

Rs.16,24,400
Rs.15,47,600
0.93

CPI

Rs.76,800

Rs.76,800

Rs.76,800

SV(t)

8 days

[PV - Planned Value, AC - Actual Value, EV - Earned Value, CV - Cost Variance, CPI - Cost Performance Index, PD Planned Duration, AD - Actual Duration, SV(t) - Schedule Variance respect to time.]
contractors involved in the wide range of construction
industries.
VI. CONCLUSION
Although EVA(Earned Value Analysis) may be most
The two Projects were analysed using the developed
easily associated with the monitoring and evaluation of software (in C#, .Net & SQL server) and MS Project 2007
project cost that are undertaken within an organization, it and Primavera P6 based on Earned Value Analysis Method.
can also be readily applied, with some adjustment, to the CPI, PD, AD, CV, PV, AC, EV variable were selected. The
control of project cost that are performed by contractors and result shows a strong relation between each software. The
vendors. In those circumstances, however, it must be final result gives more than 99.5% accuracy. A new
recognized that the client and contractor will have differing parameter SV (t) (Schedule Variances respect to time) is
perspectives on actual and budgeted costs. This study also identified and incorporated in developed software which is
indicated that EVA has significant value and presents not in MS Project 2007 and Primavera 6. The final result
unique features that can benefit clients, consultants and gives almost 100% accuracy.

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ISSN: 2277-3754
International Journal of Engineering and Innovative Technology (IJEIT)
Volume 1, Issue 4, April 2012
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