EARNED VALUE

ANALYSIS
MODULE 12
Dr. Khalid Ahmad Khan, Ph.D.,
PE, PMP
2 PROJECT PERFORMANCE

Efficiency
Is spending proportional
to work completed ?

Project Progress Speed

Information

Is progress according
to plan ?
 Efficiency

• What is the value of work that

we have completed?
PERFORMANCE • How much have we spent on
doing the work?

Speed

• What is the value of work that

we have completed?
• What is the value of work that
we should have completed?
VALUE OF WORK

Physical work is measured can be measured in a variety of

terms – length, area, volume, mass, number of units, etc.

We can’t add physical work on its own because there are

so many different units.

But we can assign a budget value to each work – this way

we can easily determine the value of the work. This value is
called Earned Value.
5 DETERMINING PHYSICAL PROGRESS
Chairs Project Progress

Desks Project Progress

6 OVERALL PHYSICAL PROGRESS
Office Project Progress

Item Rate Qty Amount Item Rate Qty Amount

Chair 1,200 4 4,800 Chair 1,200 3 3,600
Desk 6,000 2 12,000 Desk 6,000 1 6,000
Total 16,800 Total 9,600
BASELINE PLAN
1. Define activities
2. Estimate Resources / Cost for each activity
3. Create project schedule
4. Determine Cash Histogram (Period values) and Cost Baseline
(Accumulated budget)
 BASELINE
Day 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Activity

A
30 30 30 30 30
B
20 20 20 20 20 20 20
C
40 40 40
D
40 40 40 40 40
E
40 40 40 40
F
30 30 30 30
G
30 30
H
20 20 20
I
10 10
9 BASELINE (PRIMAVERA)
10 METHODS FOR CALCULATING EV
METHOD How Earned Value is Calculated
% Progress X Budget value of activity
Percent Complete Activity is 30% complete and budget is 200.
EV= 30% X 200 = 60

50% EV at start, 50% EV at completion of activity

50/50 Activity is 30% complete and budget is 200.
EV= 50% X 200 = 100

Units completed/Total Units X Budget value

Units Completed 20 Units have been completed out of 50 and budget is 200.
EV=20/50 X 200 = 80
 Data required for EVA

QUESTION ANSWER ACRONYM

Project Budget Budget Cost BC

Budget Planned to Planned Value PV

to be utilized till date

Budget value of physical Earned Value EV

Work completed till date

Payments made for Actual Cost AC

work done till date

Latest Estimated cost Estimate at Completion EAC

of the Project
12 PROJECT PERFORMANCE
Rehabilitation
of Taunsa
Barrage

Water
Mobilization Handling & Sub-Weir Main Weir
Care

Repair of
Right Existing
Side Left Side
Barrage Floor

Flared out Wall

Zone 9
Silt Excluder
Earth Sub-Structure Miscellaneous
Floors Apron
Works Works Works

Layout & Sheet Stone PCC Fish Ladder

Leveling Piling Apron Blocks
DG Khan
Backfill u/s u/s Canal Head
Regulator
d/s d/s
Diversion
Channel

Efficiency
EV vs. AC ?

Project Progress
Speed
Information
PV, AC, EV

EV vs. PV?
13 THE PROJECT
It’s my
pleasure to hmm...7,500 sft
award you construction, 8
this contract months to do it
for a new BHU all....3.72 million
budget....This
is going to be tough!
14 PLANNED VALUE (PV)

…Earthworks in
April should cost
PV for April 316,667…
316,667
15 BUDGET AT COMPLETION (BAC)
BC= 3.72 million

..If I add up all the

individual PV I get
the BC…3.72
million..
…
 BC = 3.722 M
PV = 1.982 M
EV = 1.450 M

16 Status at Month 3 AC = 1.640 M

Activity Activity Or ig Budget Planned Earned Actual

Months
ID Descr iption Dur (BAC ) (BCW S) (BCW P) (ACW P) 1 2 3 4 5 6 7 8 9 10
Ru ral Health Cli n ic
Total 210 3,722,000.00 1,982,800.00 1,450,000.00 1,640,000.00

General
S ubtotal 210 0.00 0.00 0.00 0.00

1000 P rojec t S tart 0 0.00 0.00 0.00 0.00 Pr oject Star t

1110 P rojec t Complete 0 0.00 0.00 0.00 0.00 Pr oject Complete

Foundation
S ubtotal 54 850,000.00 850,000.00 850,000.00 950,000.00

1010 E arthworks 18 50,000.00 50,000.00 50,000.00 60,000.00 Earthworks

1020 Foundation upto P linth 24 800,000.00 800,000.00 800,000.00 890,000.00 Foundation upto Plinth

St ruct ure Work

S ubtotal 51 1,536,000.00 1,132,800.00 600,000.00 690,000.00

1030 S uper-struc ture 50 1,440,000.00 1,036,800.00 504,000.00 584,000.00 Super -structure

1040 B lock Mas onry 15 96,000.00 96,000.00 96,000.00 106,000.00 Block Masonr y

Finis hes
S ubtotal 105 1,336,000.00 0.00 0.00 0.00

1050 P laster 40 192,000.00 0.00 0.00 0.00 Plaster

1100

1090
P lumbing

E lectrical W orks
15

25
100,000.00

200,000.00
0.00

0.00
0.00

0.00
0.00

0.00
Plumbing

Electr ical Works

EAC
1070 Flooring 45 300,000.00 0.00 0.00 0.00 Floor ing

1060 P aint 40 144,000.00 0.00 0.00 0.00 Paint

1080 W ood W ork 20 400,000.00 0.00 0.00 0.00 Wood Wor k

x 1000 00 x 1000 00

10 40

9
AC PV 36

8 32

BAC
7 28

6 24

5 20

4 16

3 EV 12

2 8
Resource/Cost P r ofile Legend
Total of All Resour ces Detail scale (left): X 100000
1 4
Total ear ly cost per M onth (Cur r ent E stim ate) Cum ulative scale (right): X 100000
Curr ent estim ate cur ve
E arned value curve
1 2 3 4 5 6 7 8 9 10
P lanned value cur ve
Months

Sh eet 1 of 1
 EV ANALYSIS – SCHEDULE PERFORMANCE

Data Date
BC

Current
Target
COST

SV

SPI (Schedule Performance)

EV / PV [1.0=On schedule]
EV

TIME
18 SCHEDULE VARIANCE

PV
BUDGET

Value of work that was planned to be completed

BASED

EV Value of work that has been completed

BC = 3.722 M
PV = 1.982 M
EV = 1.450 M
AC = 1.640 M

SCHEDULE VARIANCE is the difference between work

scheduled and work performed (expressed in terms of
budget dollars)

formula: SV = EV - PV

example: SV = EV - PV = 1.450 – 1.982

SV= -0.532 (negative = behind schedule)
19 SCHEDULE PERFORMANCE INDEX

PV
BUDGET

Value of work that was planned to be completed

BASED

EV Value of work that has been completed

BC = 3.722 M
PV = 1.982 M
EV = 1.450 M
AC = 1.640 M

SCHEDULE Performance Index is the ratio between work

scheduled and work performed (expressed in terms of
budget)

formula: SPI = EV / PV

example: SPI = EV / PV = 1.45 / 1.982

SPI= 0.73 (only 27% of behind Schedule)
 EV ANALYSIS – COST PERFORMANCE

Data Date
CPI (Cost Performance) BAC
EV / AC [1.0=On budget]

Target
COST

CV

AC

EV

TIME
21
COST VARIANCE
EV of the work I actually performed,
PERFORMANCE

how much did I budget for it to cost?

AC BC = 3.722 M
BASED

of the work I actually performed, PV = 1.982 M

EV = 1.450 M
how much did it actually cost? AC = 1.640 M

COST VARIANCE is the difference between budgeted cost

and actual cost

formula: CV = EV - AC

example: CV = EV - AC = 1.45 – 1.64

CV= -0.19 (negative = cost overrun)
 COST PERFORMANCE INDEX
EV of the work I actually performed,
PERFORMANCE

BC = 3.722 M
how much did I budget for it to cost? PV = 1.982 M

AC of the work I actually performed, EV = 1.450 M

BASED

AC = 1.640 M
how much did it actually cost?

COST PERFORMANCE INDEX is the ratio between earned value

and actual cost

formula: CPI = EV / AC

example: CPI = EV / AC = 1.45 / 1.64

CPI= 0.88
(we are overshooting budget by 12%)
23 PERFORMANCE SUMMARY BC = 3.722 M
PV = 1.982 M
EV = 1.450 M
AC = 1.640 M

Utilization
% spent = AC = 1.64/3.72 = 44%
BC

Performance:

% spent vs. % complete

CPI 0.88 - SPI 0.73
example: 44% spent vs. 39% complete
 EV ANALYSIS VAC
BAC

Data Date
CPI (Cost Performance)
EV / AC [1.0=On budget]
Delay
Projected
Target
COST

ETC
SV
CV

AC SPI (Schedule Performance)

EV / PV [1.0=On schedule]
EV

TIME
 WHAT WILL BE THE FINAL COST?
Common EAC Formulae:

EAC = BC 3.72 = 4.23 M

CPI 0.88 BC = 3.722 M
PV = 1.982 M
… 0.51 M over
EV = 1.450 M
Budget… AC = 1.640 M

= BC .
.8(CPI) +.2(SPI)

= BC .
CPI * SPI (empirical formulae)
 VARIANCE AT COMPLETION (VAC)
BC what the total job is supposed
to cost

EAC what the total job is expected BC = 3.722 M

PV = 1.982 M
to cost EV = 1.450 M
AC = 1.640 M

VARIANCE AT COMPLETION is the difference between what

the total job is supposed to cost and what the total job is now
expected to cost.
FORMULA: VAC = BC - EAC

Example: VAC = 3.72 – 4.23

VAC = - 0.51 M (negative = overrun)
 TARGET COST PERFORMANCE INDEX
(BAC)
EV ofhowthemuch
work I actually performed,
PERFORMANCE

BC = 3.722 M
did I budget for it to cost? PV = 1.982 M

AC ofhowthemuch
work I actually performed, EV = 1.450 M
BASED

AC = 1.640 M
did it actually cost?

COST PERFORMANCE INDEX is the ratio between earned value

and actual cost

formula: TCPI(BAC) = (BAC – EV) / (BAC – AC)

example: TCPI(BAC) = (3.722-1.45) / (3.722-1.64)

TCPI(BAC) = 1.091
(we have to get 9% better performance then planned)
 TARGET COST PERFORMANCE INDEX
(EAC)
EV ofhowthemuch
work I actually performed,
PERFORMANCE

BC = 3.722 M
did I budget for it to cost? PV = 1.982 M

AC ofhowthemuch
work I actually performed, EV = 1.450 M
BASED

AC = 1.640 M
did it actually cost?

COST PERFORMANCE INDEX is the ratio between earned value

and actual cost

formula: TCPI(EAC) = (EAC – EV) / (EAC – AC)

example: TCPI(EAC) = (4.23-1.45) / (4.23-1.64)

TCPI(EAC) = 1.073
(we have to get 7% better performance then planned)
POP QUIZ 1

PV

AC
cv
$ sv

EV

TIME Now 8 months

schedule variance = EV - PV =
cost variance = EV - AC =
30 POP QUIZ 2

PV
EV

$
AC

TIME NOW

schedule variance = EV - PV =
cost variance = EV - AC =
31 EARNED VALUE REVIEW EXERCISE
32 PERFORMANCE INDICES
COST PERF INDEX (CPI) = EV
AC

1.2
“GOOD”

SCHED PERF INDEX (SPI) = EV

PV
1.1

TIME
1.0
CPI

.9
“BAD”

SPI
.8
33 EARNED VALUE PROBLEM INDICATORS

Zero variances

Monthly trends turning negative or downward

Schedule variances generally indicate cost will follow

Actuals > Latest Revised Estimates (LRE)

EV increases with no increase in AC

Negative data elements

34 SUMMARY

Before we start we need:

 Cost Loaded Schedule – this gives us PV
Physical progress is used to calculate Earned Value
EVA calculations help us calculate:
 Schedule Performance
 Cost Performance
 Q&A
Drkhalidkhan.org