Earned Value Management
What’s the Meaning of Earned Value Management?
The definition of the earned value management is a project management technique for measuring project performance and progress in the project to achieve an objective manner. The EVM is a systematic project management process use to find the variances based on the comparison of work performance and work planned whether behind or ahead. The Cost and Schedule control can forecast the project performing. Each data is based on the time or date or scheduled progress.
The advantages of EVM are:
- Preventing scope creep
- Improving communication and visibility with stakeholders
- Reducing risk
- Profitability analysis
- Project forecasting
- Better accountability
- Performance tracking
Data EVM:
- Budget at Completion (BAC)
- Total Cost of Project
- Budgeted Cost for Work Scheduled (BCWS)
- Planned Value (PV)
- Budgeted Cost for Work Performed (BCWP)
- Earned Value (EV)
- Actual Cost of Work Performed (ACWP)
- Actual Cost (AC)
Cost Forecasting as follows:
- Estimate at Completion (EAC)
- Estimate to Complete (ETC)
Variance as follows:
- Cost Variances (CV)
- Schedule Variances (SV)
- Variance at Completion (VAC)
Performance as follows:
Cost Performance Index(CPI)
Schedule Performance Index(SPI)
Formula:
|
CV = BCWP – ACWP
|
SV = BCWP – BCWS
|
|
CPI = BCWP / ACWP
|
SPI = BCWP/BCWS
|
|
EAC = ACWP +ETC
|
ETC = (BAC – BCWP) / CPI
|
|
BAC = Original Project Estimate
|
|
Example for EXM:
The total estimated duration of the mass excavation activities in an office building project is 40 days. After 15 days the project manager receives the following information:
|
Type of excavation
|
Total Quantity (CY)
|
Unit Price
|
Total Budget
(RM)
|
Actual
(RM)
|
Actual Cost
(RM)
|
|
Common
|
39,000
|
4.52
|
176,500
|
13,200
|
59,700
|
|
Earth
|
20,000
|
2.50
|
50,000
|
7,800
|
17,950
|
|
Clay
|
10,000
|
5.50
|
44,000
|
1,200
|
5,850
|
|
Rock
|
12,000
|
7.50
|
82,500
|
4,200
|
35,900
|
Solution:
= Work done (day)/ Completion day = 15days/40days = 0.375
BCWS (RM) = 0.375 x 176,500 = RM 66,187.50
BCWP (RM) = Actual x Unit price = 7,800 x 2.50 = RM19,500
|
Activity
|
Common
|
Earth
|
Clay
|
Rock
|
Total
|
Status
|
|
Total Budget
|
176,500
|
50,000
|
44,000
|
82,500
|
353,000
|
|
|
% Complete
|
33.85
|
39.00
|
12.00
|
35.00
|
|
|
|
BCWS (RM)
|
66,187.50
|
18,750
|
16,500
|
30,938
|
132,376
|
|
|
BCWP(RM)
|
59,664
|
19,500
|
6,600
|
31,500
|
117,264
|
|
|
ACWP (RM)
|
59,700
|
17,950
|
5,850
|
35,900
|
119,400
|
|
|
SV
|
-6,523.50
|
750.00
|
-9,900
|
562.00
|
-15,111.50
|
Behind
|
|
CV
|
38
|
1,550
|
750.00
|
-4,400
|
-2,062
|
Under budget
|
|
SPI
|
0.90
|
1.04
|
0.400
|
1.02
|
0.84
|
|
|
CPI
|
1.11
|
1.086
|
1.13
|
0.88
|
1.024
|
|
So,
BAC = RM 353,000
ECT = (RM353,000 – RM117,264)/1.024 = RM230,211
EAC = ACWP – ETC = 119,400 – 230,211 = -RM110,811
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