Tim Kress & Associates Project Management Earned Value Management Study Guide The Principal Concepts:
1. EVM (Earned Value Management): A method for integrating scope, schedule and resources, and for measuring project performance. It compares the amount of work that was planned with what was actually earned with what was actually spent to determine if cost and schedule performance are as planned. 2. Earned Value Analysis: Most commonly used method of performance measurement. Integrates scope, cost and schedule measures to assess project performance. 3. EV (Earned Value): (Formerly BCWP). Value of work actually completed 4. PV (Planned Value): (Formerly BCWS). Portion of approved cost estimate planned to be spent on activity during given period. 5. AC (Actual Cost): (Formerly ACWP). Total costs incurred in accomplishing work during given period. 6. BAC (Budget at Completion): The sum of all budgets allocated to a project. 7. EAC (Estimate at Completion): A value expressed as either dollars or hours to represent the projected final costs of work when completed. The EAC equals the actual costs incurred, plus the estimated cost of completing the remaining work. 8. CPI (Cost Performance Index): The cost-efficiency factor representing the relationship between the actual costs expended and the value of the physical work performed. 9. CV (Cost Variance): Any difference between the budgeted cost of an activity and the actual cost of that activity. 10. ETC (Estimate to Complete): The expected additional cost needed to complete an activity or project. 11. SV (Schedule Variance): Any difference between the scheduled completion of an activity and the actual completion of the activity. 12. SPI (Schedule Performance Index): The schedule efficiency ratio of earned value accomplished against the planned value. The SPI describes what portion of the planned schedule was actually accomplished. 13. TCPI (To Complete Performance Index): The project performance that must be achieved on all remaining work in order to meet some financial goal set by management. 14. CAPS (Control Account Plans): The management control unit in which earned value performance measurement takes place. Formerly called Cost Account Plan. All EVM Control Account Plans (CAPs) must continuously measure project performance by relating three independent variables: i. The Planned Value, the physical work scheduled to be performed ii. The Earned Value iii. Actual Costs occurred to accomplish earned value
1
The Formulas:
1. CV (Cost Variance): CV=EV-AC 2. EAC (Estimate at Completion): a. EAC = AC + ETC b. EAC = AC + BAC – EV 3. CPI (Cost Performance Index): CPI=EV/AC 4. SV (Schedule Variance): SV=EV-PV 5. SPI (Schedule Performance Index): SPI=EV/PV 6. TCPI (To Complete Performance Index): TCPI = Remaining Work (BAC – EV) Funds Remaining (BAC or EAC – AC)
Sample of Earned Value Management Data Earned Value Management Report for Sample Project - Work Period X Planned Actual Earned Schedule Cost Value Cost Value Variance Variance (PV) (AC) (EV) (SV) (CV) 300 300 300 0 0 200 250 200 0 -50 500 400 350 -150 -50 100 200 100 0 -100 300 325 400 100 75 250 200 250 0 50 1650 1675 1600 -50 -75 Sources: 1. The Project Management Body of Knowledge (PMBOK) Project Management Institute 2000 2. Earned Value Project Management Project Management Institute. Fleming & Koppelman, 2000 Copyright Tim Kress, PMP 2003
Tim Kress & Associates Project Management helps professionals improve their standing by giving them the tools they need to provide financial and process improvement contributions to their organizations. This is done through interactive project management training that not only emphasizes theory and methodology but also teaches students how to sell and execute. The site features free articles and tools focusing on integrating projects with business strategy and addressing corporate success strategies in today's competitive environment. www.timkress.net
Task 1 Task 2 Task 3 Task 5 Task 5 Task 6 Totals
2