| Earned Value analysis helps evaluate and control | | | | of the work completed -- Actual costs recorded by |
| project risk by measuring project progress in | | | | the project finance controller |
| monetary terms. | | | | The BCWP curve is calculated from: -- The measured |
| If you can't measure it, you can't control it. | | | | work completed -- The budgeted costs for that |
| Earned Value Management Systems are used to | | | | work. |
| measure the real progress of projects and takes into | | | | Earned Value Calculations |
| account: -- The work complete -- The time taken to | | | | Variances |
| complete that work -- The costs incurred to | | | | Schedule and cost variances can be calculated in |
| complete that work and compares these factors to: | | | | monetary terms from the S-curves. |
| -- The original budget -- The original schedule. | | | | Schedule variance is the difference between the |
| By taking a snap-shot of the project and looking at | | | | Earned Value and the Planned Budget. SV = BCWP - |
| the historical performance by calculating the Earned | | | | BCWS |
| Value metrics we can compare the plan with the | | | | Cost Variance is the difference between the Earned |
| actual and make a subjective assessment of the | | | | Value and the actual costs of the works. CV = |
| project progress. | | | | BCWP - ACWP |
| Furthermore, by extrapolating the curves of the | | | | Performance Indices |
| graphs we can estimate the cost at completion and | | | | Schedule Performance Index and Cost Performance |
| the probable completion date. | | | | Index give indications of the health of the project. |
| The simple S-curve graph shows how project cost | | | | Schedule Performance Index is a ratio of Earned |
| will accrue over time. | | | | Value and the planned value of completed works. SPI |
| We can complicate the graph by showing: -- The | | | | = BCWP / BCWS |
| actual costs of doing the work -- How the value of | | | | A SPI Critical Ratio |
| the product of the project increases. | | | | Measures the general health of the project and |
| The three curves on the graph represent: | | | | considers: -- planned progress versus actual progress |
| -- Budgeted Cost for Work Scheduled (BCWS) - the | | | | -- Budget costs versus actual costs |
| planned costs for all activities planned to be | | | | (Actual Progress/Scheduled Progress) X (Budgeted |
| completed -- Actual Cost of Work Performed | | | | Costs/Actual Costs) |
| (ACWP) - the actual costs for all the activities | | | | Critical ratio > 1 is good |
| actually completed -- Budgeted Cost of Work | | | | Using earned value techniques the project manager |
| Performed (BCWP) - the planned costs for all the | | | | can monitor both schedule and cost variances and |
| activities actually completed. This is the Earned Value | | | | identify trends using Cost Performance Index and |
| The BCWS curve is derived from: -- Work | | | | the Schedule Performance Index. The proactive |
| Breakdown Structure -- Project baseline budget -- | | | | project manager will monitor the earned value |
| Project baseline schedule | | | | metrics and take timely actions to reduce the |
| The ACWP curve is found by: -- Actual measurement | | | | unwanted variances and the wayward trends. |