EVM Analysis & Project Forecasting

Prepared By Engr. : PMI Member PMP PMI-RMP

June.2016 Sep.2016 Dec.2017

WALEED ELBASYOUNI
Planning & Project Control Engineer
PMP®, PMI-RMP®, TOT®, MSc (Cand.)
Session Agenda:-

• Introduction
• Overview of Key Performance Indicators ( KPI )
• What Is The Earned Value Management ?
• Why Project Managers Use EVM ?
• Earned Value Management Terms and Formulas
• Planned value (PV)
• Earned value (EV)
• Actual cost (AC)
• Variance
• Schedule Variance ( SV ) • Project Forecasting
• Cost Variance ( CV ) • Budget at Completion (BAC)
• Performance Index • Estimate at Completion (EAC)
• Schedule Performance Index (SPI) • Estimate to Complete (ETC).
• Cost Performance Index (CPI) • Variance at Completion (VAC)
• Example ( Case Study ) • To Complete Performance Index (TCPI)
1.1 Introduction
 1.1 Introduction

Overview of Key Performance Indicators ( KPI )

• Key Performance Indicators ( KPI ) are a Set Of Quantifiable

Measures That a Company Uses To Gauge Its Performance
Over Time.

• These Metrics Are Used To Determine a Company's Progress In Achieving Its Strategic and Operational Goals,
And Also To Compare A Company's Performance Against Other Businesses Within Its Industry.
1.1 Introduction

What Is The Earned Value Management ?

• Earned Value Management Is a Project Management Technique For Measuring Project Performance And
Progress.
• Earned Value Is An Approach Where You Monitor The Project Plan,
Actual Work, And Work-completed Value To See If a Project Is On
Track.
• Earned Value Shows How Much Of The Budget And Time Should
Have Been Spent, With Regard To The Amount Of Work Done So
Far.

Why Project Managers Use EVM ?

• Project Managers Use EVM To Assess The Schedule and Cost Performance Of a Project To Know Exactly
Whether The Project Is:

(Ahead Of / On / Behind Schedule) - ( Under / On / Over Budget )

1.2 Earned Value Management
Terms and Formulas
1.2 Earned Value Management Terms and Formulas

 Any Project Manager Use Earned Value Management To Assess The Schedule and Cost
Performance Of a Project He Should Based On Three Terms.

PV PV Planned value

EV Earned value
EVM
AC EV AC Actual Cost
1.2 Earned Value Management Terms and Formulas

PV Planned value
Budgeted Cost For Work Scheduled (BCWS)

• The Approved Budget For The Work Scheduled To

Be Completed By a Specified Date.

• Also Referred To As The Budgeted Cost Of Work

Scheduled (BCWS).
1.2 Earned Value Management Terms and Formulas

EV Earned value
Budgeted Cost For Work Performed (BCWP)

• The Approved Budget For The Work Actually

Completed By The Specified Date.

• Also Referred To As The Budgeted Cost Of

Work Performed (BCWP).

1.2 Earned Value Management Terms and Formulas

AC Actual Cost
Actual cost for work performed (ACWP)

• The Costs Actually Incurred For The Work

Completed By The Specified Date.

• Also Referred To As The Actual Cost Of Work

Performed (ACWP).
1.3 Project Variance & Performance
Index
1.3 Project Variance & Performance Index

Project Variance
According To Earned Value Management Three Terms We Can Define The Project
Variance :-
• Planned Value (PV)
• Earned Value (EV)
• Actual Cost (AC) EV – AC

Schedule
Variance
Project
Variance Cost
SV CV
Variance

EV – PV
1.3 Project Variance & Performance Index

Planned Value (PV) - Earned value (EV) - Actual Cost (AC)

Schedule Variance (SV) = EV – PV

SV > 0
Ahead of Schedule

SV < 0
Behind Schedule SV = 0
On Schedule
1.3 Project Variance & Performance Index

Planned Value (PV) - Earned value (EV) - Actual Cost (AC)

Cost Variance (CV) = EV – AC

CV > 0
Under Budget

CV < 0
Over Budget CV = 0
On Budget
1.3 Project Variance & Performance Index

Performance Index
According To Earned Value Management Three Terms We Can Define The Project
Performance Index :-
• Planned Value (PV)
• Earned Value (EV)
• Actual Cost (AC) EV / AC
Schedule
Performance

SPI CPI
Project Index
Performance
Index Cost
Performance
Index

EV / PV
1.3 Project Variance & Performance Index

Planned Value (PV) - Earned value (EV) - Actual Cost (AC)

Schedule Performance Index (SPI) =

EV / PV

SPI < 1
Behind Schedule

SPI > 1
SPI = 1
Ahead of Schedule
On Schedule
1.3 Project Variance & Performance Index

Planned Value (PV) - Earned value (EV) - Actual Cost (AC)

Cost Performance Index (CPI) =

EV / AC

CPI < 1
Over Budget

CPI > 1
CPI = 1
Under Budget
On Budget
1.3 Project Variance & Performance Index

Example ( Case Study )

• This Schedule Shows Some Information About Budgeted • PV = 500 x 100 = 50.000 S.R
And Actual Cost To (XYZ) Construction Project , • EV = 500 x 120 = 60.000 S.R
According To EVM Techniques Calculate The Following
• AC = 600 x 120 = 72.000 S.R
Terms Then Define The Project Status (Schedule &
Budget) ?
• SV = EV – PV = 60.000 – 50.000 = 10.000 S.R
Quantity Cost | Unit
• CV = EV – AC = 60.000 – 72.000 = -12.000 S.R
Budget 100 500 S.R • SPI = EV / PV = 60.000 / 50.000 = 1.2
Actual 120 600 S.R • CPI = EV / AC = 60.000 / 72.000 = 0.83
 Planned Value (PV)
 Earned value (EV)
 Actual Cost (AC) The Project (XYZ ) Status at this Time
 Schedule Variance (SV) • According SV & SPI The Project Ahead Of Schedule.
 Cost Variance (CV)
 Schedule Performance Index (SPI) • According CV & CPI The Project Over Budget.
 Cost Performance Index (CPI)
1.4 Project Forecasting
1.4 Project Forecasting

Project Forecasting
• Consists Of Taking The Project Status
Information And Extrapolating The Current
Project Performance To The End Of The
Project and How The Future Will Turn Out
Based On Evidence Or Assumptions.

• The Purpose Of Forecasting Is To Give

Managers Insight Into How Profitable

Projects Are Likely To Be In The Future.

1.4 Project Forecasting

Forecasting Terms :-
• Budget at Completion (BAC)

• Estimate at Completion (EAC)

• Estimate to Complete (ETC)

 Considering The Same Budgeted Rate

 Considering CPI

 Considering CPI and SPI

• Variance At Completion (VAC)

• To Complete Performance Index (TCPI)

1.4 Project Forecasting

• Budget At Completion (BAC)

Is The Total Budget Allocated To The Project
• Estimate At Completion (EAC)
Is The Expected Total Cost Of A Schedule Activity Component, EAC Is Equal To The Actual Cost Of Work Performed
(ACWP) + The Estimate To Complete (ETC) For All Of The Remaining Work.

• Estimate To Complete (ETC)

Is The Estimated Cost Required To Complete The Remainder Of
The Project There Are Various Methods To Calculate The (ETC):-
 Considering The Same Budgeted Rate
EAC = AC + (BAC – EV)
 Considering CPI
EAC = BAC / CPI
 Considering CPI and SPI
EAC = AC + [ (BAC – EV) / (CPI x SPI) ]
1.4 Project Forecasting

• Variance At Completion (VAC)

Is The Difference Between The Budget At Completion(BAC) And The Estimate
At Completion (EAC)
VAC = BAC – EAC
• To Complete Performance Index (TCPI)
It’s The Cost Performance That Must Be Achieved On The Remaining Work To Meet A Specified Goal Like
BAC Or EAC, It Represents The Ratio Between Remaining Works And Remaining Funds.
TCPI = (BAC- EV) / (BAC – AC) Or TCPI = (BAC-EV) / (EAC – AC)

From the Previous Example

• PV = 500 x 100 = 50.000 S.R TCPI =
TCPI = TCPI =
• EV = 500 x 120 = 60.000 S.R (BAC-EV)
500.000 - 60.000
--------------------- 440.000 TCPI =
• AC = 600 x 120 = 72.000 S.R ----------------------- --------------
(BAC – AC)
500.000 – 72.000 1.028
428.000
• Assumed BAC = 500.000 S.R