Earned Value Management
EVM Calculation
What for?
used to monitor:
Time and budget
in comparison
to planning
For what?
Requirements:
-a clearly defined objective
-cost and time limitations
-a clearly perceived route to the goal
-tasks of a creative nature
-work taking place over an extended period
-a high labour content
-a formalized management structure
Basics
-planned output at standard cost rate
-actual output at standard cost rate
-actual costs
→ process efficiency
→ cost efficiency
Preparation
-define sub-processes and required resources
-schedule sub-processes
-identify process milestones
Concomitant Analysis
-record actual costs
-summarize costs according to steps in your WBS
-compare planned cost and actual cost
-compare scheduled progress and reality
Variables
PTC =planned time cost
RTC
= real time cost
MC
= material cost (also includes unique investment)
PP(t) = percental progress
PC(t) = planned costs
= PTC x t + MC
AC(t) = actual costs
= RTC x t + MC
EV(t) = earned value
= AC x PP(t)
SV(t) = schedule variance
= EV(t) – PC(t)
SPI(t) = schedule performance index
= EV(t)/PC(t)
CV(t) = cost variance
= EV(t) – AC(t)
CPI(t) = cost performance index
= EV(t)/AC(t)

Planned Cost

PTC
Sum up needed work hours

MC

PC
Multiply with worker costs (wages,
insurance and so on)
Add material costs
At t=100% the project should be finished
and the costs equal PC
Actual Cost

ATC
Sum up actual worker costs until t

MC
Add material costs

AC
At any point t you can monitor the
project costs so far
Earned Value

PP
Determine the actual progress so far

EV
Look up the project budget (paymentprofit)
The product of payment and PP is the
actual progress in terms of money
In other words: EV indicates the
produced value so far
Obviously, EV will always reach 100%.
The question is when
Comparing Schedule

PC
The planned costs contain a set time limit

EV

SV

SPI
Is the progress higher than scheduled
(SV=EV(t)-PC(t)>0), then we are ahead
of schedule, and verse vice
The schedule performance index
indicates the same, but as a division
EV(t)/PC(t)=SPI(t) is the SPI higher than
1, we are more than good in time
Comparing Costs

AC
The actual costs imply our profit

EV

CV

CPI
The calculations work parallel to the
schedule EV(t)-AC(t)>0 means gain,
lower than 0 additional costs
The CPI works the same
EV(t)/AC(t)=CPI(t)
CPI>1 means gain CPI<1 means loss
Monitoring
How often should one enquire the progress?
As you see, there is some work to be done when
enquiring. Especially the estimation of the
progress is not so easy
Depending on the progress, different sources
commend different steps
Milestone Monitoring
We already identified milestones in the progress
These are good for monitoring, if they fulfil the
other conditions
For example if we have a S->S relation in our
WBS but a time gap and the second process
takes time over the end of the first one, the end
of the first is an appropriate milestone
Calendary Monitoring
Monitor due to dates.
For example at the beginning of every month
when the wages are paid, or every week, if you
work with weekly payment
Percental Monitoring
Monitor after xx% of the project
As long as you follow the project at least a little,
you can estimate when approximately 20%,
50% or 75% are done.
Monitoring Times
With all types of monitoring make sure to have a
useful relation between number of monitorings
and the gaps between them
This relation should be based on the risk analysis
of the project and your spare time for it. Neither
you should waste time nor risk to miss an
important development
Earned Value Management
Cost Value Reconciliation
Preparation
Cost estimation of the project
Project time
Dead costs like bureau and taxes
Estimate spare time until next project
Add some collateral
This needs some experience
Emending the preparation
Add collateral to your price
Add dead costs to your EVM graphs
Of course, in this way of monitoring the „bank
events“ are much more significant
Aftermath
Compare the planned development with the actual
one
Remember the spare time you want to be able to
cope with
Are your numbers still black? Then you did right.
Simple as can be.
Sources
Using earned value: a project manager's guide
By Alan Webb © 2003
ISBN 0 566 08533 X
Thank You For Your Attention
If you have questions,
please go ahead