Earned Value

Elements of Project Control

Creation of a Baseline Schedule Measurement of Performance
Effective Corrective Actions

Schedule Updating
1. Schedule durations and sequences often vary from actual durations and sequences
Subcontractors might use different methods Force Majeure events delay the project Etc

2.

Participants would like to know how the project is progressing

Owners When can I move in? How much should I pay this month? What milestones have been met? Designers When do I release drawings Subcontractors when do I come on to the site?

Usefulness of frequent schedule updating

Current state of the project is always known Updates provide a valuable record of project status at a given time
Can document changes, responsibilities and delays throughout the project Useful during claims proceedings

Schedule is a document that can be followed

More on updates
Schedules should be updated periodically
Especially if a major event such as a logic change occurs

Updates should show

New start and completion dates Completed activities Percentage progress on activities

Percentage Complete

Planned Vs. Actual

Updating a Precedence Diagram

0 3 3 3 0 9 9 6 8

A 3
0 0 3

B (4)6
7

D 2
1 9 9 9 0 9

0 Start 0 0

0 0

3 E 3 4 1

6 7

Finish
9

6
C 2

F (3)4

7 1 9

Earned Value
We have spent 60% of the time for an activity but have completed 40% of the work. We are on schedule since we have completed the most time consuming parts of the activity

Evaluating Progress on an Activity

Units completed
Length of pipe laid, length of trench dug

Effort expended
Plastering = 50%, Painting = 50% effort 3 walls plastered, two painted out of 4 walls Percentage complete = (3x0.5+2x0.5)/4 = 62.5%

Expert opinion Amount spent Time taken (?)

Project Monitoring

Project Monitoring
Planning and scheduling play an important role in project management But without monitoring the project, chances of completing the project on schedule is difficult Two parameters are monitored
Cost Time

The following graph shows the Time-cost relationship for a project

Project Monitoring
This graph shows Project Progress

Cost over-run with schedule

Time over-run

Cost

Ideal Curve

Time

Project Monitoring
Cost is not proportional to the time/man-hours spent on each activity
Eg:- Installation of a projector in a classroom
Cost of the projector is very high Man-hours spent on installation are not significant

Neither expenditure nor man-hours spent can be used to measure the project progress Expenditure and man-hours are inputs Progress in terms of input does not indicate progress in terms of output

Project Monitoring
Quantities installed can give information regarding project progress, but is limited to very few activities and cannot be applied to the entire project as it involves various activities Thus with the help of above mentioned parameters, it is difficult to measure the project progress. Hence the use of EARNED VALUE of time or cost

Concepts of Earned Value

Concept of Earned Value

Consider the following example:
Wall construction Wall is divided into 4 sections For 4-sections - 100 man-hours are required Hence if 2-sections are completed, (2/4) 100 = 50 man-hours We say that 50 man-hours have been EARNED

The actual man-hours spent to construct these two sections can be more than or less than the Earned Value of man-hours

Concept of Earned Value

Wall construction If 4 sections cost Rs. 1000/then the cost of constructing 2 sections = Rs. 500/We say that Rs. 500/- is the EARNED value of money The actual cost incurred in constructing these two sections can be more than or less than the Earned Value of money It is important to note that Earned Value is based on the Actual quantities installed or Actual quantity of work done Hence output is considered in the Earned Value concept

Concept of Earned Value

Calculation of Earned Value
Earned Value of man-hours or money for an activity can be calculated as follows:

Example 1

Example 1
Determination of planned % complete: Consider the following example
300
Activity A 5000 5000 (money) 500 Activity B 10000 70000 (money) 800 (man-hours)

700 (man-hours)

Draw % complete with respect to man-hours and money.

Example 1
Determination of planned % complete based on man-hours.
300 Activity A 5000 5000 (money) 500 Activity B 10000 7000 (money) 800 (man-hours) 700 (man-hours)

Daily Cumulative Total Cumulative

300 300 300 2300 = 0.13

1200 1500 1200 2300 = 0.65

800 2300 300 2300 = 1.0

% Complete

Example 1
Determination of planned % complete based on money.
300 700 (man-hours)

Activity A
5000 5000 (money) 500 Activity B 10000 27000 (money) 800 (man-hours)

Daily Cumulative Total Cumulative

5000 5000 5000 27000 = 0.185

15000 20000 20000 27000 = 0.741

7000 27000 90000 27000 = 1.0

% Complete

Example 1

Percentage

Stages

Example 1

BCWS Man-hours

Stages

Total

Activity A
Activity B Stage Total Cumulative Total Project % Complete

300
0 300 300 0.13

700
500 1200 1500 0.65

0
800 800 2300 1.0

1000
1300 2300

Example 1

BCWS Money

Stages

Total

Activity A
Activity B Stage Total Cumulative Total Project % Complete

5000
0 5000 5000 0.185

5000
10000 15000 20000 0.741

0
7000 7000 27000 1.0

10000
17000 27000

Example 1
Determination of Earned Value of Man-hour.
Consider the previous problem (man-hours)

Activity A

300

700

Activity B

500

800

scheduled

% Complete Activity A Activity B 0.25 0.95 0.6 1.0 0.95

Example 1
Determination of Earned Value of Man-hour.
Stage 1: EMh (A)

EMh (B)

% complete of project: Total Man-hours = 2300

% complete = 250 / 2300 % complete = 0.11

Example 1
Determination of Earned Value of Man-hour.
Stage 2: EMh (A)

EMh (B)

% complete of project: Total Man-hours = 2300

% complete = 1730 / 2300 % complete = 0.752

Example 1
Determination of Earned Value of Man-hour.
Stage 3: EMh (A)

EMh (B)

% complete of project: Total Man-hours = 2300

% complete = 2235 / 2300 % complete = 0.97

Example 1
Determination of Earned Value of Man-hour:

250

700

50

Man-hours

Activity A

300

700

Earned Value
780 455

Man-hours

(man-hours)
scheduled

Activity B

500

800

% Complete Activity A Activity B Project - % Complete 0.108 0.25 0.95 0.6 0.752 1.0 0.95 0.971

Example 1
Determination of Earned Value of Man-hour.
BCWP

Stages % complete Activity A Activity B Earned Value (man-hours) Activity A Activity B Stage total Activity A (cum) Activity B (cum) Total cumulative Project % complete

0.25 0

0.95 0.6

1.0 0.95

250 0 250 250 0 250 0.109

700 780 1480 950 780 1730 0.752

50 455 505 1000 1235 2235 0.972

Example 1
Determination of Earned Value of Man-hour: ACTUAL MAN-HOURS
400 500 100

Man-hours

Activity A

300

700

Actual
450 1000

Man-hours

(man-hours)
scheduled

Activity B

500

800

Example 1
Determination of Earned Value of Man-hour:
ACWP

Stages Activity A Activity B

1 400 0

2 500 450

3 100 1000

Stage Total
Cumulative Total

400 400

950 1350

1100 2450

Example 1
Determination of Earned Value of Man-hour:
Stage 1 Stage 2 Stage 3

BCWS BCWP ACWP SV CV SPI CPI

SCHEDULED MAN-HOUR EARNED MAN-HOUR ACTUAL MAN-HOUR BCWP-BCWS BCWP-ACWP BCWP/BCWS BCWP/ACWP

(Cumulative) (Cumulative) (Cumulative)

300 250 400 -50 -150 0.83 0.63

1500 1730 1350 230 380 1.15 1.28

2300 2235 2450 -65 -215 0.97 0.9122

Example 1
Determination of Earned Value of Man-hour: Earned Value

Man-hour

Stages

Example 1
Determination of Earned Value of Money
Consider the previous problem (money)

Activity A

5000

5000

Activity B

10000

7000

scheduled

% Complete Activity A Activity B 0.25 0.95 0.6 1.0 0.95

Example 1
Determination of Earned Value of Money.
Stage 1: EMh (A)

EMh (B)

% complete of project: Total Man-hours = 27000

% complete = 2500 / 27000 % complete = 0.093

Example 1
Determination of Earned Value of Money.
Stage 2: EMh (A)

EMh (B)

% complete of project: Total Man-hours = 27000

% complete = 19700 / 27000 % complete = 0.730

Example 1
Determination of Earned Value of Money.
Stage 3: EMh (A)

EMh (B)

% complete of project: Total Man-hours = 27000

% complete = 26150 / 27000 % complete = 0.969

Example 1
Determination of Earned Value of Money.

2500

7000

500

Money

Activity A

5000

5000

Earned Value
10200 5950

Money

(money)
scheduled

Activity B

10000

7000

% Complete Activity A Activity B Project - % Complete 0.093 0.25 0.95 0.6 0.730 1.0 0.95 0.969

Example 1
Determination of Earned Value of Money.
BCWP

Stages % complete Activity A Activity B Earned Value (money) Activity A Activity B Stage total Activity A (cum) Activity B (cum) Total cumulative Project % complete

0.25 0

0.95 0.6

1.0 0.95

2500 0 2500 2500 0 2500 0.093

7000 10200 17200 9500 10200 19700 0.730

500 5950 6450 10000 16150 26150 0.969

Example 1
Determination of Earned Value of Money. ACTUAL MONEY
4500 6000 5000

Money

Activity A

5000

5000

Actual
8500 7500

Money

(money)
scheduled

Activity B

10000

7000

Example 1
Determination of Earned Value of Money.
ACWP

Stages Activity A Activity B

1 4500 0

2 6000 8500

3 5000 7500

Stage Total
Cumulative Total

4500 4500

14500 19000

12500 31500

Example 1
Determination of Earned Value of Money.
Stage 1 Stage 2 Stage 3

BCWS BCWP ACWP SV CV SPI CPI

SCHEDULED MONEY EARNED MONEY ACTUAL MONEY BCWP-BCWS BCWP-ACWP BCWP/BCWS BCWP/ACWP

(Cumulative) (Cumulative) (Cumulative)

5000 2500 4500 -2500 -2500 0.5 0.56

20000 19700 19000 -300 700 0.99 1.04

27000 26150 31500 -850 -5350 0.97 0.83

Example 1
Determination of Earned Value of Money. Earned Value

Money

Stages

Example 2

Example 2
Determination of planned % complete:
Sch. Qty. Sch. Mhrs MAN-HOURS 20 20 20 12.5 20 12.5 20 12.5 12.5 10 10

Flooring
Electrical AV systems

400
100 20

100
50 20

Sch. Money 40000 40000 150000 8000 8000 8000 10000

MONEY
8000 10000 8000 10000 10000 75000 75000

Draw % complete with respect to Man-hours and Money.

Example 2
Determination of planned % complete based on Man-hours:
Sch. Mhrs. Flooring Electrical AV systems 100 50 20 170 20 20 20 170 0.118 20 40 40 170 0.235 32.5 72.5 72.5 170 0.426 32.5 105 105 170 0.618 32.5 137.5 137.5 170 0.809 32.5 150 150 170 0.882 20 20 20 12.5 20 12.5 20 12.5 12.5

10
10 160 160 170 0.941

10
10 170 170 170 1.0

Total Mhrs. Cuml. Mhrs.

% complete

Stage 1

Stage 2

Stage 3

Stage 4

Example 2
Determination of planned % complete based on money:
Sch. Money Flooring Electrical AV systems 40000 40000 150000 230000 8000
8000 8000 230000

8000

8000

8000 10000

8000 10000

8000 10000 10000 75000 75000 75000

230000 230000 230000

8000
16000 16000 230000

18000
34000 34000 230000

18000
52000 52000 230000

18000
70000 70000 230000

10000
80000 80000 230000

75000
155000 155000 230000

Total Money Cuml. Money

0.034

0.069

0.147

0.226

0.304

0.347

0.673

1.0

% complete

Stage 1

Stage 2

Stage 3

Stage 4

Example 2
Scheduled-percentage complete

Percentage

Days

Example 2
Determination of Earned Value of Man-hour UPDATE 1
Sch. Mhrs Flooring Electrical AV Systems 100 50 20 170 12.5 Earned Mhrs. Cuml. Earned Mhrs. 12.5 17.5 0 0 0 0 0 0 Inst. Qty. 120 50 70 Quantity Installed

30
0.176

30
0.176

30
0.176

30
0.176

30
0.176

30
0.176

30
0.176

% complete

0.074

Actual Man-hours

20

20

Total Mhrs. Cuml. Mhrs.

20 20

20 40

0 40

0 40

0 40

0 40

0 40

0 40

Example 2
Update 1

Man-hours

Stages

Example 2
Determination of Earned Value of Man-hour UPDATE 2
Sch. Qty. Flooring Electrical AV Systems 400 100 20 Sch. Mhrs 100 50 20 170 Inst. Qty. 280 55 50 70 80 25 Quantity Installed 80 30

Earned Mhrs.
Cuml. Earned Mhrs. % complete

12.5
12.5 0.074

17.5
30 0.176

32.5
62.5 0.368

35
97.5 0.574

0
97.5 0.574

0
97.5 0.574

0
97.5 0.574

0
97.5 0.574

Actual Man-hours 20 20 30 15 30 15

Total Mhrs. Cuml. Mhrs.

20 20

20 40

45 85

45 130

0 130

0 130

0 130

0 130

Example 2
Update 2

Man-hours

Days

Example 2
Determination of Earned Value of Man-hour UPDATE 3
Sch. Qty. Flooring Electrical AV Systems 400 100 20 Sch. Mhrs 100 50 20 170 Inst. Qty. 400 100 0 50 70 80 25 Quantity Installed 80 30 90 35 30 10

Earned Mhrs.
Cuml. Earned Mhrs. % complete

12.5
12.5 0.074

17.5
30 0.176

32.5
62.5 0.368

35
97.5 0.574

0
137.5 0.809

0
150 0.882

0
150 0.882

0
150 0.882

Actual Man-hours 20 20 30 15 30 15 30 15 15 15

Total Mhrs. Cuml. Mhrs.

20 20

20 40

45 85

45 130

45 175

30 205

0 205

0 205

Example 2
Update 3

Man-hours

Days

Components of Earned Value

Components of Earned value Analysis

Budgeted Cost of Work Scheduled (BCWS)
It is the budgeted cost of work scheduled to be performed It is also called the Planned Value (PV) It tells how much work have been completed

Components of Earned value Analysis

Budgeted Cost of Work Performed (BCWP)
It is the budgeted cost of work actually performed The Earned Value for the work actually completed It tells how much work is actually completed

Components of Earned value Analysis

Actual Cost of Work Performed (ACWP)
It is the amount actually spent on the work completed This could be more or less than the Earned Value

Components of Earned value Analysis

Scheduled Variance (SC)

It compares work completed vs work planned It helps to identify whether the project is ahead or behind schedule Negative value indicated that the project is behind schedule

Components of Earned value Analysis

Scheduled Performance Index (SPI)

It helps to identify whether the project is ahead or behind schedule Less than 1 indicates that the project is behind schedule It can be used to forecast how long it will take for the project to complete

Components of Earned value Analysis

Cost Varience (CV)

It compares what was planned to be spent on the work completed vs. what was actually spent It helps to identify whether the project is ahead or behind schedule Negative value indicates that the project is over budget

Components of Earned value Analysis

Cost Performance Index (CPI)

It helps to identify weather the project is above or below budget Less than 1 means the project is over budget It can be utilised to forecast how much amount will be required to complete the project

Components of Earned value Analysis

Budget at Completion (BAC)
It is the amount that was originally budgeted to complete the project

Components of Earned value Analysis

Estimate at Completion (EAC)
It is the estimated amount required to complete the project

Components of Earned value Analysis

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