The earned schedule

CONFERENCE PAPER Scheduling, Benefits Realization, Technical Skills, Earned

Value Management 18 July 2012
Anbari, Frank T.
How to cite this article:
Anbari, F. T. (2012). The earned schedule. Paper presented at PMI® Research and Education
Conference, Limerick, Munster, Ireland. Newtown Square, PA: Project Management Institute.

Abstract

The Earned Value Management (EVM) and the Critical Path Method (CPM) are widely accepted
methods and are often used simultaneously to evaluate project performance. The common
practice is to use EVM to evaluate the status of project cost and forecast the project's cost at
completion while using CPM to evaluate the status of project schedule and forecast the project's
completion time. However, EVM and CPM are based on different assumptions about the future
and using them simultaneously can lead to the wrong decisions about the project.
The Earned Schedule (ES) allows EVM metrics to be transformed to time or duration metrics to
enhance the evaluation of project schedule performance and to forecast the duration needed to
complete the project. ES extends the use of EVM data to the assessment of the project's schedule
status and the forecast of its completion time. These additional insights regarding the schedule
are gained without the need for additional data collection and related cost. ES and EVM use the
same underlying assumptions, leading to consistent forecasts about project outcomes. When
combined with schedule analysis using CPM, ES enhances the project manager's understanding
of project schedule status and forecasts and provides further support for making better, evidence-
based decisions about the project's schedule and other parameters.
EVM, ES, and CPM are powerful methods that give executives, project managers, and other
stakeholders the ability to visualize project cost and schedule status throughout the project life
cycle and consequently manage projects, programs, and portfolios more effectively.
Keywords: Earned Schedule (ES); Earned Value Management (EVM); Critical Path Method
(CPM); forecasting project outcomes; underlying assumptions.

Introduction

The Earned Value Management (EVM) method helps managers in making evidence-based
decisions about project scope, resources, and cost; as a result, it supports effective project cost
control and oversight. EVM gives the executive, program manager, project manager, and other
stakeholders the ability to visualize project cost status throughout the project life cycle and
consequently manage projects, programs, and portfolios more effectively. In its original form, EVM
was used to evaluate project performance and forecast the cost of the project at completion.
Usually, project control is established at the work package or cost account level. EVM data were
generally not used to estimate the time needed to complete an activity, work package, or project,
or to forecast their completion date. Project schedule network analysis techniques, such as the
Critical Path Method (CPM) method, has been used widely to evaluate project schedule
performance and forecasts of completion time. However, EVM and CPM are based on different
assumptions about the future and using them simultaneously can lead the project manager to
make the wrong decisions about the project. Extensions to EVM have been developed to use
EVM data for schedule performance assessment and forecasts. The Earned Schedule (ES)
concept allows EVM metrics to be transformed to time or duration metrics to enhance the
evaluation of project schedule performance and to forecast the duration needed to complete the
project. When combined with appropriate schedule analysis, this approach can enhance the
project manager's understanding of the time estimate at completion of the project, and provide
further insights for making better decisions about the project schedule and other related
parameters. This paper highlights the main elements of EVM; presents the ES concept; compares
ES with CPM; and integrates EVM, ES, and CPM.
The use of EVM in private industry and support by popular project management software
packages have been rapidly growing in recent years. Details of the method were provided
in Practice Standard for Earned Value Management—Second Edition (Project Management
Institute, 2011) and in other sources (Anbari, 2003; Association for Project Management, 2006;
Humphreys, 2002; Kerzner, 2009; Project Management Institute, 2008; Turner, 2009; Turner,
Huemann, Anbari, & Bredillet, 2010). There has been a high degree of acceptance among users
of EVM, who tend to agree that EVM can improve the cost, schedule, and technical performance
of their projects. Non-believers in EVM claim that the method is hard to use, that it applies primarily
to very large projects, and that they do not need it (Fleming & Koppelman, 2010; Kim, Wells, &
Duffey, 2003). Anbari, (2003), Kwak and Anbari (2010), Turner (2009), and Turner et al. (2010)
show how the method can be simplified and implemented effectively while retaining its essential
features. The interest in EVM and its use in differing types of projects are growing globally,
particularly in the public sector, with notable progress in Australia, Japan, Sweden, the United
Kingdom, and the United States.
ES is a valuable extension to EVM, requires no additional data collection, and provides valuable
insights into the project schedule and forecast of its outcome. The use of ES is still very limited in
practice.

Elements of Earned Value Management

EVM integrates three critical elements of project management: scope management, cost
management, and time management. It requires the periodic monitoring of actual expenditures
and the amount of work done (expressed in cost units). To determine cost performance, EVM
compares how much we have spent with what we planned to have spent to do the work we have
done. To determine time performance, it compares the amount of work done with the amount of
work scheduled to be done. To make these comparisons, EVM calculates cost and schedule
variances, along with performance indices for project performance management. Based on these
results, it forecasts the cost and date of the project at completion and highlights the possible need
for corrective action. EVM uses the following project parameters to evaluate project performance
(Exhibit 1):
Planned Value (PV): This is the cumulative planned cost for the work planned to be done on the
project up to a given point in time. It is the approved budget for completing the work planned so
far, and as such it is the cost baseline for the project. It was previously called the budgeted cost
of work scheduled (BCWS).
Exhibit 1: Components of earned value management.
(Adapted from Anbari, 2003; Kwak & Anbari, 2010; Turner et al., 2010)
Budget at Completion (BAC): This is the total amount of money expected to be spent on the
project, and as such, it is the value that PV is planned to reach at completion.
Actual cost (AC): This is the cumulative actual cost spent on the project so far, including all
accrued cost on the work done. AC was previously called the actual cost of work performed
(ACWP).
Earned value (EV): This represents the cumulative amount of work done up to a point in time,
expressed in cost units. It is expressed as the amount that was planned to have been spent on
the work that has been completed up to this point. EV was previously called the budgeted cost of
work performed (BCWP). To calculate the EV for a given element of work, the planned cost is
multiplied by the percentage complete. The EV for the project is the sum of the EV for all the work
elements.
BAC, PV, AC, and EV are expressed in cost units. These may be in units of actual money, in any
currency, or expressed in hours or days of work. PV, AC, and EV can be calculated for any
element of work to determine progress and status of that element of work.

Project Performance Measurement

Cost performance on the project is determined by comparing EV with AC. AC represents what
has actually been spent and accrued to do the work so far, and EV represents what was planned
to be spent to do the work so far. The difference shows whether the project is over-spent or under-
spent. Schedule performance is determined by comparing the EV with the PV. PV shows the
amount of work that was planned to have been done and EV represents the amount that has
been done. By comparing the two we can determine whether more or less work has been
performed than should have been done, and whether the project is ahead or behind schedule.
We do these comparisons by calculating the variances and the performance indices.

Variances

The following formulas are used to calculate the variances:

 The cost variance (CV) is a measure of cost performance:

• CV = EV − AC
The schedule variance (SV) is a measure schedule performance:

• SV = EV − PV

Variance Percentages

The following formulas are used to calculate the variance percentages:

Cost variance percent (CV%):

• CV% = CV ÷ EV
Schedule variance percent (SV%):

• SV% = SV ÷ PV
In the above formulas, 0 indicates that performance is on target. A positive value indicates good
performance; a negative value indicates poor performance.

Performance Indices

The following formulas are used to calculate the performance indices:

Cost performance index (CPI) is another measure of cost performance:

• CPI = EV ÷ AC
The schedule performance index (SPI) is another measure of schedule performance:

• SPI = EV ÷ PV
In the above formulas, 1 indicates that performance is on target; more than 1indicates good
performance; and less than 1 indicates poor performance.

Forecasting of Project Outcome

Project management is primarily concerned with decisions affecting the future. Therefore,
forecasting is an extremely important aspect of project management. EVM is particularly useful in
forecasting the cost and time of the project at completion, based on actual performance to date
using the following calculations.

Forecasting of Cost at Completion

 The forecast of the cost of the project at completion is usually called the estimate at completion
(EAC) or the cost estimate at completion (CEAC). The forecast of the cost remaining is usually
called the estimate to complete (ETC).
Several assumptions can be made about project cost performance in the future (Anbari, 2003).
Two major assumptions are:

• The remaining work will be performed according to the original plan, therefore (Turner, 2009):
o ETC = BAC − EV
o EAC = AC + BAC − EV = BAC + CV
• The remaining work will be performed while continuing to over-spend or under-spend at the same
rate (Anbari, 2003; Project Management Institute, 2011; Turner, 2009):
o ETC = (BAC − EV) ÷ CPI
o EAC = AC + (BAC − EV) ÷ CPI = BAC ÷ CPI

Cost Variance at Completion

The cost Variance at Completion (VAC) provides an indication of the estimated cost under-run or
over-run at the completion of the project:

• VAC = BAC − EAC

In this equation, 0 indicates that the project is forecasted to be completed on budget. A positive
value indicates a forecasted under-run; a negative value indicates a forecasted over-run.

Earned Schedule

In its basic form, EVM has not been used to estimate the time to completion or to forecast the end
date. However, extensions to EVM have been developed to use EVM data for that purpose
(Anbari, 2003; Lipke, 2009; Lipke, Zwikael, Henderson & Anbari, 2009; Turner et al., 2010).
The terminology in this area is not as fully agreed on as in EVM, so the following terminology will
be used:
Schedule at Completion (SAC): This is the original planned completion duration (date) of the
project.
Earned Schedule (ES): This duration from the beginning of the project to the date on which the
PV should have been equal to the current value of EV. On the EVM chart (Exhibit 2), it is the date
on which the horizontal line through the current value of EV intersects the PV curve.
Actual Time (AT): This is the duration from the beginning of the project to status date.
The average PV per time period can be calculated by dividing the BAC by SAC, and can be called
the PV Rate or the Planned Accomplishment Rate (PAR):

• PAR = BAC ÷ SAC

 SV can be transformed to time units by dividing SV by PAR. The result is a measure of schedule
performance in time units rather than cost units and can be called the Time Variance (TV):

• TV = SV ÷ PAR
ES can be calculated by dividing EV by PAR:

• ES = EV ÷ PAR
Alternately, TV can be calculated by subtracting AT from ES:

• TV = ES − AT
If TV value is negative, the project is behind schedule and if it is positive, it is ahead of schedule.
This is sometimes called the schedule variance (time), SV(t), but this name can lead to possible
confusion with the schedule variance.

Exhibit 2: Components of the earned schedule.

(Adapted from Anbari, 2003; Lipke, 2009; Lipke et al., 2009; Kwak & Anbari, 2010; Turner
et al., 2010)
The time variance percent (TV%) can be calculated as:

• TV% = TV ÷ AT
The result of the above formula is consistent with the result obtained by using the SV% formula
provided earlier. However, a more realistic measure of schedule performance may be obtained
by calculating TV% by dividing TV by ES.
The time performance index (TPI) can be defined as the ratio of ES to AT and calculated as:

• TPI = ES ÷ AT
This is sometimes called schedule performance index (time), SPI(t), but again there is a possible
risk of confusion with SPI. As with SPI, if TPI is greater than 1, then the project is ahead of
schedule and if it is less than 1, then the project is behind schedule.
 Forecasting of Completion Time

As an important extension to EVM, ES is particularly useful in forecasting the time at completion

of the project, based on actual performance to date, using the same EVM data and the following
calculations.

Forecasting of Time at Completion

The forecasting of time at completion can be called the time estimate at completion (TEAC). The
fact that the estimated cost at completion is generally called the estimate at completion (EAC)
and not the cost estimate at completion (CEAC), whereas the estimated time at completion has
to be called the time estimate at completion (TEAC), underlines EVM's primary focus on cost
control. The forecast of time to complete the remaining work can be called the time estimate to
complete (TETC).
Several assumptions can be made about project schedule performance in the future (Anbari,
2003). Two major assumptions are:

• The remaining work will be performed according to the original plan and there will be no further delay
to (or speeding of) the project, therefore (Anbari, 2003; Turner et al., 2010):
o TEAC = SAC + TV
• The remaining work will be performed while maintaining the same rate of doing work for the rest of
the project (Anbari, 2003; Lipke, 2009; Lipke et al., 2009; Turner et al., 2010):
o TEAC = SAC ÷ TPI
TEAC can also be calculated using the SPI, but the calculations are more complicated. They depend
on whether the project has reached the planned completion date and whether it is ahead or behind
schedule. If the date is earlier than SAC and the project has not yet finished:
o TEAC = SAC ÷ SPI
After the SAC is reached, SV tends toward 0 and concludes at 0 and SPI tends toward 1.0 and
concludes at 1when the project is completed. Hence, using SPI for schedule forecasting after the
SAC is reached would lead to erroneous results. Therefore, we define the Expected Accomplishment
Rate (EAR) as the expected average accomplishment rate per time period from the status date to
the completion of the project or the work package. Then:
o TEAC = AT + (BAC − EV) ÷ EAR
When past schedule performance is a good predictor of future schedule performance, EAR would
be equal to the average Actual Accomplishment Rate (AAR) per time period to date, which can be
obtained by dividing EV over AT:
o EAR = AAR = EV ÷ AT
Then:
o TEAC = AT + (BAC − EV) ÷ AAR
 Time Variance at Completion

The Time Variance at Completion (TVAC) gives an indication of the estimated amount of time
that the project will be completed ahead or behind schedule:

• TVAC = SAC − TEAC

In this equation, 0 indicates that the project is expected to be completed on schedule, a positive
value indicates that the project is expected to be completed ahead of schedule, and a negative
value indicates that the project is expected to be completed behind schedule.

Statistical Forecasting

EVM and ES have been integrated with statistical confidence limits to derive the range of probable
outcomes for the project final cost and duration. Results of this work demonstrate that the
proposed approach is sufficiently reliable for general application of the forecasting method for
both cost and duration, and that the ES approach can be applied effectively, regardless of the
type of work or the magnitude of cost and duration of the project (Lipke et al., 2009).

Example

The following example (adapted from Anbari, 2003 and Kwak & Anbari, 2010) illustrates the
concepts discussed in this paper. Consider a project that has a baseline Budget at Completion of
US$100 (followed by an appropriate number of 0's) and a baseline schedule of 40 weeks. The
baseline indicates that by the end of week 20, the project is planned to be 50% complete. At the
end of week 20, it is reported that 40% of the project work has been completed at a cost of US$60.
The main components of this example are shown in Exhibit 3.

Exhibit 3: Main components of the example project.

(Adapted from Anbari, 2003 and Kwak & Anbari, 2010)
Using the EVM method:
• BAC = US$100
• AT = 20 weeks
• AC = US$60

• PV = 50% × US$100 = US$50

• EV = 40% × US$100 = US$40
Verifying:

• % Complete = EV ÷ BAC = US$40 ÷ US$100 = 40%

• %Spent = AC ÷ BAC = US$60 ÷ US$100 = 60%
Cost and Schedule Variances:

• CV = EV − AC = US$40 − US$60 = -US$20

• SV = EV − PV = US$40 − US$50 = -US$10
Performance Indices:

• CPI = EV ÷ AC = US$40 ÷ US$60 = 0.67

• SPI = EV ÷ PV = US$40 ÷ US$50 = 0.80
Estimate at Completion and Variance at Completion:

• EAC = BAC ÷ CPI = US$100 ÷ 0.67 = US$150

• VAC = BAC − EAC = US$100 - US$150 = -US$50
Earned Schedule:

• PAR = US$100 ÷ 40 weeks = US$2.5 per week

• TV = SV ÷ PAR = -US$10 ÷ US$2.5 per week = -4 weeks

• AT = 20 weeks
• ES = 40 ÷ 2.5 = 16 weeks
• TV = AT − ES = 20 − 16 = -4 weeks

• TPI = ES ÷ AT = 16 ÷ 20 = 0.80
• TEAC = SAC ÷ TPI = 40 ÷ 0.80 = 50 weeks
• TVAC = SAC − TEAC = 40 − 50 = -10 weeks
From the above, we can conclude that this project is in serious trouble regarding both cost and
schedule performance. Corrective actions should have already been taken. It is critical to conduct
an immediate review of this project, evaluate the underlying causes of the problems facing it, and
make evidence-based, appropriate decisions promptly.
 Comparison and Integration of ES and CPM

Many professionals like to use network analysis techniques, such as CPM, for schedule
forecasting and EVM for cost forecasting. However, it is important to note that these methods
have different underlying assumptions. CPM is primarily a planning tool, whereas EVM is primarily
a monitoring and control tool. CPM generally assumes that future performance will parallel the
original plan, unless changes are made to the original plan scope, time, logic, resources, or cost.
CPM assumes initially that problems or opportunities that affected performance in the past will
not recur in the future and that the original plan is better than past performance on the project as
a predictor of future performance on the same project. By contrast, the assumption generally
associated with EVM is that past performance on the project is a good predictor of future
performance on the same project, that performance to date will continue into the future, and that
efficiencies or inefficiencies observed to date will prevail through the completion of the project,
unless changes are made. Which of these assumptions and related forecasts will materialize
depends greatly on decisions and actions taken by the project manager, the project team, senior
executives, and others in the organization (Anbari, 2003; Turner et al., 2010).
Considering the above example, the project is 4 weeks behind schedule as of week 20. Using
CPM analysis and assuming the worst case scenario that the 4 weeks are entirely on the critical
path of 40 weeks, the project would be forecasted to be completed in 44 weeks, with a delay of 4
weeks. This analysis is demonstrated in Exhibit 4, where the critical path consists of activities C,
D, and G, resulting in the planned project duration of 40 weeks:

• Planned Project duration = 14 weeks + 15 weeks + 11 weeks = 40 weeks

Exhibit 4: Critical Path Method (CPM) analysis of the example project.

If the delay of 4 weeks occurred on the critical path, then the project would be forecasted to be
completed in:

• Forecasted Project duration = 40 weeks + 4 weeks = 44 weeks

However, using ES, the project would be forecasted to be completed in 50 weeks, with a delay of
10 weeks. The 4 weeks represent 10% of the original duration of 40 weeks and may be considered
a tolerable deviation in some organizations, whereas the 10 weeks represent 25% of the original
duration of 40 weeks and would be considered beyond tolerable deviations in most organizations.
This important difference affects resource allocation and management decisions greatly. Applying
CPM and ES with a clear understanding of their underlying assumptions can enhance the project
manager's decisions to achieve various project objectives. A combination of forecasts using CPM
and ES can provide better perspectives of possible future outcomes.
It is advisable to ask functional managers and work package managers to review cost and
schedule mathematical forecasts and to provide their own subjective forecasts for the work being
performed in their areas. Both mathematical forecasts and subjective forecasts could be included
in project performance reports. This approach highlights performance deviations for various
managers, encourages them to consider appropriate, timely actions, and incorporates their
detailed knowledge of performance in their own areas, which may not be evident from the
mathematically forecasted values (Anbari, 2003; Turner et al., 2010).
Forecasting in project management may well be a self-defeating prophecy, which, ultimately, may
be good for the organization. Large deviations usually attract the attention of senior executives
and result in corrective action. Small deviations are usually left alone. By quantifying and
highlighting such deviations, bar (Gantt) charts, project network analysis techniques (such as
CPM), ES, and EVM help focus management's attention on projects or work packages that need
the most concentration. As a result, these tools support effective management of projects and
work packages collectively and enhance the management of the enterprise portfolio of projects
and programs. Using these techniques consistently to forecast project outcomes provides a
uniform approach to project reviews, builds confidence in the project outcome as time progresses,
and enhances management's ability to take corrective actions and make evidence-based,
appropriate decisions affecting all projects and programs (Anbari, 2003; Turner et al., 2010).

Conclusions

ES is a powerful method that helps the executive, program manager, project manager, and other
stakeholders in managing projects, programs, and portfolios more effectively. ES allows EVM
metrics to be transformed to time or duration metrics to enhance the evaluation of project schedule
performance, forecast the duration needed to complete the project, augment the project
manager's understanding of the time estimate at completion of the project, and provide further
insights for making better, evidence-based decisions about the project schedule and other
parameters.
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