Earned Value Analysis (EVA)

The Earned Value Analysis (EVA) is a project management method that allows the use of the KPIs CPI/SPI. It shows whether the project is on schedule in terms of costs and schedule.

1. Definition

1.1 Earned Value Analysis: Why?

Earned value analysis (or earned value management) is a widely used method for measuring the performance of projects. These three areas are considered in this method:

• Scope
• Costs
• Time

The following core questions can be answered with the EVA:

• Is our plan on schedule, are we late?
• When will the project be completed based on the current status?
• Are we over or under budget?
• What is the estimated cost upon completion of the project?
• How efficiently do we use our resources?

In order to set up the EVA, the following requirements are necessary:

• Precise baselining of the planned values (time, costs and scope) from a WBS, plan milestones and assign costs
• Precise actual cost information: real-time actual data, clear differentiation between booking types
• Precise progress measurement: degree of completion calculated based on clear work/scope artifacts
• Realistic estimates of completion collected by the project team

1.2 Key Values

• Budget at Completion (BAC): Total cost of the project
• Planned Value (PV): The amount of work in EUR that needs to be performed according to the schedule. PV = BAC * Planned degree of completion in %
• Earned Value (EV): The amount expressed in EUR for the work actually done. EV = BAC * completed degree in %
• Actual Costs (AC): The sum of all costs actually posted (in EUR)

2. The Baselines

The quality of the baseline for the earned value analysis is a key success factor. The following procedure might be helpful:

• Define the initial scope of work based on the project brief
• Document all achievements in the WBS to achieve 100% visibility at a high level
• Deviation from all required work packages that serve the services
• Assign activities to work packages, define milestones and set the schedule
  • The short-term work packages should contain more detail than the long-term packages.
  • If a roadmap plan is in place, the WBS should be linked to it

• Estimate the costs for the entire project duration
  • Estimate detailed short-term activities
  • Appreciate long-term work packages
• Create a budget baseline
  • A BAC is defined for the entire project
  • A BAC per fiscal year is defined if this view is required for the EVA
  • A PV curve is available

3. The KPIs

The following key figures are mainly used in the context of EVA:

• CV (cost variance) = EV-AC
• SV (schedule deviation) = EV - PV
• CPI (Cost Performance Index) = EV / AC
  • CPI> 1: Budget on track / underspent
  • CPI 1: Overbudget / overspent<
• SPI (Schedule Performance Index) = EV/PV
  • SPI 1: Schedule on track>
  • SPI< 1: Appointment delay
• EAC (estimate upon completion) = BAC / CP

4. Links

• • https://www.projectsmart.co.uk/earned-value-management/earned-value-management-explained.php
  • ‍https://www.slideshare.net/WaHamdy/projects-control-using-earned-value-technique
  • http://www.pmknowledgecenter.com/content/earned-value-management
  • http://www.pmknowledgecenter.com/dynamic_scheduling/control/earned-value-management-forecasting-cost
  • http://www.pmknowledgecenter.com/dynamic_scheduling/control/earned-value-management-forecasting-time