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Earned Value Example :
Let’s say, I have a project plan called “EV.MPP”. This project contains just one task called “Installation and Configuration of the server”. Sam is the resource working on this project. Sam’s hourly rate is $10 per hour.
Scenario:
- Project/Task Start: 7/16/2007
- Project/Task Finish: 7/27/2007
- Estimated total duration to complete project: 10 days
- Estimated work: 80 hours
- Resource hourly rate: $10
- Budget cost at completion (BAC) = 80 * $10 = $800
Let’s assume these estimates, I saved as baseline.
Once I saved the baseline, project has been started and entered into execution phase. Sam started working on his task and worked for 5 days and he submitted the actual work as follows:
Actual work done by Sam:
- 7/16/2007 (Monday): 8 hours
- 7/17/2007 (Tuesday): 8 hours
- 7/18/2007 (Wednesday): 2 hours
- 7/19/2007 (Thursday): 6 hours
- 7/20/2007 (Friday): 8 hours
Total Actual Work : 32 hours
I updated the project plan with actual work from 7/16 to 7/20. After update, Gantt chart looks as below:
To view Earned value, we have to apply the Earned value table to tracking gantt.
Steps
- On View menu -> Choose Tracking Gantt
- View -> Tables -> More Tables -> Earned Value -> Apply
Gantt Chart will looks like below:
Please see below for explanation of EV values obtained from example:
% Work Completed:
Originally estimated work for entire project: 80 hours
Actual work done till status date: 32 hours
Percentage of work completed with respect to original estimation: 32 hours out of 80 hours
(32 * 100)/80 = 40 %
% Completed:
Originally estimated duration of entire project: 10 days
On status date, estimated duration has been calculated: 11 days
(We had less actual work comparatively with original estimation, to complete the entire work, now required 11 days)
Out of 11 days of the work, we completed 5 days of actual work as of Status Date.
(5 * 100)/11 = 45.4545 %
Please note due to rounding, Gantt char is showing as 45 % completed
BAC:
Estimated total duration to complete project: 10 days;
Estimated work: 80 hours;
Resource hourly rate: $10
Budget cost at completion (BAC) = 80 * $10
= $800
BCWS: BCWS value is original estimated of budgeted cost till Status Date.
Originally estimated work till status date: 40 hours
Resource rate per hours: $10
Originally planned budgeted cost till status date: 40 * $10 =$400
BCWP: BCWP value is based on % completed, so the calculation of BCWP as follows:
Original planned budget for entire project: $800
Percentage of work performed till Status Date (% Completed): 45.4545 %
(45.4545 * 800) / 100 = $363.63
ACWP: ACWP values actual cost incurred till status date.
Actual work performed till status date: 32 hours
Resource rate per hours: $10
Actual cost till status date: 32 * $10 = $320
Cost Variance (CV): The difference between BCWP and ACWP
CV = $363.63 - $320
= $43.63
A positive cost variance indicates that the project is on budget
A negative cost variance indicates that the project is under budget, it means more funds need to complete the project.
Schedule Variance (SV): The difference between BCWP and BCWS
CV = $363.63 - $400
= - $36.37
A positive schedule variance indicates that the project is on time and keeping the estimated schedules
A negative schedule variance indicates that the project is behind the schedules.
Cost per Index (CPI):
CPI = Earned Value / Actual Costs
CPI = BCWP/ACWP
= $363.63/$320.00
= 1.1363
= 1.14
Schedule per Index (SPI):
SPI = Earned Value / Planned Value
CPI = BCWP/BCWS
= $363.63/$400.00
= 0.91
Estimated at Completion (EAC): Expected total cost of project based on performance as of status date.
EAC = ACWP + (BAC – BCWP) / CPI
= $320 + ($800 - $363.63 ) /1.1363
= $320 + $436.37/1.1363
= $320 + $ 384.0271
= $704.02
The complete performance index (TCPI):
TCPI = (BAC-BCWP)/(BAC-ACWP)
TCPI = ($800 - $363.63)/ ($800 - $320)
TCPI = 436.37/480
TCPI = 0.91
A TCPI value is greater than 1, implies good performance of the project
A TCPI value is less than 1, implies poor performance of the project
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