1. Earned Value Management
EVM Calculation 1

2. What for?
used to monitor:
Time and budget
in comparison
to planning 2

3. 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 3

4. Basics -planned output at standard cost rate
-actual output at standard cost rate
-actual costs
→ process efficiency
→ cost efficiency 4

5. Preparation -define sub-processes and required resources
-schedule sub-processes
-identify process milestones 5

6. Concomitant Analysis -record actual costs
-summarize costs according to steps in your WBS
-compare planned cost and actual cost
-compare scheduled progress and reality 6

7. 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) 7

8. Planned Cost PTC MC PC Sum up needed work hours
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 8

9. Actual Cost ATC MC AC Sum up actual worker costs until t
Add material costs
At any point t you can monitor the project costs so far 9

10. Earned Value PP EV Determine the actual progress so far
Look up the project budget (payment- profit)
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 10

11. Comparing Schedule PC EV SV SPI
The planned costs contain a set time limit
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 11

12. Comparing Costs AC EV CV CPI The actual costs imply our profit
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 12

13. 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 13

14. 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 14

15. 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 15

16. Monitor after xx% of the project
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. 16

17. 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 17

18. Earned Value Management
Cost Value Reconciliation

19. 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

20. 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

21. 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.

22. Using earned value: a project manager's guide
Sources
Using earned value: a project manager's guide
By Alan Webb © 2003
ISBN X 22

23. Thank You For Your Attention
If you have questions,
please go ahead 23