Earned Value Analysis

Question 1

Earned Value Analysis?

Answer 1

1. A method to measure the amount of work actually performed
2. A method to forecast a projectʼs total cost and date of completion, based on trend analysis
3. Is a snapshot in time and used as an early warning system
4. Work Scheduling Efficiency
   - Comparison of the actual duration the work is completed to the planned duration
5. Work Cost Efficiency
   - Comparison of the actual cost of the completed work to the planned cost
6. Relies on the key metric known as earned value

Question 2

Planned Value (PV)

Answer 2

1. The planned budget for work currently scheduled
2. Budget at completion is the estimated total cost

Question 3

Actual Cost (AC)

Answer 3

Total cost incurred for the project up to a specified date:
- Actual Cost of Work Performed (ACWP)
- Contains both direct and indirect cost

Question 4

Earned Value (EV)

Answer 4

1. The sum of planned cost for the work completed
   - Budgeted Cost of Work Performed (BCWP)
2. EV represents the value of the completed work expressed in terms of the budget assigned to that work

Question 5

CPI / SPI Interpretations

Answer 5

1. CPI > 1: The cost of work performed is lower
2. CPI = 1: Project is in budget
3. CPI < 1: The cost of work is higher; project is over budget
4. SPI > 1: Project is ahead of schedule
5. SPI = 1: Project is in schedule
6. SPI < 1: Project is behind schedule

-> Around 1 -> Well managed project

Question 6

EVA - Metrics

Answer 6

• PV: How much work should be done?
• EV: How much work was done?
• AC: How much did the work cost?
• CPI: Is the project in budget?
• SPI: Is the project in schedule?
• EAC: What do we expect the total project to cost?

Question 7

EVA - Steps

Answer 7

1. Determine EV, PV, and AC
2. Calculate CV and CV
3. Calculate CPI and SPI
4. Calculate the forecast for the project costs EAC
5. Calculate the forecast for the project duration EDP
6. Interpret the calculated key figures
7. Control your project

Question 8

EVA - Prerequisites

Answer 8

1. The project must be fully planned
2. The project must be structured into a sufficient number of acttivities
3. Each activity must have a
   - cost estimate
   - a planned start date
   - a planned finish date
4. The effort recoding must be structured according to activities and must take place immediately

Question 9

EVA - Advantages

Answer 9

1. The method is clearly defined, simple, and fully tracable
2. It makes projects comparable with each other in terms of cost and schedule adherence
3. It allows forecasts to be made of
   - expected costs when the project is completed
   - expected end date

Question 10

EVA - Disadvantages

Answer 10

• The complete implementation of the method is not easy
• It requires an environment / organization with a high degree of project maturity
• It is only applicable to projects with clearly defined requirements / deliverables