Earned Value Analysis terms
Earned Value Management is one of the most common techniques used to measure the performance of the ongoing project. To implement earned value analysis in project management, it is important to first understand the following EVA terms and formulae.
Planned Value (PV):
Also called Budgeted Cost of Work Scheduled(BCWS), is the cost that is proposed to be utilised on an activity during a specific time frame.
Actual Cost (AC):
Also called Actual Cost of Work Performed(ACWP), is the aggregate cost that is spent on an activity while its execution, during a specific time frame.
Rate of Performance (RP):
It is the rate at which the project is progressing. ...view middle of the document...
Now, the earned value(EV) or the value of the work actually completed in monetary terms
=Rate of performance X Planned Value of work to be completed till the first month (EV = PV X RP)
=50% of 10,000
This implies that we have utilised Rs.10,000(AC) for the work which should have utilised Rs. 5,000(EV) according to our budget.
Some more important terms in Earned Value Management:
Cost Variance (CV):
As the name suggests, Cost Variance calculates the deviation between the cost actually incurred and the planned cost. It checks whether we have gone according to our budgeted costs or not.
CV = EV - AC
Cost Performance Index(CPI):
Cost Performance is used to estimate the projected or actual cost of completing the project based on the performance to date.
CPI = EV / AC
Schedule Variance (SV):
Schedule Variance calculates the deviation between the actual and planned time taken to complete the project or an activity of a project. It checks whether the project has taken more or less time than that of the planned schedule.
SV = EV - PV
Schedule Performance Index(SPI):
Schedule Performance Index is used to estimated the projected time to complete the project.
SPI = EV / PV
Estimate At Completion(EAC):
Used to find the estimate cost of the project at completion, going by the present performance.
EAC = PV of whole project/CPI
Estimated time to complete:
Used to find the approximate time required to complete the project, going by the...