Question

Discuss the prevalence of the use of earned-value analysis to track and control costs on construction projects?

Answer 1

EVA can be used to determine profit and loss on projects and it can be used to balance the profit and losses and also to maximize the profit of project.

EVA provides information related to schedule, progress and cost management related to scope, risk associated, quality and procurement.

EVA mainly focuses on two variables that are

1. Cost

2. Schedule

We can find out the variance in schedule or cost using EVA in the following manner-

1. Calculation of cost varinace

CV = EV - AC

EV- Earned value & AC - actual cost

A negative value means the project is over-budget and a positive value indicates it is under budget.

2. Schedule varinace (SV)-

SV = EV - PV

PV - Planned Value

A negative value indicates the project is behind schedule and a positive value indicates the project is ahead of schedule.

We can also calculate other factors related to EVA such as -

1. Schedule performance index (SPI ) -

SPI = 0.85 means the project is 15% behind schedule.

2. Cost performance index ( CPI ) -

CPI = 0.9 means the project is 10% over budget

3. Estimate at Completion ( EAC ) -

EAC = AC + BAC - EV

BAC - Budget at completion

4. Estimates TO Completion ( ETC )-

ETC = EAC - AC

These are the various indicators which can be used for the control of cost in construction projects using EVA method of analysis.