Question

The earned Value analysis involves comparing what happened with what should have happened. Illustrate and Explain this statement with regard to budget and schedule

Answer 1

Earned value analysis is the project management tool that is used to measure project progress. It compares the actual work completed at any time to the original budget and schedule. It forecasts the final budget and schedule and analyzes the path to get there

Project managers used to have two parameters: planned expenditures and actual expenditures.These two variables help the project manager compare planned spending with actual spending. However, this is not enough information to get the whole picture; the information was incomplete. It was not possible to understand the relationship between the completed work and the money spent.Getting the cost performance of the project was not possible.This is where Earned Value Management (EVM) comes in. It helps project managers overcome the shortcomings of traditional project management methods.

EV =budget at Completion(BAC) * Actual% Complete

EV is calculated by multiplying %complete of each task (completed or in progress) by its planned value

Budget Earned value :

The total planned value (PV or BCWS) at the end of the project. If a project has a management reserve (MR), it is typically not included in the BAC, and respectively, in the performance measurement baseline.Management or the customer may be upset with the planners as an overly conservative baseline ties up available funds for other purposes, and the baseline is also used for manpower planning

Cost variance (CV) : CV = EV-AC

CV greater than 0 is good (under budget)

Cost performance index (CPI) CPI= EV/AC

Schedule Earned value :

The Earned Value Management technique evaluates the performance of a project during its execution by monitoring the integrated management of its scope, schedule, and costs. Specifically, this technique compares baseline performance with actual performance in terms of duration and costs

This technique is based on the variables Schedule at Completion (SAC), Earned Schedule (ES), and Actual Time (AT). In addition, the main indicators are Time Estimate at Completion (TEAC) and the Schedule Performance Index (SPI(t)). Itpresents a Cost/Time graph showing the main indicators and predictors that the Earned Schedule technique calculates.