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UCL APM Principles of Project Management Earned Value (EV)

Learn about earned value in project management and how it can be used to track project performance. Calculate cost performance and schedule performance indicators and analyze variances.

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UCL APM Principles of Project Management Earned Value (EV)

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  1. UCL/APM Principles of Project ManagementEarned Value (EV)Graham CollinsUniversity College London (UCL) graham.collins@ucl.ac.uk

  2. Example iterative project

  3. Question After 5 months, it is found that activities 1-4 have been completed, and that the spend is £36000. Using a measure that simply looked at spend, the target was to have completed five activities during this time and therefore the spend should be £46000

  4. Calculating Earned Value Value is ‘earned’ by the completion of activities and the budget for each activity is the value it has earned. In this case it would be the sum of the budgets for the activities 1-4 ie £32000

  5. Array of Measures Actual spend £36000 Planned spend £46000 Earned value £32000

  6. cpi Cost performance indicator =earned value/actual spend =32000/36000 =0.889 Estimated cost at completion =original budget/cpi =£46000/0.889 =£51000 approx (Note that the variance between earned value and actual is £4000)

  7. spi Schedule performance indicator =earned value/planned =32000/46000 =0.696 Estimated time of completion=Original time estimate/spi =5months/0.696 =7.2months (Note variance was £14000 between what was earned and planned)

  8. Exercise Month Planned costs Actual costs iterations complete 1 50 40 0.5 2 60 50 1.5 3 70 60 2 4 90 90 2.5 5 100 110 3 6 90 70 3.5 The plan was to complete one iteration per month

  9. Planned in comparison to Actual

  10. Earned Value in relation to Planned costs and Actual costs

  11. Variance

  12. Exercise Should variance ie cpi and spi be plotted based on cumulative figures or per month? Recalculate based on monthly values

  13. Variance tracked on a monthly basis

  14. spi • Note calculations for spi have used spic or cost. In the original example spic was EV/planned = 32/46=0.696 • Final time to complete=original time estimate/spic 5 months/0.696 = 7.2 months • spit or time is 4/5 (ie 4 months over 5) =0.8 therefore final time = 5months/0.8 =6.25 months

  15. Further reading Agile & Iterative Development: A Manager’s guideCraig Larman2004Addison-Wesley(Agile Software Development Series)ISBN: 0-13-111155-8

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