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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 ManagementEarned Value (EV)Graham CollinsUniversity College London (UCL) graham.collins@ucl.ac.uk
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
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
Array of Measures Actual spend £36000 Planned spend £46000 Earned value £32000
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)
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)
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
Exercise Should variance ie cpi and spi be plotted based on cumulative figures or per month? Recalculate based on monthly values
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
Further reading Agile & Iterative Development: A Manager’s guideCraig Larman2004Addison-Wesley(Agile Software Development Series)ISBN: 0-13-111155-8