Elaborating the Concept of Earned Value Analysis (EVA)

Elaborating the Concept of Earned Value Analysis (EVA)
Elaborating the Concept of Earned Value Analysis (EVA)
When to perform earned value analysis?
  1. Any time
  2. At Actual completion of Activities, Work Packages or at Actual Milestones (best)

Key Terms in earned value analysis:

Current Schedule & Cost Performance
  • Budget at Completion (BAC)
  • Planned Value (PV)
  • Earned Value (EV)
  • Earned Schedule (ES)
  • Actual Cost (AC)
  • Actual Time
  • Schedule Variance & Performance Index wrt mu & tu (SVmu, SVtu, SPImu, SPItu)
Forecast Schedule & Cost Performance
  • Estimate at Completion (EAC)
  • Estimate to Complete (ETC)
  • Variance at Completion (VAC)
  • To Complete Performance Index (TCPI)
Other EVA Concepts
Estimate at Completion (EAC) (cost)

This is the Estimated Cost of Completed Project.  The simplest way to find this KPI is to apply CPI on the BAC.  For example, if the mean CPI is 0.85, EAC (cost) will be 3,000/0.85=3,529

Variance at Completion (VAC)

It is the difference between the BAC and EAC (cost).  VAC=3,000-3,529=-529

Estimate to Complete (ETC) or Funds Required

These are the Funds Required to Complete the Project considering the EAC (cost).  In this case, ETC=3,529-1,800=1,729 (EAC-AC), or 1,200+529=1,729 (Funds Remaining + VAC)

To Complete Performance Index (TCPI)

BAC compares Work Remaining (WR) with Funds Remaining (FR) to ascertain if the Project can be completed with the FR. In the last   , WR=3,000-1,560=1,440 (BAC-EV), and FR=3,000-1,800=1,200 (BAC-AC).  Comparison of WR with FR (no other way around) is 1,440/1,200=1.2.  This implies that the Project can only be completed within the given funds (3,000) IF the remaining activities of the project are completed at 120% Cost Efficiency, i.e. 120 PRs of work is done in 100 PRs. Since this is easier said than done, it is not possible to complete the Project with the FR if TCPI BAC is > than 1

TCPIEAC compares WR with ETC to ascertain if the Project can be completed if ETC are provided.  In the given case, Comparison of WR with ETC (no other way around) is 1,440/1,729=0.83.  Since 0.83 is < 1, the Project can be completed with ETC

EAC (time) is the Estimated Completion Time of the Project.  The simplest way to find this KPI is to apply SPI on the Planned Project Duration.  For example, if the mean SPI is 0.80, EAC (time) will be 30/0.80=37.5

EAC Time: I was given 30tu (Project Duration) to complete the Project. If the Project continues to progress at this rate (SPI), how long it will take?  Ans: BAC/SPI

EAC Cost: I was given 3,000 (BAC) for the Project. If the Project continues to spend at this rate (CPI), how much it will cost?  Ans: BAC/CPI

VAC: The difference between what we were given 3,000 (BAC) and the new Cost Estimate for the Project (EAC Cost)

ETC: How much money do I need to complete the Project? Ans: Add VAC to Remaining Funds or, from the EAC Cost, subtract the money which is not with you now (AC)

Work Remaining (WR):

What is to be earned (BAC) minus what I have already earned (EV).

Funds Remaining (FR):

What was given to us (BAC) minus what I have already spent (AC).

TCPIBAC: Can I complete the Project in the FR?  Ans: Find TCPIBAC, which is ratio of WR to FR. Yes, if the ratio is 1 or less.  No, if more than 1.

TCPIEAC: Can I complete the Project if I am provided the Funds Required (ETC)?  Ans: Find TCPIEAC, which is ratio of WR to ETC. Yes, if the ratio is 1 or less.  No, if more than 1.

EVA Formulas
Elaborating the Concept of Earned Value Analysis (EVA)
Elaborating the Concept of Earned Value Analysis (EVA)
Elaborating the Concept of Earned Value Analysis (EVA)
Elaborating the Concept of Earned Value Analysis (EVA)

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