chap 15 earned value.word

8/16/2019 Chap 15 Earned Value.word

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Project Management Planning and Control Techniques

CHAP-15: EARNED VALUE

PROJECT EARNED VALE

• !s an integrated "lanning # control tool$

de%elo"ed to &ull' integrate cost # time(

• )or e&&ecti%e "roject control$ the "er&ormance should *e measured +hile there is still time to

ta,e correcti%e action(• !n "ractice$ it +as o&ten to trac, do+n "rogress measured as earned manhours and time(

• !n &act an' "arameter that &lo+s through out th "roject can *e used $ &or e-am"le$ tonnes o&

steel$ M. o& concrete$ meters o& "i"e etc(

Let us analyze some of the paametes fo measu!n" the po"ess as follo#sMan hour re"orting

$n th!s %ase !f the a%tual manhous ae e%o&e& 's planne& manhous( )ut !t may lea& to #on"

s!"nals* +o e,ample( !f . of the planne& manhous ae spent( then !t #as assume& that the po/e%t #as . %omplete( )ut #henthey loo0e& out the #!n&o# they %oul& see the po/e%t #as not f!n!she& - o)'!ously someth!n" #as #on"#!th the! epot!n"*E-"enses Re"orting/ A s!m!la po)lem a!ses #hen e,penses an& po"ess ae epote& sepaately -%ons!&e the follo#!n" e,ample f!"ues 1 an& 23:+om the e,pense "aph 13 the a%%ountant #oul& epot that the po/e%t !s un&espent( #!th planne&

e,pen&!tue 54. an& a%tual e,pen&!tue 5.* Hee the foe%ast loo0s "oo& fo the po/e%t to )e %omplete&un&e )u&"et*



+!"1: Po/e%t E,penses A"a!nst 6!me+!"2: Po/e%t Po"ess a"a!nst 6!me

6he po"ess "aph( !n&!%at!n" a%tual po"ess of 4. as a"a!nst planne& po"ess 54.* Po"ess

#oul& not )e so opt!m!st!%( as !t #oul& lea& to t!me o'eun*• 7ut no# !nte"ate the t#o "aphs( the po/e%t !s 5. spent )ut has only a%h!e'e& 4. of the

#o0* 8h!%h no# !n&!%ates that the po/e%t !s )eh!n& s%he&ule( an& o'espent as #ell( thuss!"nal the P9 that he nee&s to %ontol the po/e%t )!n" )a%0 on ta%0*

• 6h!s e,ample %lealy sho#s( the need to integrate the po/e%t;s %ost an& t!me !nfomat!on* 7ase&on thee,pense !nfomat!on alone the po/e%t mana"e #oul& )e m!slea&( )el!e'!n" that the po/e%t #oul&

meet !ts o)/e%t!'es #!thout the nee& fo any %oe%t!on* As po/e%t "o# !n s!ze an& %omple,!ty( so thenee& fo an earned value measu!n" system !n%eases* Eane& 'alue !s 7UD<E6ED C=>6 +=R8=R? PER+=R9ED 7C8P3*

0( Earned Value 1tructure

• 6he earned value %al%ulat!ons %an )e pesente& as e!the an earned value ta)le see ta)le 23 o olle&-up to an earned value "aph see f!"ue @3* 6he "aph po'!&es an e,%ellent pesentat!on that !s easyto ass!m!late( #h!le the ta)le po'!&es futhe &eta!l fo the po/e%t mana"e to !n'est!"ate any'a!an%es*



• Percentage Com"lete 4PC5/ 6he PC !s a measue of

the a%t!'!t!es pefoman%e an& po"ess up to t!me no# an& !s eu!e& fo the earned value %al%ulat!on* +o th!s e,ample the PC !s 4. at t!me no#*

• 3udgeted Cost &or 6or, Per&ormed 43C6P5/

Also %alle& eane& 'alue( !s a measue of a%h!e'ement 'alue of the #o0 &one to t!me no#* 6he 7C8P!s %al%ulate& )y the euat!on:

7C8P B PC eane& po"ess at t!me no#3 , 7ACB 4. - 2444 B 44

• Actual Cost &or 6or, Per&ormed 4AC6P5/ 6h!s !s the amount paya)le fo the #o0 &one to

t!meno#* $t !s the real %ost !n%ue& e,e%ut!n" the #o0 to a%h!e'e the epote& po"ess* 6a0e %ae toensue that )oth PC an& AC6P ae )ase& on the same &ata*

• +o th!s e,ample the AC8P !s 1244 at t!me no# see f!"ue .5(

• A poss!)le m!sta0e !s to epot po"ess as the #o0 !s pefome&( )ut only epot %osts on e%e!pt ofthe !n'o!%e*

• 6h!s &!ffeent!al %ash-flo# #!ll ma0e the po/e%t a%%ounts loo0 &e%ept!'ely "oo& !n the shot tem*

Anothe m!sta0e !s to %ompae a%tual #o0 hous #!th the planne& #o0 hous* As ment!one& )efoe!n the pe'!ous po/e%t*

• 6h!s !s a mean!n"less %ompa!son as !t says noth!n" a)out #hat #o0 has )een a%tually pefome&*3

0(. Earned Value )orecast

• 8hen the !nte"at!on of %ost an& t!me ae %om)!ne& #!th

foe%ast!n"( the P9 has the )est of )oth #ol&s*• Estimate at Com"letion 4EAC5/ 6he EAC !s a e'!se& )u&"et fo the a%t!'!ty( #o0 pa%0a"e o

po/e%t )ase& on %uent po&u%t!'!ty



B 144• 6he est!mate-to-%omplete !s a useful f!"ue fo the po/e%t mana"e to %ompae the fun&s

a'a!la)le outstan&!n" !n'o!%es must also )e !n%lu&e&3 #!th the %ost-to-%omplete*

• A s!"n!f!%ant &!ffeen%e shoul& t!""e a e'!e# of est!mates an& )u!l& metho&s to f!n& a %oe%t!'esolut!on*

0(7 Earned Value Variances

• A 'a!an%e !s s!mply the &!ffeen%e )et#een planne& an& a%tual 'alues* $n the eane& 'alue %onte,tthee ae a num)e of !mpotant fla"s to atta%t the po/e%t P9Gs attent!on( %ons!&e the follo#!n":

• >%he&ule 'a!an%e >V3

• Cost 'a!an%e CV3

• 1chedule Variance 41V5/ 6he s%he&ule 'a!an%e

!s a measue of the t!me &e'!at!on )et#een the planne&

po"ess 7C8>3 an& the eane& po"ess 7C8P3*

• 6he !nteest!n" featue a)out th!s t!me 'a!an%e !s that !t !s measue& !n money un!ts*>V B 7C8P - 7C8>

B 44-1444

B - 244

6he s!"n of the 'a!an%e #!ll !n&!%ate !f the po/e%t !s ahea& o )eh!n& the planne& po"ess:• Ne"at!'e 'a!an%e: Po/e%t !s )eh!n& planne& po"ess*

• Pos!t!'e 'a!an%e: Po/e%t !s ahea& of planne& po"ess*

• 1chedule Variance Percentage 41V85/ Con'et!n" the schedule variance to a pe%enta"e #!lla&&ess any &!stot!on %ause& )y the s!ze of the a%t!'!ty



• Project control: Du!n" po/e%t the a%t!'!t!es ae at 'a!ous sta"es of %omplet!on some ahea&( some)eh!n&( some on )u&"et( some o'e o un&e3 et%* 6h!s po)lem !s esol'e& )y us!n" eane& 'aluemo&el to !n&!%ate o'eall pos!t!on* Cons!&e ta)le 1*

• 6he status !n&!%ates o'eall eane& 'alue 7C8P 14 !s ahea& of planne& po"ess 7C8> 1@44*$f !t %ont!nues at same spee&( the po/e%t shoul& ealy* Ho#e'e 'a!ous othe fa%tos shoul& )e loo0e&!nto* +o

e,ample a%t!'!ty 244 !s )eh!n&*

6a)-1/ Eane& 'alue Po"ess Repot

Earned Value ta*le/ Cons!&e the follo#!n" steps:

• 1te" !/ >et up an earned value ta)le us!n" the follo#!n" a))e'!ate& f!el& hea&!n"s:



• 1te" </ Cal%ulate the total PC( >V an& CV*

7( Earned Value =ra"h

6he earned value "aph see f!"ue @3 !s po&u%e& us!n" follo#!n" steps:

• 1te" 2/ Da# the 7C8> %u'e *

• 1te" 2: Da# 7C8P %u'e to t!me no# an& e,tapolate unt!l the l!ne !ntese%ts #!th 7AC* 6h!s

!ntese%t!on #!ll "!'e a foe%ast %omplet!on &ate* 6h!s %omplet!on &ate ho#e'e( shoul& not )e loo0e& at !n !solat!on )e%ause !t &oes not %ons!&e the

net#o0 lo"!%( %!t!%al path an& t!m!n" of the a%t!'!t!es* 6hee e,tapolat!ons* +!"-3 a3 ma!nta!ne&

pefoman%e( )3 !mpo'e&( %3 8ose*• 1te" ./ Da# the AC8P %u'e to t!me no# an& e,tapolate to the ne# en& &ate of the po/e%t an&

EAC* 8hee EAC B AC8P 1 7C8P3 , 7AC* 6h!s euat!on assumes po"ess to t!me no#!ll

%ont!nue at the same ate to the en& of the po/e%t*• 1te" : Da# the >V an& CV 'a!an%es*

• 1te" 5: Detem!ne ho# fa the po/e%t !s ahea& o )eh!n&

*



9( Earned Value Re"orting

6he earned value output len&s !tself to effe%t!'e epot!n" fo the follo#!n" easons*

• 6he o'eall status of the po/e%t %an )e seen at a "lan%e on a "aph an& the ta)ula epots pesent moe &eta!le&!nfomat!on at the #o0 pa%0a"e an& a%t!'!ty le'els*

• 8hen epot!n" to fun%t!onal mana"ement the epot shoul& %lealy !n&!%ate the a%t!'!t!es that fall un&e the!espons!)!l!ty* 6h!s !nfomat!on %an )e sepaately epote& !f a espons!)!l!ty f!el& has )een !n%lu&e& !n the &ata )ase*

chap 15 earned value.word

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