Understanding Earned Value Management System (EVMS)

Scope of the project : This project comprises of laying a fence around a square plot of size 1 km on each sides (A,B,C,D). Each side has a budget of 1000. The work is supposed to get over on the 4th week. The surveyor is conducting the survey to assess the progress after 4 weeks from the start date.

Side A, Side B, Side C are fully completed.

The Budgeted Cost of Work Scheduled BCWS(A), which is also known as the Planned Value (PV) for A = 1000

Since ‘A’ got over, the Budgeted Cost of Work Performed BCWP(A), which is also known as Earned Value (EV) for ‘A’  = 1000

The Actual cost (AC) incurred to complete side A = 1000

For SIDE – B,   PV=1000, EV=1000, AC=1000

For SIDE – C, PV=1000, EV=1000,  AC=1000

For SIDE – D, PV=1000, EV=500, AC=800

Conclusion

A Schedule Performance Index (SPI) =>1 indicates the project is doing well schedule wise

A Schedule Performance Index (SPI) < 1, indicates that the project is lagging behind schedule wise

If the Cost Performance Index (CPI) >=1, indicates that the work is getting completed within budget

A Cost Performance Index (CPI) < 1 indicates that we have spend more than planned for the completed work.

Throughout the project if we can maintain a CPI and SPI which is greater than or equal to one, then the project is doing well schedule wise and cost wise.

The ‘S’ Curve

The ‘S curve’ is widely used in project management to track the project. At regular intervals they plot the Planned Value (PV), Earned Value (EV) and the Actual Cost (AC) . If SPI=1 and CPI=1, then all these curves would have intersected at PV.

The Budget at Completion (BAC) is the sum of ‘PV’ of all the work from start of the project till the end.

Based on these data, it is possible to forecast the Estimate at Completion (EAC)

EAC = AC + (BAC-EV) / CPI  (Assumption, the nature of the work is same)