Earned value management EVM detailed explanation and application, example explanation

Earned value management （Earned ValueManagement,EVM） The earned value management of the project is used with the schedule 、 Three independent variables of cost are related to actual cost , A way to measure project performance . It compares the planned workload 、WBS The actual amount completed （ Earn ） And the actual cost , To determine whether the cost and schedule performance conform to the original plan . therefore , Compared with other methods , It is a more suitable measurement and evaluation method for project cost management . Earned value management can be carried out at a specific time point of the project , From reaching the range 、 Time 、 Evaluate the status of the project in terms of three objectives of cost .

Earned value analysis ： In the early stage, you only need to remember three parameters ,4 Indicators and formulas .PV、EV、AC、CV、SV、CPI、SPI. But it's not so cheap now , In depth assessment PV、EV、AC The understanding of the , Calculate from a text description PV、EV、AC, There is no master of the concept , It's hard to get full marks .

One 、 Three basic parameters of earned value method ：

1、 Planned value (PV,Plan Value), It is also called budget cost of planned workload (BCWS,BudgetedCost for Work Scheduled ). It refers to the budgeted man hours required for the workload required to be completed in a certain stage of the project implementation （ Or cost ）. The formula is ：

PV=BCWS= Plan the workload * Budget quota

for example , A project plans to install one WEB Access server , Estimated hardware 、 Software 、 The installation and other work are planned to take a week , The cost budget of purchasing software and hardware and inviting people to install them , approved 3 Ten thousand yuan . The planned workload and budget cost of this week BCWS Namely 3 Ten thousand yuan .

BCWS It mainly reflects the workload that should be completed in the cost value of the schedule , Instead of reflecting the cost of consumption （ Working hours , cost ）.

PV It mainly reflects the workload that the schedule should complete , Instead of reflecting the man hours or expenses that should be consumed .

2、 actual cost （AC,Actual Cost）, Also known as the actual cost of the completed workload （ACWP,Actual Cost for Work Performed）. It refers to the man hours consumed by the workload actually completed in a certain stage during the implementation of the project （ Or cost ）. It mainly reflects the actual consumption index of project implementation .

for example , In the above example , Finally, it actually took two weeks , Completed the purchase and installation of the server . Spend the first week 2.5 Ten thousand yuan to buy the server , Spend in the second week 0.5 Million yuan to complete the installation work , At the end of the first week ACWP by 2.5 Ten thousand yuan , The second week ACWP by 0.5 Ten thousand yuan .

3、 Earned value （EV,Earned Value）, It is also called the budget cost of the completed workload （BCWP,Budgeted Cost for Work Performed）. It refers to the actual workload completed in a certain stage of the project implementation process and the man hours calculated according to the budget quota （ Or cost ）. The formula is ：

EV=BCWP= Work done * Budget quota

for example , In the above example , In the first week, I bought servers and software , Is to complete the total planned workload 70%, The planned cost for the first week is 3 Ten thousand yuan , Then the earned value in the first week is ：

BCWP=70%*3 Ten thousand yuan =2.1 Ten thousand yuan , That is, the earned value at the time point of the first week is 2.1 Ten thousand yuan .

Term description		explain
PV	Planned  Value( Planned value )	Budget cost of planned workload , Is how much work should be done
EV	Earned  Value( Earned value )	Budgeted cost of work done , Is how much budget work has been completed
AC	Actual  Cost( actual cost )	The actual cost of the work done , Is the actual cost of completing the work
SV	Schedule  Variance ( Schedule deviation )	Inspection date EV and PV Difference between (EV-PV) SV>0, Progress ahead of schedule ; SV=0, It means that the actual situation is consistent with the plan . SV<0, Indicates progress delay .
CV	Cost  Variance ( Cost deviation )	Inspection date EV and AC Difference between (EV-AC) When CV>0, Indicates the actual labor consumed （ Or cost ） Below budget , That is, there is surplus or high efficiency ; When CV=0, Indicates the actual labor consumed （ Or cost ） Equal to budget ; When CV<0, Indicates the actual labor consumed （ Or cost ） Over budget or over expenditure .
SPI	Schedule  Performed Index ( Progress performance index )	The ratio of earned value to planned value (EV/PV) When SPI>1 when , Indicates that the progress is ahead of schedule When SPI=1 when , Indicates that the actual progress is the same as the planned progress When SPI<1 when , Indicates progress delay
CPI	Cost  Performed Index ( Cost performance index )	The ratio of budgeted expenses to actual expenses (EV/AC) When CPI>1 when , Below budget , That is, the actual cost is lower than the budgeted cost ; When CPI=1 when , Indicates that the actual cost is consistent with the budgeted cost ; When CPI<1 when , It means over budget , That is, the actual cost is higher than the budgeted cost ;
BAC	Budget at  Completion ( Completion budget )	When the specified scope of work is completed , An activity 、 The estimated total cost of a group of activities or projects , general budget
ETC	Estimate to  Complete ( The completion of the project needs to be estimated )	Current estimated cost of uncompleted work ETC=(BAC‐EV)    The current bias is seen as atypical ; ETC=(BAC‐EV)/CPI     The current deviation is seen as a typical deviation representing the future
EAC	Estimate at  Completion ( Completion estimate )	Estimated actual cost of completing all work EAC=AC+ETC

Two 、 The relationship between the three basic parameters ：

The relationship between the three parameters		Result analysis	Countermeasures
1	AC>PV>EV   SV<0  CV<0	Low efficiency 、 Slower 、 Investment in advance	Replace a group of inefficient personnel with efficient personnel
2	PV>AC=EV SV<0  CV=0	Low efficiency 、 Slow speed 、 There is little difference between input and expenditure	Increase the input of efficient personnel , Rush to work
3	AC=EV>PV SV>0  CV=0	Low efficiency 、 Faster 、 There is little difference between input and expenditure	Draw out some personnel , Add a small number of key personnel
4	EV>PV>AC SV>0  CV>0	Efficient 、 Faster 、 Investment is delayed	If the deviation is small , Maintain the status quo , Strengthen quality management

3、 ... and 、 Four evaluation indicators of earned value analysis ： Schedule deviation （SV）、 Cost deviation （CV）、 Cost execution index （CPI） And progress performance indicators （SPI）：

1、 Schedule deviation （SV,ScheduleVariance）SV Refers to the inspection date EV and PV Differences between ：

SV=EV-PV=BCWP-BCWS

When SV When it is a positive value , Progress ahead of schedule ;

When SV When it's zero , It means that the actual situation is consistent with the plan .

When SV When it's negative , Indicates progress delay .

2、 Cost deviation （CV,CostVariance）.CV Means during the inspection EV and AC Differences between ：

CV=EV-AC=BCWP-ACWP

When CV When it is a positive value , Indicates the actual labor consumed （ Or cost ） Below budget , That is, there is surplus or high efficiency ;

When CV When it's zero , Indicates the actual labor consumed （ Or cost ） Equal budget value ;

When CV When it's negative , Indicates the actual labor consumed （ Or cost ） Over budget or over expenditure .

3、 Cost performance indicators （CPI,CostPerformed Index）. The ratio of budgeted expenses to actual expenses （ Or the ratio of man hour value ）：

CPI=EV/AC=BCWP/ACWP

When CPI>1 when , Below budget , That is, the actual cost is lower than the budgeted cost ;

When CPI=1 when , Indicates that the actual cost is consistent with the budgeted cost ;

When CPI<1 when , It means over budget , That is, the actual cost is higher than the budgeted cost ;

4、 Progress performance indicators （SchedulePerformed Index）. It refers to the ratio of project earned value to planned value ：

SPI=EV/PV=BCWP/BCWS

When SPI>1 when , Indicates that the progress is ahead of schedule

When SPI=1 when , Indicates that the actual progress is the same as the planned progress

When SPI<1 when , Indicates progress delay

Earned value management is a method of project management , It is mainly used to monitor project cost and progress .

Earned value is compared with the work done through the plan at the beginning of the project , Gives an estimate of when a project will be completed , By calculating from the completed part of the project , The project manager can estimate when the project will be completed , How many resources will be spent .

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Instance of a 、 An information system development project is developed by a system integrator A The company undertakes to build , Time limit 1 year , Total project budget 20 Ten thousand yuan . At present, the implementation of the project has reached the third stage 8 At the end of next month . At the regular project meeting , The project manager analyzed and reported the current project progress . By the end of 8 At the end of the month, the project implementation analysis table is as follows ：

Serial number	The name of the task	Planned cost value ( element )	Actual cost value ( element )	Percentage complete
1	Project start	2000	2100	100%
2	feasible ***	5000	4500	100%
3	Demand research and analysis	10000	12000	100%
4	Design and selection	75000	86000	90%
5	system implementation	65000	60000	75%
6	test	20000	15000	35%

[ problem 1]（8 branch ）

Please calculate up to 8 The cost deviation of the project at the end of the month （CV）、 Schedule deviation （SV）、 Cost execution index （CPI） And progress index （SPI）; Judge the current implementation of the project in terms of cost and schedule .

[ problem 2]（7 branch ）

Please briefly describe the main work of cost control .

Analytical thinking ：

[ problem 1]

According to the formula ：CV=EV-AC;SV=EV-PV;CPI=EV/AC;SPI=EV/PV 

PV=2000+5000+10000+75000+65000+20000=177000

AC=2100+4500+12000+86000+60000+15000=179600

EV=2000*100%+5000*100%+10000*100%+75000*90%+65000*70%+20000*35%=137000

We can work out ：

CV=137000-179600=-42600

SV=137000-177000=-40000

CPI=137000/179600=0.763

SPI=137000/177000=0.774

in summary , The project ends at 8 The cost at the end of the month is over budget , Inefficient use of funds , And the progress lags behind , Low progress efficiency .

[ problem 2]（ This part is best understood and memorized ）

1.  Influence the factors causing the change of cost benchmark ;

2.  Ensure that the change request is agreed ; 

3.  When a change occurs , Effectively manage these actual changes ; 

4.  Ensure that the potential cost overrun does not exceed the authorized project phase funds and total funds ;

5.  Supervise cost implementation , Find out the deviation from the cost benchmark ; 

6.  Accurately record all deviations from the cost benchmark ; 

7.  Prevent wrong 、 Inappropriate or unapproved changes are included in the cost or resource use report ;

8.  For approved changes , Inform the project stakeholders ; 

9.  Take measures to , Control the expected cost overrun within an acceptable range .

Example 2 、 At a weekly meeting during the implementation of the project , Project manager Xiao Wang used the following table to inform you of the current progress . According to this table , Current project progress （）.

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A.  Ahead of schedule 7%          B.  Behind schedule 18%        C.  Behind schedule 7%          D.  Behind schedule 7.5%

Answer and analysis ： Find out PSV =[ (18000+45000+30000)-100000] / 100000 = -7%, choose C.

Examples of three 、 Xiao Zhang, the project manager, analyzed the cost earned value of a project he was working on , Draw a picture as shown below , The current time is the inspection date in the figure . According to the analysis of this figure ： The progress of the project （1）, cost （2）.

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（1）A． normal            B ． backward            C ． leading          D ． Unable to judge

（2）A． normal            B ． Overspending            C ． save          D ． Unable to judge

answer ： C、B.

Instances of four 、 An ongoing project , Current PV=2200 element 、EV=2000 element 、AC=2500 element , Current project

SV And project status is （1）, The project CPI And cost performance is （2）.

（1）

A、-300 element ; The project was completed ahead of time           B、+200 element ;  The project was completed ahead of time

C、+8000 element ;  The project is completed on time     D、-200 element ;  The project lags behind the original plan

（2）

A、0.20;  The actual cost is consistent with the plan     B、0.80;  The actual cost is lower than the planned cost

C、0.80;  The actual cost exceeds the planned cost          D、1.25;  The actual cost exceeds the planned cost

Analysis of the answer ： In the subject ,SV=EV-PV=2000-2200=-200, therefore , The project lags behind the original plan .CPI=EV/AC=2000/2500=0.8, therefore , The actual cost exceeds the planned cost . choose D、C.

Example 5 、 A project manager decomposes the system integration project he is responsible for , The cost of each work unit is estimated , Get its planned cost ： At the end of the fourth month , The planned cost of each task 、 The actual cost and completion percentage are shown in the table below ：

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【 problem 1】

Please calculate the... Of the project at the end of the fourth month respectively PV、EV、AC value , And write the calculation process . Please evaluate the performance of this project from the aspects of schedule and cost , And explain the basis .

【 problem 2】

Some people think that ： The actual cost of a certain stage of the project （AC） If it is less than the planned expenditure cost （PV）, It shows that the project cost is saved at this time , Do you think that's right ？ Please explain why .

【 problem 3】

（1） If you start from May , The project will no longer have cost deviation , Then the estimated completion cost of this project （EAC） How much is the ？

（2） If the project continues to develop according to the current situation , Then the estimated completion cost of this project （EAC） How much is the ？

（3） According to the current situation of the project , What measures can the project manager take ？

Answer and analysis ：

【 problem 1】

Mission	Planned cost value ( Ten thousand yuan )	Actual cost value ( Ten thousand yuan )	Percentage complete	Earned value
A	10	9	80%	10*80%=8
B	7	6.5	100%	7*100%=7
C	8	7.5	90%	8*90%=7.2
D	9	8.5	90%	9*90%=8.1
E	5	5	100%	5*100%=5
F	2	2	90%	2*90%=1.8
A total of	41	38.5	-	37.1

The red part of the table indicates the... Of each task in the first four months EV And the first 4 End of the month PV、EV、AC Total of .

The cost deviation in the table CV=EV-AC=37.1-38.5=-1.4 Ten thousand yuan , Indicates that the cost of the current project is over budget ;

Schedule deviation SV=EV-PV=37.1-41=-3.9 Ten thousand yuan , Indicates that the current project progress lags behind ;

Cost performance index CPI=EV/AC=37.1/38.5=96.36%<100%, Indicates that the cost of the current project is over budget , Inefficient use of funds ;

Progress performance index SPI=EV/PV=37.1/41=90.49<100%, Indicates that the current project progress lags behind , Low progress efficiency .

【 problem 2】

This statement is wrong . In this case , The project is no 4 At the end of the month AC=38.5 Ten thousand yuan <PV=41 Ten thousand yuan , but EV=37.1 Ten thousand yuan <AC<PV. combination 【 problem 1】 According to the analysis results of , The current cost of the project exceeds the budget . so , Comment on whether the cost of a project at a certain stage is saved or overspent , The actual cost of the project at this stage cannot be simply （AC） Go out with the plan （PV） Make a simple comparison , Instead, the budgeted cost of actually completing the work within a given period of time （EV） As one of the important considerations .

【 problem 3】

(1)  If you start from the first month , The project will no longer have cost deviation ( That is, the current deviation is regarded as atypical , The project team expects that such a deviation will not occur in the future ), Then the estimate required for the remaining work of the project ETC be equal to BAC Subtract the accumulated earned value so far ( namely ETC=BAC-EV=41-37.1=3.9 Ten thousand yuan ), The most likely overall budget value of this project , That is, the estimated completion cost EAC=AC+ETC=AC+BAC-EV=AC+ETC=38.5+3.9=42.40 Ten thousand yuan .

(2)  If the project continues to develop according to the current situation ( That is, the current deviation is regarded as a typical deviation that can represent the future deviation ), Then the estimate required for the remaining work of the project ETC be equal to BAC Subtract the accumulated earned value to date and divide it by the accumulated cost to implement the performance index ( namely ETC=(BAC-EV)/CPI=(41-37.1)/96.36%=4.047 Ten thousand yuan ), Estimated completion cost of this project EAC=AC+((BAC-EV)/CPI)=AC+ETC=38.5+4.047=42.547 Ten thousand yuan .

(3)  After the above analysis, we can conclude that , In the first 4 At the end of the month , The cost of the project is over budget , Inefficient use of funds , And the progress lags behind , Low progress efficiency . Therefore, in order to ensure the realization of the cost target and schedule target of this project , The adjustment measures that the project manager can take are ：

(1) Improve work efficiency , For example, replace a group of inefficient personnel with highly efficient personnel ;

(2) Work overtime , Or rush to work , Or parallel construction on the premise of preventing risks ( Fast tracking );

(3) Strengthen cost monitoring .

Example 6 、 Look at the picture below , Calculate and answer ：（1）PV、AC、EV   （2）EAC（ The deviation is representative ）（3） Current expenses （ Overspending / Savings ） （4） Progress （ advance / lagging ）

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Answer and analysis ：

（1）

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（2）EAC=AC+(BAC-EV)X(AC/EV)=378, If the deviation is not representative ：EAC=205+(340-185)=360

（3）CPI=185/205=0.90<1 Overspending

（4）SPI=185/210=0.88<1 lagging