Author
PROJECT HEALTH MONITORING BY
EARNED VALUE ANALYSIS
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Index
i. Abstract
ii. Introduction
iii. History
iv. Terminologies
v. More Derived Metrics
vi. an Example to illustrate the EV
vii. Best Practices followed to get EV
viii. what do do with EVM Data
ix. Main RESULTS
x. Pros
xi. Pre measures to be considered for EVA
xii. CONCLUSIONS
xiii. ACKNOWLEDGMENT
xiv. REFERENCES

Abstract — An Execution of engineering projects are tracked against critical
metrics such as safety, quality, delivery cost and inventory. Earned value is a key
parameter that helps in assessing delivery (schedule) and cost. Static shows that
70% of projects are over budget behind schedule, 52% of all projects finish at
189% of their initial budget and some, after huge investments of time and money,
are simply never completed.
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INTRODUCTION
Earned Value (EV) technique is an industry standard way to measure a project’s
progress, forecast its completion date and final cost, and to provide schedule and
budget variances along the way. By integrating three measurements, it provides
consistent, numerical indicators with which you can evaluate and compare
projects EV. EV is primarily a schedule tracking tool, determining schedule from
cost and earned value of individual Work Breakdown Structure (WBS) tasks
performed in time.
History
Earned Value Management (EVM) emerged as a financial analysis specialty in
United States Government programs in the 1960s [1], but it has since become a
significant branch of project management and cost engineering.
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Terminologies
Figure 1: Earned Value example
(ACWP)
(BCWP)
(BCWS)
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Schedule and Cost Variances
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SV: Schedule Variance (EV-PV)
49,000hr - 55,000hr
SV = - 6,000hr
A negative variance means the project is behind schedule.
CV: Cost Variance (EV-AC)
49,000hr- 56,000hr
CV = - 7,000hr
A negative variance means the project is over budget.
CPI: Cost Performance Index CPI=EV/AC
49,000/56000 = 0.875
If CPI is lesser than 1, means project is over budget.
CSI: Cost Schedule Index (CSI=CPI x SPI)
.891 x .875 = 0.780
When CSI is greater than 1, the less likely project recovery becomes.
SPI: Schedule Performance Index SPI=EV/PV
49,000/55,000 = 0.891
If SPI is lesser than 1, means project is behind schedule.
More Derived Metrics
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An Example to illustrate the EV: 1
complete cycle of Test task
By Referring the Figure , A set of module test is divided based on function calls. To test
each function call complete cycle of Test task need to be done. For initial module it will
take more than base line hours. For all models base line hour will be assumed as 16 hours.
From Task Gather Data to Structural coverage, total 70% of test task completed. Once it is
sent for review, then only Manger will notice the EV and can take credit for the module
and till then based on Tester and manger trust, work will be done.
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Consider a project where the work has to be completed in two months in Rs 20,000.
Cost breakdown is Rs.10,000 for each month.
The work scheduled in each month is half of the total work to be completed.
1st month 25% completed but cost utilised is that of 50% of the total work.
actual cost(AC) incurred =50% of total budgeted cost =10,000
The planned value(PV) for the work to be completed by the end of the first month
=50% of total =50% of 20,000 =10,000
The Earned value(EV) or the value of the work actually completed in monetary terms
Rate of Performance * Planned Value
=50% * 10000 =5000
This implies that we have utilized Rs.10,000(AC) for the work which should have utilized
Rs. 5,000(EV) according to our budget.

Best practices followed to get EV
A) Operating system element is called Visual Management (VM).
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B) Activity based management (ABM)
It is a method of identifying and evaluating activities that a business
performs. In XLS sheet it will have Tabs called Life cycle, Data, PCT
Chart, EV chart, RFS state. In Data tab, Task is assigned with
responsible person, base line hours, actual start, Percentage
complete these data’s are filled daily/weekly/every 15days by Leads.
This ABM xls will be maintained in secured share drive.
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C) Minority Report Tool/JIRA Tool
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What to Do With EVM Data
EV indicators provides an early warning about the project performance and
also gives an unambiguous lead to the project manager on what is the most
appropriate action. Because of that the utitative value of EV indicators is very
important.
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MAIN RESULTS
By applying EVA technique, Project will be delivered at the maximum percentage on
time
Considering the example below:
Suppose we are calculating EV for 6 employees for a week.
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Pros:
I. EVA is a flexible and easy to learn tool adaptable to projects of any size, able to
control them all with minimal effort.
II. Since all the process activities (artifacts, license, ctp/hilite queues, CM21, analysis
time, etc) required for project execution are in place, the outcome of deliverables
will be on-time.
III. EV analysis/calculation process can asses in real time true project schedule and
cost performance.
IV. With EV analysis, a project manager will be allowed to only study and manage cost
in time, leaving the performance metric of technical variable to technical discipline
leads. This burden release emphasizes the benefit of 20% effort for 80% results.
V. EVA is very objective and robust when many owners contribute its data in
calculating.
VI. SPI and CPI these are an early warning signals
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Pre measures to be considered for EVA:
I. While doing earned value analysis, we don't take quality into consideration. It
may be possible that our project is scoring high on earned value performance
scale, but the quality of work is below par. Quality is an important criteria in any
project, and unfortunately it is not considered in EVA.
II. If the Project schedule is very large (around x000 hours), 70% of the work
schedule is based on the trust on the team members. If there is any deviation in
the plan, the effort considered will not holds good. To recover the same, a
project manager has to think on the alternative way to achieve.
III. If updating the EVA tool with cost and percentage of completed work is not
done on regular basis, hides early problem identification.
IV. When the percentage of work assessments is not discussed with team members,
the EVA report is often slanted, leading to increased subjectivity. The one doing
the work has the best assessment of its status.
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CONCLUSIONS
After analyzing through all the scenarios and data, we can come to conclusion:
Earned Value is needed because different measures of progress for different type
of tasks need to “roll up” progress of many tasks into an overall project status.
Need for a uniform unit of measure (dollars or work-hours).
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ACKNOWLEDGMENT
I would like to acknowledge my gratitude for presenting this paper and thank all
my colleagues: Laveen, Pavan, Mukund, Arunkumar and other managers for
their support.

REFERENCES
[1] Booz, Allen and Hamilton Handbook Tutorial “Earned Value Management Tutorial”
[2] Quentin W. Fleming & Joel M. Koppleman, Handbook of” Earned Value”.
[3]Quentin W. Fleming Handbook of” Cost/Schedule Control Systems Criteria” Robert
R. Kemps Handbook of “Project Performance Measurement”
[4] Kevin Forsberg, Ph.D., Hal Mooz and Howard Cotterman Handbook of “Visualizing
Project Management”
[5] Kevin Bury, President & CEO, Quick Arrow
Paper on 'Earned Value Management'
Websites
http://www.pmi.org/
http://www.acq.osd.mil/pm/
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Thank You
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