The team was tasked with planting 600 trees over 5 days but encountered difficulties on the first day. They planted 70 trees which was 30 less than planned. Costs were higher than expected at $350 due to needing a machine to remove stones. Earned value was $203 but the budgeted cost was $290, resulting in negative schedule and cost variances. If performance does not improve, the project will exceed its budget and deadline. The key EVM metrics - schedule variance, cost variance, estimate at completion and budget at completion - were calculated to assess progress and risks to the project.

1. Simple example of EVM in action
© 2014 Planisware

2. The plan
• Our team has been tasked with planting the trees on
the plot of land behind our company’s new factory
• The plan:
– 30 batches of 20 trees (600 trees)
– 5 batches per day (100 trees)
– budgeted cost per tree 2.90$ (2.5$ per baby tree / 0.40$
for the slow release fertiliser)
→ total budget 1,740$
© 2014 Planisware 2

3. After the first day…
• 70 trees were planted (the team hit a patch with
stones that had to be removed before the trees
could be planted)
• Total cost was 350 $ (we had to rent a special
machine to help remove the stones which cost 147$
for the day)
• Simple EVM calculation:
– Earned Value = 70 trees planted  2.90$ = 203$
– Budgeted Cost = 100 trees planned per day  2.90$ = 290$
– Actual Cost = 70 trees planted  2.90$ + 147$ for the machine = 350$
© 2014 Planisware 3

4. Visually…
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Start 1st day
Actual cost = 350$
Budgeted cost = 290$
Earned Value = 203$
© 2014 Planisware 4

5. Regarding cost…
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Start 1st day
EV
AC
BC
© 2014 Planisware 5
We are here

6. Regarding cost…
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Start 1st day
EV
AC
BC
© 2014 Planisware 6
We are here
We should have been here

7. Regarding cost…
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Start 1st day
EV
AC
BC
© 2014 Planisware 7
Cost variance = EV – AC
= 203$ – 350$ = -147$ < 0

8. Regarding cost…
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Start 1st day
EV
AC
BC
© 2014 Planisware 8
Cost variance = EV – AC
We’re over budget,
and have spent
203  350 = 58%
more budget than
anticipated (our cost
performance index)
= 203$ – 350$ = -147$ < 0

9. Regarding schedule…
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Start 1st day
EV
AC
BC
© 2014 Planisware 9
We are here

10. Regarding schedule…
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Start 1st day
EV
AC
BC
© 2014 Planisware 10
We are here
Which is where we
should have been then

11. Regarding schedule…
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Start 1st day
EV
AC
BC
© 2014 Planisware 11
Schedule variance
in hours

12. Regarding schedule…
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Start 1st day
EV
AC
BC
© 2014 Planisware 12
Schedule variance
in hours
= 203$ – 290$ = = -87$ < 0
Schedule variance
in dollars = EV – BC

13. Regarding schedule…
0
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Start 1st day
EV
AC
BC
© 2014 Planisware 13
Schedule variance
in hours
We’re late and
have only performed
203/290 = 70% of
the work planned
(our schedule
performance index)
= 203$ – 290$ = = -87$ < 0
Schedule variance
in dollars = EV – BC

14. The consequences
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© 2014 Planisware 14
Earned Value
today
Estimate at Completion
EAC = 3,000$
Budget at Completion
BAC = 1,740$
Extending the
Actual Cost
into the future
gives us the end
result if we do
not modify the
performance of
the project

15. The consequences
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© 2014 Planisware 15
Earned Value
today
Estimate at Completion
EAC = 3,000$
Budget at Completion
BAC = 1,740$
Cost Overrun

16. The consequences
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© 2014 Planisware 16
Earned Value
today
Planned end date
= 6 days
Estimate at completion
= 8.57 days
Project Slip
Estimate at Completion
EAC = 3,000$
Budget at Completion
BAC = 1,740$
Cost Overrun

17. The consequences
→ If we continue at this rate, we will need: 1,740$  58% = 3,000 $
(cost estimate at completion)
and 6 days  70% = 8.57 days (schedule estimate at completion)
to finish the work.
→ If we want to finish on budget, we need to work at
(planned remaining budget)  (actual remaining budget)
(1,740 – 290)  (1740 – 350) = 104.3% of the originally planned
performance
→ If we want to finish on time, we need to work at
(actual remaining work)  (planned remaining work)
(600 – 70)  (600 – 100) = 106% of the originally planned
performance
© 2014 Planisware 17

18. In technical terms…
In real life, the elements we calculated have slightly
different names:
• The Actual Cost is usually referred to as the Actual
Cost of Works Performed (ACWP)
• The Planned Cost = Budgeted Cost for Work
Scheduled (BCWS)
• The Earned Value = Budgeted Cost for Work
Performed (BCWP)
© 2014 Planisware 18

19. Summary
© 2014 Planisware 19
today
time
cost
ACWP
(Actual Cost of
Work Performed)
BCWS
(Budgeted Cost of
Work Scheduled)
BCWP
(Budgeted Cost of
Work Performed)
completion
date
Budget at
Completion (BAC)
Estimate at
Completion (EAC)
Schedule variance in $
SV = BCWS - BCWP
Cost variance in $
CV = ACWP - BCWP
Cost Overrun
Project SlipSchedule variance
in hours

20. To learn more about EVM and tools to
help manage it, visit our glossary:
www.planisware.com/glossary/earned-
value-management
© 2014 Planisware 20