Earned Value Project Management

Tracker modules provide the structured project environment and tracking capabilities required for Earned Value Project Management according to ANSI/EIA 748 Protocols.

(We also offer a detailed overview of Earned Value Management with TrackerSuite.Net, our Web based product)

Earned Value Project Management (EVPM) has two objectives:

1. To improve project and organizational efficiencies.
2. To provide consistent, accurate information on project status.

Earned Value Project Management combines scheduling, resource allocation, costs and requirements to enforce efficient internal cost and scheduling protocols for projects, and to provide project managers and executives an effective system for tracking and forecasting project development and costs according to the ANSI/EIA 748 compliance standard for earned value management systems. ANSI/EIA 748 provides guidelines for:

1. Defining the nature of the work to be done, as well as the organization that is performing the work.
2. Planning and budgeting for projects.
3. Work accounting requirements and practices.
4. Analysis and report generation.
5. Revisions and data maintenance.

Organizations use these criteria to define work accurately, not only in terms of the work itself, but also those responsible for it (from an organizational standpoint), the nature of its cost, and the time and resources allocated for its completion.

By defining work in this manner, the process of identifying variances in planned and actual schedules and costs is simplified. EVPM compares the planned amount of work against what has actually been completed to determine if cost, schedule and work accomplished are progressing as planned. Work is "earned" or credited as it is completed.

This is accomplished by breaking down project work into budgeted and scheduled time-phased "planned value" segments, which combine to form the project baseline. Typically this is accomplished through establishing a Work Breakdown Structure (WBS) for the project. By establishing this structure, earned value analysis metrics such as Cost Variance and Project Schedule Indexes can be determined.

Successful incorporation of the Earned Value Project Management philosophy can yield:

• Lowered costs through improved efficiencies.
• An early warning system. EVPM highlights projects that are off-track in time for corrective action to be taken.
• Increased productivity.
• Accelerated time to market.
• Improved accuracy in project time and budget tracking.
• Groundwork for effective decision-support systems.

The metrics of earned value analysis are based on:

• Budgeted Cost of Work Scheduled (BCWS): The planned cost of the total amount of work scheduled to be performed by the milestone date.
• Actual Cost of Work Performed (ACWP): The cost incurred to accomplish the work that has been done to date.
• Budgeted Cost of Work Performed (BCWP): The planned (not actual) cost to complete the work that has been done.

By comparing these numbers, metrics and indexes can be developed to review the project's health.

• Scheduled Variance: BCWP - BCWS
  A comparison of the amount of work performed during a given period of time to what was scheduled to be performed. A negative variance indicates the project is behind schedule.
• Cost Variance: BCWP - ACWP
  A comparison of the budgeted cost of work performed with the actual cost. A negative variance means the project is over budget.
• Schedule Performance Index (SPI): BCWP / BCWS
  A SPI index of less than 1 indicates the project is behind schedule.
• Cost Performance Index (CPI): BCWP / ACWP
  A CPI index of less than 1 indicates the project is over budget.
• Cost Schedule Index (CSI): CPI x SPI
  This is a measure of an off-schedule and or over-budget project's likelihood of recovery. The greater the CSI index is from 1.0, the less likely a recovery is.