Study EVM (Earned Value Management) – 1

During the past few days I was studying Project Time Management in PMBOK, for preparing the upcoming PMP exam on 4th December 2010, while I spent a few hours on understanding/mastering EVM, I log my memory hereSmile

EVM stands for Eearned Value Management, it is a complementary for Critical Path Method schedule management, its purpose could be described as “What did we get for the money we spent?” the definition of is in Wikipedia is below:

Earned value management (EVM) is a project management technique for measuring project progress in an objective manner. EVM has the ability to combine measurements of scope, schedule, and cost in a single integrated system. When properly applied, EVM provides an early warning of performance problems. Additionally, EVM promises to improve the definition of project scope, prevent scope creep, communicate objective progress to stakeholders, and keep the project team focused on achieving progress.

There are three fundamental glossaries in EVM, they are:

  • PV Plan Value (also called BCWS – Badget Cost for Work Scheduled)
  • AC Actual Cost (also called ACWP – Actual Cost for Work Performed)
  • EV Earned Value (also called BCWP Badget Cost for Worked Performed), so
    EV = BAC (Budget At Completion) * [Finished work]%
    EV formula from Wikipedia:

EV

For simple and straight-forward, in my understanding:

  • PV is on a specified timestamp, what is the planed budget.
  • AC is on a specified timestamp, what is the actual cost.
  • EV is on a specified timestamp, how much percent of work has been done while how much cost was expected.
    During the project implementing process, Program Manager tracks the schedule and cost using EVM, and calculate SV&SV, SPI&CPI, they are:

SV Schedule Variance
SV = EV – PV
CV Cost Variance
CV = EV – AC

SPI Schedule Performance Index
SPI = EV/PV
CPI Cost Performance Index
CPI = EV/CV

I take a simple example for better understanding, assume I am managing a 10 days project code name “Lambda”, Lambda project has a BAC of $100, and the detailed project schedule was determined below:

Day# 1 2 3 4 5 6 7 8 9 10
Budget $10 $10 $10 $10 $10 $10 $10 $10 $10 $10

The scenario is at the end of day 3, I (PM) called up team member and held a meeting to track status, we found:

We got 40% of the entire work done, on the other hand, we’ve already spent $60, based on this fact, I (PM) will get to know:

PV: 3 days past, initially we planed/supposed to spend $30 according to the schedule, so PV=30.
AC: We’ve spent &60, so AC=60.
EV: we finished 40% of work, initially we planed/supposed to spend $40 to get 40% work done, so EV=40

OK, then:

SV = EV – PV = 40 – 30 = 10, greater than 0, it is good, we are ahead scheduleSmile
CV = EV- CV = 40 – 60 = -20, smaller than 0, it is not good, we are overspending moneySad smile

SPI = EV/PV = 40/30 = 1.3 > 1 greater than 1, good.
CPI = EV/CV = 40/60 = 0.66 < 1, smaller than 1, not good.

+U+U to myself, I put a flag here, I believe I will pass the exam!

References

EVM on Wikipedia
http://en.wikipedia.org/wiki/Earned_value_management

EVM official web site
http://www.earnedvaluemanagement.com/

Advertisements

About Wayne Ye
Wayne is a software developer, Tech Lead and also a geek, he has more than 6 years experience in developing Web/Windows based applications using ASP.NET, HTML/CSS, JavaScript/AJAX, Web Service, Silverlight, Winform, WPF, Win32 API/WMI, he also invests tremendous effect in GOF Design Patterns, S.O.L.i.D principle, MVC, MVVM, Domain Driven Design, SOA, HTTP/REST and AOP. In his spare time, he likes writing tech/life blogs on WayneYe.com, and separate time with his dear wife and lovely son. Wayne's Geek Life http://WayneYe.com Infinite passion on programming.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: