Earned Value Analysis in the last years proved itself as one of the best system for project control. It's importance comes from thefact that we get an integrated vision checking both costs and schedule.

In this article, I will try to introduce the EV concepts. This introduction should help you to apply straight the EV to your project.

Before start with the definition, pleast consider that EV in its correct form would require all the quantities being expressed in term of money. Quite often this is not possible (expecially in large organizations) because such values are not shared with team leaders or because it is difficult to get them. In order to apply the EV concept we just need to substitute the "money" with "person day". Even if in this way we loose a bit of information related to project indirect costs, the results in term of control are still relevant.

The most important variables in EV analysis are:

• BCWS (budgeted cost of work scheduled) or PV (planned value)

it represents the initial estimation for one activity. It's the cost of the activity if it is done as planned. If there are no planned cost, then we used planned days.

• BCWP  (budgeted cost of work performed) or EV (Earned value)

Earned value measures the project progress at a given date. It is the planned cost of the activities that were effectively closed. For example if at one give day I closed activities that were estimated (both direct and not direct costs) 5000 euros, then my EV will be 5000 euros. As for PV, it is possible to express EV in terms of person days of closed activities.

• ACWP (actual cost of work performed) or AV (actual Value)

This value gives the real cost that we had (direct + not direct + other) to complete the activities at a given date.Even here we will be able to use the persons day, if cost are not available.

In order to make the analysis we need to obtain the value of three basic variables at a specific date or at specific time interval (for example weekly) during the project.

Once we will have such values it will be possible to perform the analysis by using the following quantities:

• Cost Variance (CV)= EV - AV
• Schedule Variance (SV)= EV - PV

In easy word, a negative CV means that we are spending more than planned (or using more person days), while a negative SV means that we are going late.

Instead of variances we can use the performance indexes CPI ed SPI, that are defined as:

• CPI  ratio between earned value and actual cost (EV/AV). If it is 1, that means we are spending as planned, if less than 1 then we are spending more thna planned.
• SPI  ratio between earned value and planned value (EV/PV). In a similiar way to CPI a value less than 1 means we are late and a value equal to one means we are on time.

It is possible, in order to check the status of the project to create graphs with SPI and CPI and monitoring their values against the ideal value of one.

Now it will be easier to understand the approach to follow in order to apply the concepts:

• Create a complete project plan, by specifying all the tasks (to their appropriate level) that will be later monitored by using EV. Usually task duration should be between one/two days and some weeks. If a task is taking longer to complete, you should divide it (otherwise it will not be possible to get meaningful results). Defining a good project plan is a task quite complex and it will be handled in a different article, at this level what we need to understand is that without a project plan you will not be able to monitor EV.
• Plan must be baselined, so that we will have the BCWS values to be used as reference.
• Periodically (usually weekly), you should gather time and cost related to each task in the plan. Verify closed task and "earn" their values. These data allows us to define EV and AV. It is possible to earn value of a task according to one of the following:
  • Once the task is closed, the associated EV is earned
  • By using well defined work percentages (25%, 50%, 75%) part of EV is earned.
  • 50/50: 50% is earned at the beginning and 50% at the end (eventually is possible to change the percentages.
  • Use any other criteria, based on project conditions and characteristics.
• EV, AV and PV are compared to get the indicators. It is possible to get a graphical representation of them, in order to highlight the project status.

Following some examples about the project evaluation, starting from the graphical representation:

It is possible to extend EV concepts and to perform a better control on the project, using more complex tools and enriching them by using Management by Exceptions (MBE) concepts, but this will be handled in a different article.