Can you explain earned value with a sample?

 Posted by articlesMaint on 9/30/2009 | Category: Project Management Interview questions | Views: 7606


Let’s take a small sample project. We need to make 400 breads and following is the estimation of the project:-

• We need to make 400 breads.
• It will take 10 hours to make 400 breads.
• Each bread will cost 0.02 $.
• Total cost of making 400 breads is 400 X 0.02 = 8$.
• In one hour we should be able to make 40 breads.

Below graph “Bread Project” shows the planned value and the actual cost graph. According to the planned value in 3 hours we will make 120 breads, in 7 hours we will make 280 breads and finally we will complete the 400 bread target in 10 hours. As the project moves ahead actually in the 3 rd hour we have only completed 80 breads with 3$ spent.
 



Figure: - Bread Project
 


Ok, now that we know the actuals its time to calculate the EV, PV and the AC.

In the 3rd hour below is the analysis.

 





PV (Planned value) = 120 * 0.02 = 2.4 $.
AC (Actual Cost) = 3$


Now it’s the time to calculate the earned value. Below figure ‘Earned Value for Bread’ shows the simplified view of the bread project
 


 



Figure: - Earned Value for Bread
 


EV (Earned Value) = 80 * 0.02 = 1.6$ (How much work has been completed?). So let’s do all calculations.
 





















Metrics Calculations
SV = EV - PV 1.6 – 2.4 = -0.8 ( We are behind schedule )
CV = EV - AC 1.6 – 3 = -1.4 ( We are over budget )
SPI = EV/PV 1.6/2.4 = 0.6 ( We are behind schedule )
CPI = EV/AC 1.6/3 = 0.53 ( We are over budget )
TCPI = ( Planned – EV ) / ( Final – AC ) (8-1.6)/(8-3) = 1.28 i.e. ( We have to perform 128 percent higher to reach our goal of making 400 breads in 10 hours )
 


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