Earned VALUE management is a technology from the range of the project management as a check of the project progress and the associated costs.

Overview

It describes a measuring procedure, with which one can determine and evaluate the actually obtained progress in relation to the planned goal. The Earned VALUE (EV) is a measure for the performed work and answers the question: "“Which has the customer gotten and has it for it paid which"”

The nomenclature and in particular the acronyms for the designation of the variables are to a large extent established from the English linguistic usage, so that without a translation into German one does.

For the use of Earned VALUE as control means in projects the following steps are necessary:

Proceeding for the determination of the EV

1. Determination of the WBS (Work BREAK down Structure) or the goal DefinitionUm the goals of a project to determine, setting of tasks is classified into ever smaller partial packages and represented in a hierarchical tree. The partial goals with the highest degree of detail are the so-called work packages. The whole of the work packages, which are defined over this WBS, represent 100% of the aim of the project which can be realized.

2. Kostenkalkulation (on basis of a Bottom UP computation) the calculation of the costs, which cover the overall project, are calculated on basis of the WBS. The plan for the temporal Aufeinderfolge of the implementations of the underlying work packages is provided, the so-called network plan (network Diagram). The times become subsequently, estimated, which are necessary for their realizations. Finally resources (would wind materials up etc. in person days,) are determined, with those the conversions take place. In this Kostenkalkulation it was already considered that coworkers with different abilities are available or that certain basic conditions were imposed upon to the project (end of the Projekes in 20 days, number of persons the available limits, budget on "€ 1.000.000. - limits

3. Correlation of the actual progress against the this original basis calculation (cost basis plan) serves during the conversion of the project as reference, against which the actual project progress (thus the reached partial results of the project) is measured. This determines itself from the time needed for it and the costs needed for it.

Definitions

Planned Cost (PC)

The planned costs are defined at the beginning of the project in the work packages and distributed over the extent of the project. Thus a planned budget at each time in the project, which may be up to then used, results. If these costs are exceeded, the project the risk runs that the total budget is exceeded for the end of the project.

Example: It is planned that the painter used 3/5 of the total budget after 3 hours (3/5 of the total time): "€120

PC = 3/5 * "€200 ("€100 wages + "€100 costs of the color) = "€120.

Another designation in Earned VALUE methodology is Budgeted Cost OF Work Scheduled (BCWS)

Actual Cost (AC)

The actual costs are seized over the variable AC. All resulting hours and all costs of material, which summed up up to one time, on which AC is determined.

Example: The painter worked 2 hours and at it an apprentice added (5"€/hr). The color was 30% more expensively than expected. Thus the current costs result to "€102:

AC = 2*"€20 (2 hours wages painter) + 2*"€5 (2 hours wages apprentice) + 2/5 (1+30%) *"€100 (costs of the color) = "€40 + "€10 + "€52 = "€102

Another designation in Earned VALUE methodology is Actual Cost OF Work Performed (ACWP)

Earned VALUE (EV)

The performed work - or Earned VALUE (Earning = profit) - results during the work on the project. It is calculated in monetary value or other agreed upon Metriken. It is the amount for the achievements furnished so far, which would have resulted on the assumption of the planned resources costs.

Example: A wall is to be painted, the painter assigned for it required "€20. - the hour. He estimates that he needs 5 hours for the work, i.e., the wall becomes for "€100. - Wages to be painted. The color costs "€100. After two hours are 3/5 of the wall painted, 2/5 of the color is used up. The value of EV amounts to therefore "€120:

EV = 3/5 ("€200 = total value of the trade) = "€120

Another designation in Earned VALUE methodology is Budgeted Cost OF Work Performed (BCWP)

Schedule Variance (sports association)

In the material project absolute plan fulfillment is however very rarely given. Endweder one over-fulfills the planned goals or (in most cases) one "“hangs to the plan afterwards"”. A deviation from a planned goal appears, those as Schedule Variance is designated (Schedule = schedule, Variance = deviation).

Earned VALUE - planning costs = deviation from the schedule

or in the anglikanischen linguistic usage:

Earned VALUE (EV) - Planned Costs (PC) = Schedule Variance (sports association)

Example: The painter worked slowly and after 3 hours only 1/5 of the wall painted. Thus results a deviation from the schedule (sports association) of ("€40):

EV = (1/5 "€200) = "€40PC = (3/5 "€200) = "€120

Sports association = "€40 - "€120 = ("€80)

Cost Variance (CV)

The cost deviation Cost Variance (CV) based on the actual current costs of the contractor.

Earned VALUE - current one costs = deviation from the costs plan

or in the anglikanischen linguistic usage:

Earned VALUE (EV) - Actual Costs (AC) = Cost Variance (CV)

Example: The painter worked 3 hours and at it three apprentices added (5"€/hr). The wall is painted only to 1/5. The color was 30% more expensively than expected. The current costs (AC) amount thereby to "€101. Thus results a deviation from the costs plan (CV) of ("€91):

EV = 1/5 ("€100 wages + "€100 costs of color) = "€40AC = 3*"€20 (3 hours wages painter) + 3*3*"€5 (3 apprentice 3 hours wages) + 1/5 (1+30%) *"€100 (costs of the color) = "€131

CV = EV - AC = ("€91)

Schedule performance index (MIRROR-IMAGE ONE)

With the time efficiency (Schedule performance index or MIRROR-IMAGE ONE) a measure defines itself, how far a project is temporally seen from the production target. A value more largely 1 suggests that the course of the project goes faster, than originally planned. Turned around a value results in smaller 1 a project delay. The relationship from EV and PC is formed:

MIRROR-IMAGE ONE = EV/PC (or BCWP/BCWS)

Example: In the original plan of the painter it was intended that after 2/5 of the time the PC "€80 amounts to. The painter painted however only 1/5 to the surface, so that a MIRROR-IMAGE ONE of 0.5 results: EV = 1/5 "€200 = "€40PC = 2/5 "€200 = "€80

MIRROR-IMAGE ONE = "€40/"€80 = 0.5

Cost performance index (CPI)

Cost-efficiency (Cost performance index or CPI) measures the value of the performed work against the originally planned value. A value more largely than 1 points on a Kostenerstparnis in the project, on the other side points a value smaller than 1 on the fact that the project of expensive develops as planned. The relationship from EV and AC is formed:

CPI = EV/AC (or BCWP/ACWP)

Example: After 2 hours the painter has 1/5 of the surface and 2/5 of the color used.

EV = 1/5 * (200"€) = "€40AC = 2 hrs * "€20/hrs (wages) + 2/5 * "€100 (color) = "€40 + "€40 = "€80

CPI = "€40/"€80 = 0.5

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