In 1996, the EVMS (Earned Value Management System) criteria, which were taken over from the DoD Manual 5000.2R, were revised. In 2000, the new EVM terms were incorporated into the PMBOK of the PMI (ACCESS to the Sixth Edition of PMBOK Guide). Below, we interactively show you (click on the icons in the image) each of these new terms, concepts and performance formulas of Earned Value Management (EVM):
You may access all this information and much more in the book Earned Value Management by Roland Wanner.
Earned Value Management (EVM): basis performance figures
Have you tried to press with your finger the icons of the previous image and interact? In case you are more of a reader, you can read a summary of all the concepts and formulas below
The previously common term for the Planned Value was BCWS (Budgeted Cost of Work Scheduled).
At all times during the project, the Planned Valued describes the budgeted costs of the planned work. It can only be determined from project planning. That means that it has a direct relation to the WBS. This means:
- Planned WBS € = Planned Value €
- NO WBS = NO planning = NO Planned Value
The PV is the defined Baseline on which current project progress is measured. If this base has been defined, it will only be changed if adjustments of the project scope are necessary and authorized.
When you apply the Planned Value over the time course of the project, you obtain the cost plan (tubular representation), the cost trend (histogram over time) or the cost baseline (cumulative costs over time).
The previously common term for the Actual Cost was ACWP (Cost of Work Performed).
The Actual Cost corresponds to the actual incurred and recorded costs for the performed work up to the status date. The Actual Costs mostly derive from the accounting system of the company. Depending on the reporting cycle of the project team members and the payment of supplier invoices, the Actual Cost may be overstated or understated. For larger balances, an evaluation adjustment has to be applied.
The previously common term for the Earned Value was BCWP (Budgeted Cost of Work Performed).
The Earned Value is the value of the work performed at a given time based on the planned (budgeted) value for this work. Assessing the project according to the Earned Value means to not evaluate it accordingly to the Actual Costs, but according to the planned costs.
BUDGET AT COMPLETION
The Budget at Completion (BAC) is an important element in the calculation of the Earned Value and the end costs of the project. The BAC corresponds either to the defined total budget for the program, the project, the Control Account of Work Package. The sum of the BAC´s, e.g. all work packages, is the BAC of the project. If a work package is completed, the Planned Value of the Work Package corresponds to the BAC of the Work Package.
The BAC is not an EVM basis performance figure.
ESTIMATE TO COMPLETE
ETC = (BAC – EV)/ CPI
There are additional variations about how to calculate the ETC value for our project.
ESTIMATE AT COMPLETION
EAC = AC + ((BAC-EV) / CPI)
There are additional variations about how to calculate the EAC value for our project.
VARIANCE AT COMPLETION
VAC = BAC – EAC
SV = EV – PV
CV = EV – AC
IN PROJECT 2080 WE WOULD LIKE YOU TO REMEMBER
The earned value management will give you the answers to questions such as: how much cost is estimated to have at the end of the project, if having less real cost than planned means that the project is going well or behind schedule, when will you have completed the project? With the answers to these questions, you will quickly find out the health of any of your projects.