Guide
Earned value management,
explained with one project.
Earned value management compares three numbers: the work you planned to have done, the work actually done, and what it cost. From them you can tell whether a project is over budget, behind schedule, and where it's heading. One worked example.
In development: ZeroPlan
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1. The three numbers
Take a project with a budget of $10,000 (the budget at completion, BAC). At the end of week 4 you check where it stands.
- Planned value (PV): the budgeted cost of the work planned by now. 50% planned × $10,000 = $5,000
- Earned value (EV): the budgeted cost of the work actually done. 40% done × $10,000 = $4,000
- Actual cost (AC): what has really been spent. $5,000
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2. Variances: over or under
Subtract to see how far off you are, in money. A negative number is bad news.
- Cost variance, CV = EV − AC = $4,000 − $5,000 = −$1,000: over budget
- Schedule variance, SV = EV − PV = $4,000 − $5,000 = −$1,000: behind schedule
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3. Indices: how efficient
Divide instead, to get ratios you can compare across projects. Below 1.0 is worse than planned; above 1.0 is better.
- Cost performance index, CPI = EV ÷ AC = 0.8: each dollar spent earns 80 cents of work
- Schedule performance index, SPI = EV ÷ PV = 0.8: work is getting done at 80% of the planned rate
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4. Forecast the finish
If the project keeps spending at the same efficiency, the estimate at completion is the budget divided by the CPI: $10,000 ÷ 0.8 = $12,500. That's $2,500 over, a warning you get at week 4 instead of at the end.
- Estimate at completion, EAC = BAC ÷ CPI = $12,500
- Variance at completion, VAC = BAC − EAC = −$2,500
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5. Track it as you go
Earned value works best measured often, from the same plan the schedule uses. ZeroPlan, from Black Zero Labs, keeps costs and earned value next to the schedule; it's in development and under testing, and not released yet.
Apps used
The apps behind it.
The apps are designed to open the same project, so nothing has to be exported between them. You'll install only the ones you use.
Questions
Good to know.
1.0 means spending exactly as planned. Above 1.0 is under budget for the work done; below 1.0 is over. Small swings early in a project are normal; a steady drop is the thing to act on.
That version assumes current efficiency continues. Other versions assume the rest goes to plan (EAC = AC + BAC − EV) or factor in both cost and schedule. Pick the one that matches what you expect.
No; a spreadsheet can do the arithmetic. What's hard by hand is keeping planned value tied to an up-to-date schedule, which is what project software is for.
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