Earned value management

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Earned value management is a project management technique for estimating how a project is doing in terms of its budget and schedule.

Earned value compares the work we have finished so far with the estimates we made in the beginning of the project. This gives a measure of how far the project is from completion. Extrapolating from the amount of work we put into the project already, we get an estimate on how much we will have spent at completion.


To apply earned value to a project, the project manager needs the following primary data:

  • a work breakdown structure (WBS): a list of all tasks broken down in a hierarchical structure
  • project master schedule (PMS): a Gantt chart of what task will be done when and by who
  • budgeted cost of work scheduled (BCWS) or planned value: for every period the budgets of the tasks that were planned to be finished in this time unit
  • budgeted cost of work produced (BCWP) or earned value: for every period the budgets of the tasks that actually finished in this time unit
  • actual cost of work produced (ACWP) or effort spent: for every period the actual costs of the work
  • budget at completion (BAC): sum(BCWS), the total budget we estimate to spend to complete the project
  • total funding available (TFA): the budget the client has committed to
  • negotiated period of performance (NPOP): the time period the client has agreed upon with the project manager
  • planned period of performance (PPOP): the time period we think we can finish the project
  • cost accrual ratio (CAR): the total average cost per person per time unit
  • forecast of remaining work (FCST) or current schedule: the work that still needs to be done after this time unit

From this data, the project manager can calculate

  • the cost variance (CV): BCWS - ACWP, greater than 0 is good
  • the schedule variance (SV): BCWP - BCWS, greater than 0 is good
  • the cost performance index (CPI): BCWP/ACWP, greater than 1 is good
  • the schedule performance index (SPI): BCPW/BCWS, greater than 1 is good
  • the estimate at completion (EAC): sum(ACWP) + (BAC - sum(BCWP)) / CPI, an estimate of the budget spent at the end of the project

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