Project Management Webinar

Earned Value Basics – In Practice

Initiate Project Intelligence®

Things to Know…
All participants will be on mute
Questions are welcome
Use the question box to ask questions
PM training is valid for 1 PDU
Must be in attendance for full session
PDU certificate sent by the end of the day
Recording and slides sent by tomorrow

© 2017 Core Performance Concepts Inc.

Moderator
Denise Rodriguez

Project Insight

Marketing
Denise.Rodriguez@projectinsight.com

www.projectinsight.net

© 2017 Core Performance Concepts Inc.

Project Insight

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© 2017 Core Performance Concepts Inc.

Presenter
Diane C. Buckley, MBA, PMP
CEO, Core Performance Concepts Inc.
Training in project management,
PMP® and CAPM® certification, leadership,
business analysis, agile and six sigma
dbuckley@cpconcepts.net
www.coreperformanceconcepts.com
PMP® and CAPM® are registered trademarks of the Project Management Institute

© 2017 Core Performance Concepts Inc.

 Project Manager’s Responsibility
 Estimate, budget, and control project costs

 Know the expected budget at completion for

the project as well as the activities

 Measure actuals at the activity level

 Manage earned value management indicators

 Forecast changes as accurately as possible

© 2017 Core Performance Concepts Inc.

 Earned Value Calculations
CV (Cost Variance) $600 - $800 =<$200>
 EV (Earned Value) minus AC (Actual Costs)

SV (Schedule Variance) $600 - $700 = <$100>

 EV (Earned Value) minus PV (Planned Value)

Budget at Completion $1,000

1 2 3 4 5 6 7 8 9 10
EARNED VALUE $600
PLANNED VALUE $700

© 2017 Core Performance Concepts Inc. ACTUAL COSTS $800

Question from you…
• The earned value is quite subjective on most
projects I have had. If you ask 2 different persons,
you may get 2 different assessments on the earned
value of a task.
• Are there any guidelines for refining the qualitative
assessment of level of completion to assure the
accuracy of EV calculations?

© 2017 Core Performance Concepts Inc.

 Earned Value Analysis – New Landscape
Budget at Planned Value Actual Costs Earned Value Schedule Cost Variance
Completion (PV) (AC) (EV) Variance (EV-AC)
(EV-PV)
Landscape Plan $1,000 $1,000 $1,200 $ 1,000 $0 <$200>
Order Materials $ 500 $ 500 $ 400 $ 400 <$100> $0
Clear Old Yard $2,000 $1,500 $1,800 $1,000 <$500> <$800>
Install New $4,000 $2,000 $2,200 $2,500 $500 $300
Sprinkler
System
Replanting $1,000 $0 $0 $0 $0 $0
Total $8,500 $5,000 $5,600 $4,900 <$100> <$700>

© 2017 Core Performance Concepts Inc.

 Earned Value Analysis – New Landscape
Budget at Planned Value Actual Costs Earned Value Schedule Cost Variance
Completion (PV) (AC) (EV) Variance (EV-AC)
(EV-PV)
Landscape $1,000 $1,000 $1,200 $ 1,000 $0 <$200>
Plan
Task Estimated Hours Dollars Percentage/ Complete Y/N Actual Costs
Weight
Develop project charter 5 $100 10% Yes $100

Develop landscaping plan and 25 $500 50% Yes $700 (10 extra
schedule hours)

Review plan with stakeholders 15 $300 30% Yes $300

& adjust

Sign-off on plan and schedule 5 $100 10% Yes $100

Question from you…
• EV includes material costs as well, correct?
• Can you talk about incorporating non labor-related
costs into the calculation?

© 2017 Core Performance Concepts Inc.

 Earned Value Analysis – New Landscape
Budget at Planned Value Actual Costs Earned Value Schedule Cost Variance
Completion (PV) (AC) (EV) Variance (EV-AC)
(EV-PV)
Landscape Plan $1,000 $1,000 $1,200 $ 1,000 $0 <$200>
Order Materials $ 500 $ 500 $ 400 $ 400 <$100> $0
Clear Old Yard $2,000 $1,500 $1,800 $1,000 <$500> <$800>
Install New $4,000 $2,000 $2,200 $2,500 $500 $300
Sprinkler System
Replanting $1,000 $0 $0 $0 $0 $0
Total $8,500 $5,000 $5,600 $4,900 <$100> <$700>

© 2017 Core Performance Concepts Inc.

 Earned Value Analysis – New Landscape
Budget at Planned Value Actual Costs Earned Value Schedule Cost Variance
Completion (PV) (AC) (EV) Variance (EV-AC)
(EV-PV)
Install New $4,000 $2,000 $2,200 $2,500 $500 $300
Sprinkler System

Task Estimated Hours Dollars Percentage Complete Y/N Actual Costs

Materials Delivered N/A $1400 35% Yes $1400

Dig Sprinkler Trench 110 $1100 ($10/hour) 27.5% Yes $800 (Complete in
Only planned to achieved 55% through today ($600) 80 hours)

Lay Pipe 100 $1000 ($10/hour) 25% No

Connect to Water & Test 10 $500 ($50/hour) 12.5% No

© 2017 Core Performance Concepts Inc.

Question from you…
• Do you constantly recalculate when there is a change
to project whether it is cost and/or schedule?

© 2017 Core Performance Concepts Inc.

Question from you…
• I would like to hear a discussion on various contract
scenarios. For instance, if you were working under
a fixed price contract, you may look at the cost
variances differently than in the scenarios noted.
• Firm Fixed Price = $100,000 = PV
• Cost Plus = $90,000 = PV ($10,000 upon delivery)

© 2017 Core Performance Concepts Inc.

Question from you…
• What’s the best way to ensure that the estimated
hours provided by the team to complete the tasks
are reasonable?

Optimistic + 4x Most Likely + Pessimistic

2 + 4*10 + 18 ----------------------------------------------------- 6 + 4*10 + 44
------------------ = 10 6 ------------------ = 15
6 6

© 2017 Core Performance Concepts Inc.

Question from you…
• What’s the best way to ensure that the estimated
hours provided by the team to complete the tasks
are reasonable?

© 2017 Core Performance Concepts Inc.

Question from you…
• What’s the best way to ensure that the estimated
hours provided by the team to complete the tasks
are reasonable?
• If you start to identify that the estimates are lower than
they should have been, at what point do you revise the
estimated hours and budget?
• Then do you revise the budget going forward or from
the beginning?

© 2017 Core Performance Concepts Inc.

 Earned Value Analysis – New Landscape
Budget at Planned Value Actual Costs Earned Value Schedule Cost Variance
Completion (PV) (AC) (EV) Variance (EV-AC)
(EV-PV)
Landscape Plan $1,000 $1,000 $1,200 $ 1,000 $0 <$200>
Order Materials $ 500 $ 500 $ 400 $ 400 <$100> $0
Clear Old Yard $2,000 $1,500 $1,800 $1,000 <$500> <$800>
Install New $4,000 $2,000 $2,200 $2,500 $500 $300
Sprinkler
System
Replanting $1,000 $0 $0 $0 $0 $0
Total $8,500 $5,000 $5,600 $4,900 <$100> <$700>

© 2017 Core Performance Concepts Inc.

 Project S Curve
9000

8000

7000

6000

5000

4000

3000

2000

1000

0
100 400 300 800 1000 1400 400 600 1500 800 700 500
Jan Feb March April May June July August September October November December

© 2017 Core Performance Concepts Inc. PV EV AC

 Cost Performance Index (CPI)

CPI (Cost Performance Index) = Earned Value/Actual Costs

$4900/5600 = 0.875

For every dollar spent, you only receive $ 0.875 worth of value!
© 2016 Core Performance Concepts Inc.
Any questions?
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© 2017 Core Performance Concepts Inc.

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© 2017 Core Performance Concepts Inc.

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