Earned Value#
Overview#
Earned Value Management (EVM) integrates project scope, schedule, and cost data to provide project management teams with an advanced method for measuring and evaluating project progress and performance. EVM needs an integrated baseline against which performance can be measured. The principles of the technique can be applied to projects in any industry.
The main tool of earned value management is earned value analysis (EVA). For each work package and control account, it tracks the following dimensions:
- Planned Value (PV)
- Earned Value (EV)
- Actual Cost (AC)
You can use these to identify where a project deviates from the approved baseline. The cost and schedule variances derived from them can also be converted to efficiency indicators to help determine project status and provide a basis for estimating costs and schedule outcome.
Abbreviations#
| Acronym | Description |
|---|---|
| PV | Planned value |
| AC | Actual cost |
| EV | Earned value |
| CV | Cost variance |
| SV | Schedule variance |
| CPI | Cost performance index |
| SPI | Schedule performance index |
| BAC | Budget at completion (expected costs) |
| EAC | Estimate at completion (estimated costs) |
| ETC | Estimate to complete (estimated costs to completion) |
| TCPI | To-complete performance index |
Setup#
Turn on EVM#
You need to set up earned value management before first use.
- Choose the Search icon, enter EVM Setup, and then choose the related link.
- Fill in the fields as described in the following table.
| Field | Description |
|---|---|
| Completion Method | Specify the method for measuring project progress. 0:100 Shows 0% until work is complete. 20:80 After work has started, progress is set to 20%. When work is complete, progress will be set to 100%. 50:50 After work has started, progress is set to 50%. When work is complete, progress will be set to 100%. +25 When employees post their times, they can choose to set progress to 0%, 25%, 50%, 75%, or 100%. Custom Employees can freely choose the level of progress when posting their times. |
| Calculation Base | Specify if you want earned value analysis to use sales or purchase prices to calculate values. The field is set to Purchase Price by default. |
| Default Calc. Level | Specify at which level earned value analyses are run automatically. WBS Only include WBS lines in calculations. Budget Only include budget lines in calculations. Custom For each WBS line, the system checks the work package to determine whether to calculate at WBS or budget line level. |
| SPI Warning | Enter a value below which the time status of a project is set to Warning. |
| SPI Alarm | Enter a value below which the time status of a project is set to Alarm. |
| CPI Warning | Enter a value below which the cost status of a project is set to Warning. |
| CPI Alarm | Enter a value below which the cost status of a project is set to Alarm. |
| CPI Tolerance | CPI values that deviate downward from 1 to a greater extent than the value you enter in this field will later be shown in red on certain pages. Variances in the opposite direction will be shown in green. |
| SPI Tolerance | SPI values that deviate downward from 1 to a greater extent than the value you enter in this field will later be shown in red on certain pages. Variances in the opposite direction will be shown in green. |
| TCPI Tolerance | TCPI values that deviate downward from 1 to a greater extent than the value you enter in this field will later be shown in red on certain pages. Variances in the opposite direction will be shown in green. |
| EAC Tolerance | EAC values that deviate downward from 1 to a greater extent than the value you enter in this field will later be shown in red on certain pages. Variances in the opposite direction will be shown in green. |
Use EVM on a project#
You also need to set up earned value management for the project that you want to track.
- Open the relevant project card.
- On the General tab, fill in the fields as described in the following table.
| Field | Description |
|---|---|
| Use EVM | Turn on this toggle if you want to use earned value management. With the toggle turned off, neither manual nor automatic calculations are possible for this project. |
| Calculation Level | Specify at which level you want to calculate earned value. If you leave the field blank, the value in this field will be copied from EVM Setup. |
Use on work packages#
For work packages, use the following fields to configure earned value management.
| Field | Description |
|---|---|
| Ignore in EVA | Specify whether to exclude WBS lines related to this work package from EVA calculations. This might be useful if a package is called Miles Travelled, for example. |
| Calculation Level | Specify for a WBS line related to this work package if you want to use the WBS line or one of its budget lines for EVA calculation. This field is crucial if you set the default calculation level to Custom. The option you choose in this field is copied to the WBS line but can be changed there. |
| Auto Progress Calc. | If you select this checkbox, WBS line progress is calculated automatically. The calculation is based on the following formula: Line Activity Progress WBS % = Line Activity Progress % * (quantity planned on all budget lines or quantity planned on WBS line) If this checkbox isn’t selected, progress is copied from the Project Completion % field. If that field is blank, the value from the Line Activity Progress % field is used. A check mark in this field is transferred from the work package to the WBS line and can be changed there. |
Run earned value analysis#
All EVM functionality related to entire projects can be found on the project card. To see an overview of EVA calculations for a specific project:
- Open the relevant project card.
- On the ribbon, choose Actions > Earned Value > Earned Value Analysis.
EVA fields and functions are explained in the following.
Validate an analysis#
- Open the relevant project card. On the ribbon, choose Actions > Earned Value > Earned Value Analysis.
- Another page opens. On the ribbon, choose Actions > Check Project to determine whether you have filled in the fields described in the following table.
| For | Fields |
|---|---|
| Projects | • Starting Date • Ending Date • Use EVM • An active WBS |
| WBS lines | • Starting Date • Ending Date • Work Status (= In Progress, Open, or Finished) • Duration (Days) • Quantity (Base) • Unit Cost (LCY) |
| Budget lines (if available) | • Starting Date • Ending Date • Work Status (= In Progress or Finished) • Duration (Days) • Quantity • Unit Cost (LCY) • No. • Qty. to Complete |
If all fields are filled in, you will see a message that earned value management is now available. Else, you will get an error message that tells you what field has no value.
Analyze projects#
You run EVAs from the Earned Value Mgt. Project page. To perform an analysis, you first need to validate all EVA fields as described earlier.
- Open the relevant project card. On the ribbon, select Earned Value > Earned Value Analysis.
- Another page opens. On the ribbon, select Actions > Check Project to validate an EVA.
- If validation is successful, choose New > Earned Value Analysis. This opens a dialog where you can choose if you want to run calculations based on WBS or budget lines. Select your preferred method and click OK.
The system then recalculates and updates all fields on the page. See the following table for more information about these fields.
| Field | Description |
|---|---|
| Description | Shows the name of the project. |
| No. | Shows the number of the project. |
| Starting Date | Shows the start of the project. |
| Ending Date | Shows the end of the project. |
| Completion % | Shows project progress in percent. Calculation Completion % = Earned Value / Estimate at Completion * 100 |
| Person Responsible | Shows the resource responsible for the project. |
| Calculation Date | Shows the date on which EVA was calculated. |
| No. of Calculations | Shows the number of EVA calculations performed. |
| Calculation Level | Specifies if the calculation was performed based on budget or WBS lines. |
| Calculation Base | Specifies if earned value analysis uses sales or purchase prices to calculate values. |
| PV Calculation Date | Shows, up to the calculation date, the total planned project value, made up of all PV Calculation Date fields on the budget or WBS lines. |
| Actual Cost | Shows the total actual cost from all WBS or budget lines based on project ledger entries. Calculation Actual Cost = Usage (Total Cost) or Usage (Total Price) based on setup |
| Earned Value | Shows the sum of earned values from all WBS or budget lines. Calculation Earned Value = Planned Value * Completion % |
| Schedule Variance | Shows the result of comparing time entries for this project to the baseline. If the value is negative, the project is behind schedule, whereas a positive value means the opposite is true. Calculation Schedule Variance = Earned Value - Planned Value |
| Cost Variance | Shows how the project performs financially compared to the baseline. If the value is negative, the project costs more than planned. If the value is positive, the opposite is true. Calculation Cost Variance = Earned Value - Actual Cost |
| Schedule Performance Index | Shows the relation between the earned and planned value at a specific point in time. An SPI greater than 1 means that more work than planned has been completed. A value smaller than 1 means the opposite. Calculation Schedule Performance Index = Earned Value / Planned Value |
| Cost Performance Index | Shows the ratio of earned value to actual cost incurred as a result. The CPI is the most important EVA metric, as it indicates the cost efficiency of a project. A value below 1 means completed work exceeded cost estimates. If the value is greater than 1, the opposite is true. Calculation Cost Performance Index = Earned Value / Actual Cost |
| Budget at Completion | Shows the total estimated cost at the end of a project, that is, the total budget from all WBS or budget lines. Calculation Budget at Completion = Quantity (Base) * Unit Cost (Base) |
| Estimate at Completion | Shows a forecast of total project cost. Calculation Estimate at Completion = Actual Cost + (Planned Value - Earned Value) |
| Estimate to Complete | Shows what you expect to pay until the project is complete, assuming that the remaining work will be finished at the same rate as before. Calculation Estimate to Complete = Estimate at Completion - Actual Cost |
| To-Complete Performance Index | Shows the projected cost performance you need to achieve to remain on budget and within the scope set by project management. There are two options for calculating the index. If total costs are in line with the costs that you expect to remain, the calculation is as follows: Calculation To-Complete Performance Index = (Budget at Completion - Earned Value) / (Budget at Completion - Actual Cost) If the costs to completion are greater than the estimated total costs, the index is calculated based on the following formula: Calculation To-Complete Performance Index = (Budget at Completion - Earned Value) / (Estimate at Completion - Actual Cost) |
| Earned Schedule | Provides an alternative calculation method for project progress. This method includes not just monetary values but times as well. The value itself has no significance but is the basis for alternative calculations of schedule variances and the schedule performance index. Calculation (Calculation Date - Project Starting Date) + (Earned Value - Planned Value) / (Planned Value +1 - Planned Value) |
| Schedule Variance (ES Base) |
See the Schedule Variance field. Calculation Earned Schedule - (Calculation Date - Project Starting Date) |
| Schedule Performance Index (ES Base) | See the Schedule Performance Index field. Calculation Earned Schedule / (Calculation Date - Project Starting Date) |
Key figures are shown in the Cost Control section of the Project Lead home page. To see a list of all EVA calculations for a project, go to the ribbon and choose Actions > Earned Value > Earned Value History.
You can then use the Show WBS Lines or Show Budget Lines action on the ribbon to see all lines included in a calculation.
Analyze WBS lines#
You can analyze individual WBS lines as well.
- Open the relevant project card. On the ribbon, choose Project > WBS.
- In the WBS Lines section, choose the line you want to analyze.
- On the ribbon, select Line > History > Earned Value Analysis.
The page that opens looks almost exactly like the one for projects. The actions available on the ribbon are Check WBS Line and Earned Value Analysis.
The first checks whether the WBS line meets the requirements described earlier. The second action starts the analysis. Negative variances of more than 10% are shown in red. Positive variances of more than 10% are shown in green.
For a list of all line-related EVAs, choose Line > History > Earned Value History.
Analyze budget lines#
You can also analyze individual budget lines.
- Open the project card. On the ribbon, choose Project > WBS Incl. Budget View.
- In the Project Budget section, choose the line you want to analyze.
- On the ribbon, select Line > History > Earned Value Analysis.
The page that opens looks almost exactly like the pages for analyzing projects and WBS lines. The actions available to you are Check Budget Line and Earned Value Analysis. The first checks whether the budget line meets the requirements described earlier. The second starts the analysis. Negative variances of more than 10% are shown in red. Positive variances of more than 10% are shown in green.
For a list of all line-related EVAs, choose Line > History > Earned Value History.
Calculate values automatically#
If you don’t want to calculate EVAs manually for each project, you can create a report that can be added to the job queue and will analyze projects for which Use EVM was turned on.
Evaluate overall performance#
You can also use EVM to evaluate entire companies or project types.
- Choose the Search icon, enter Projects, and then choose the related link.
- On the ribbon, select Reports > EVA Company Overview. This opens a report where you can set filters on project types and dates. If you don’t set filters, the report will include all projects to which EVM currently applies.
The No. of Projects line on the report itself indicates the number of projects included in the calculation, and the Calculate From field shows the date filter if a filter was set. The project type filter, if available, is displayed above the No. of Projects field. The values represent the average of all EVA calculations.
Evaluate projects#
The following options are available for evaluating projects. 1. Open a project card. On the ribbon, choose Actions > Earned Value > Earned Value History to see all calculations for the project. You can now also see differences in analyses over time. 2. Alternatively, go to the Earned Value Mgt. Project page that relates to the project. On the ribbon, choose Report > Project History to see detailed EVA information. The upper part of the report shows all current data from an earned value analysis. The lower part contains a visual representation of key metrics.
Archive analyses#
You can archive the EVA results of completed projects so that they are no longer included in the company overview, for example.
- Open the Earned Value Mgt. Project page from the project for which you want to archive analyses.
- On the ribbon, choose Actions > Archive Project. This opens a dialog that asks you if you want to archive the results.
- Choose Yes. You will then see a message that the project has been archived successfully.
To see the results of EVAs run for a project, open the project card, and choose Actions > Earned Value > Earned Value Archive on the ribbon.