Project Management

Earned Value Management – EV AC PV Curves and Variences

Earned Value Management

SK SAXENA PMP

PV AC EV Curves & Variances

PM SK 23 March 24, 2019

PV AC EV Curves

PV curve is the planned value curve.

Whenever the project is planned then the curve plotted between the cumulative planned expenditure of the project with respect to time line is called PV (Planned Value) Curve. It is to be ensured that the expenditure done on the project must follow this line values. However, depending upon the project execution period environment there may be variations of actual cost (AC) with respect to PV, but there should be monitoring for such variations, and necessary alignment in PV and AC should be maintained.

If at any time AC value is above or below the PV value, it tells us that the expenses are than the desired values and required controls are exercised accordingly.

In case of larger variations which are not controllable, the PV may be revised with a proper approval.

AC= Actual money spent up to a time.

 

PV=Planned value up to a time

It is clear now what is PV and AC.

There is another important term which is called Earned Value (EV)

Even after spending (AC) up to planned expenditure (PV), there is no guarantee that the value of work done is in conformity with the AC. (Suppose the value of work is 100 up to a point on time line and the expender done is 100, it does not ensure that the work is 100 percent complete.  We must ascertain what percentage of work is done and what is its value. The value of this work done is earned Value (EV))

Therefore, the value of actual work done is determined and it is called Earned Value (EV).

EV= Is the value of actual work done from the money s(AC)

The EV PV and AC data on the timeline can be analyzed to get meaningful information.

EV-PV=Schedule Variance (the relation between PV and EV)

 

Schedule Variance (SV) = Earned Value (EV) – Planned Value (PV)

If SV is positive, it means that the actual value of work done is more than the planned value and the progress is ahead of schedule.

If SV is negative, it means that the actual value of work done is less than the planned value and the progress is behind schedule.

Cost Variance (CV) = Earned Value (EV) – Actual Cost (AC)

If CV is positive, it means that the actual value of work done is more than the planned value

If CV is negative, it means that the actual value of work done is less than the planned value and the project is over budgeted

 

Example of Schedule Variance (SV) and Cost variance (CV

In a project with a budgeted cost of $ 100,000, for a period of 18 months, following data was noticed after a period of 10 months:

PV at 10 months= $ 70000

Money spent=$ 75000

Work complete = 40 percent

Find the project’s Schedule Variance and cost variances and the inference from this analysis

 

Given in the question:

 

Actual Cost (AC) = $ 75000

Planned Value (PV) = $ 70000

 Earned Value (EV) = $40000 (40 % of $100000)

 Schedule Variance =Earned Value – Planned Value

 = 40,000 – 70000

 = – 30,000

Inference: The SV is -30000 and the project is behind the schedule


Cost Variance = Earned Value – Actual Cost

 CV = EV – AC

 = 40,000 – 75000

= –35000

Inference: The Cost Variance is -35000, and the project is over budgeted

 

 

The PV AC and EV curves are shown below:

The above curves are based on the following data;

 

 

Monthly Expenses

CUMULATIVE VALUES of PV AC EV

Schedule Variance

Cost Varience

S N0.

PV

 PV

 AC

 EV

EV-PV

EV-AC

1

5

5

2

1

-4

-1

2

10

15

10

9

-6

-1

3

15

30

28

24

-6

-4

4

20

50

53

54

4

1

5

30

80

83

89

9

6

6

50

130

123

124

-6

1

7

60

190

168

164

-26

-4

8

70

260

228

214

-46

-14

9

100

360

 

 

 

 

10

60

420

 

 

 

 

11

40

460

 

 

 

 

12

25

485

 

 

 

 

13

10

495

 

 

 

 

14

5

500

 

 

 

 

 

 

For Follow up Next:

Budget at Completion (BAC)

Schedule Performance Index (SPI)

Cost Performance Index (CPI)

 For follow up Estimate To Complete (ETC)

Estimate At Completion (EAC)

To Complete performance Index (TCPI)

View Earned value Management   S Curve

https://techconsults.in/earned-value-management-s-curve/

 

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