Project Monitoring
& Forecasting
using Earned
Value Method
Dr. Shobhit Chaturvedi
PhD IIT Roorkee
Asst. Professor, Civil, SOT, PDEU
Introduction to Project Monitoring
Definition: Project monitoring involves tracking the progress of a
project to ensure it is on time, within scope, and within budget.
Importance: Helps identify deviations from the plan early,
allowing corrective actions.
Forecasting: Predicting future project outcomes (time, cost)
based on current performance.
Definition: EVM is a project
management technique used to
measure project performance and
progress in an objective manner.
What is
Earned Value Purpose: Integrates project scope,
schedule, and cost variables to assess
Method overall project health.
(EVM)?
Benefits: Enables comparison of actual
work performed with planned work and
budget.
Planned Value (PV): The
authorized budget assigned to
scheduled work.
Key
Components Earned Value (EV): The value of
work actually performed at a
of Earned given point in time.
Value
Actual Cost (AC): The actual
expenditure incurred for the work
performed.
• Budgeted Cost for Work Scheduled (BCWS)
Terminologies This is defined as the budget or plan for all work
packages planned to be completed. The BCWS curve is
of Earned derived from the work breakdown structure (WBS), the
project budget and the project master schedule. The
Value Method cost of each work package is calculated period to
period, and the cumulative cost of work packages is
shown based on the planned completion dates shown
in the master schedule.
Terminologies of Earned Value Method
• Budgeted Cost of Work Performed (BCWP)
The planned costs of the work allocated to the completed activities
are the earned value. BCWP is calculated from the measured work
complete and the budgeted costs for that work.
Earned value (BCWP) = Percentage completion of project x Project
budget
• Actual Cost of Work Performed (ACWP)
This is the real cost of the work charged
against the completed activities. The ACWP
curve is found by actual measurement of the
work completed. Actual costs are recorded
from invoices and workmen’s time sheets.
Variances
Schedule and cost variances can both be calculated in
monetary terms (or in man-hour terms) from the data
needed to produce the S-curves.
Schedule Variance (SV) is the difference between the
earned value and the planned budget, and is calculated
from the following expression:
SV = BCWP - BCWS
Cost Variance (CV) is the difference between the earned
value and the actual cost of the works. This is calculated
from the following expression:
CV = BCWP - ACWP
Schedule Performance Index (SPI)
Schedule performance index indicates whether the project is on
time. SPI is a ratio of earned value and the budgeted value of
completed works , and is computed by the following expression:
The index is used to compare schedule performance against the
budget or plan. In case the earned value is less than the budgeted
value—that is, SPI < 1, it means the project is ‘behind schedule’.
Cost Performance Index (CPI)
Cost performance index indicates whether the project is spending
as per the budget. CPI is a ratio of earned value and the actual cost
of completed works. If the earned value is less than the actual cost,
CPI < 1, it indicates a ‘cost overrun’ situation.
Estimate at Completion (EAC)
The EAC can be calculated in multiple ways and some of these are given in Table 16.5. The
formulas given for EAC use different parameters such as ACWP, ETC, BCWP, CPI and BAC, all of
which except for ‘budget at completion’ (BAC) have been defined earlier. BAC is the sum of all
budgets allocated to a project and is invariably equal to the total BCWS for the project
Variance at Completion (VAC)
The expression given in Table 16.5 for computation of EAC
can also be used to determine the variance at completion
(VAC) for the project. The VAC is the difference between
BAC and EAC, and is given by the following expression:
VAC = BAC – EAC
A positive value of VAC means the forecast is for an ‘under-
run’, while a negative VAC is understood to have an
‘overrun’ projection for the project.
• Table Q4.1 gives the budgeted monthly cash-flow requirements
for a construction project. at the end of October 2006, the total
EVA Problems actual project expenditure is reported as Rs 114 lakh and the
project progress is reported as 50 per cent.
• Draw an S-curve for cumulative cash flows for the project and
calculate cost and schedule performance indices as at the end
of October 2006. What is the delay in the project as on date in
number of months?
EVA Problems
Problem 3 Field Report at the end of 7 th day
Activity Actual % Norm Duration
Activity PRED Duration Cost/Day Total Cost Complete
A 100 600
A - 2 300 600
B 100 3
B A 3 400 1200
C 33 500
C B 2 400 1200
D 50 200
D B 2 200 400
E 0 0
E D 3 100 300
Activity ACWP BCWP BCWS CPI CV SPI SV
A
B
C
D
E
Total to date
Problem 3 Field Report at the end of 7 th day
Activity Actual % Norm Duration
Activity PRED Duration Cost/Day Total Cost Complete
A 100 600
A - 2 300 600
B 100 3
B A 3 400 1200
C 33 500
C B 3 400 1200
D 50 260
D B 2 200 400
E 0 0
E D 3 100 300
Problem 4
Problem 4
Benefits of Earned Value Method
• Comprehensive Monitoring: Combines scope, cost, and schedule for
complete project control.
• Early Problem Detection: Identifies cost and schedule deviations early.
• Improved Forecasting: Offers reliable projections on future
performance.
• Objective Assessment: Provides a quantifiable way to measure project
health.
Limitations of EVM
• Complexity: Requires detailed data collection and accurate tracking.
• Focus on Cost and Schedule: Does not account for quality or
stakeholder satisfaction.
• Initial Setup: Time-consuming to set up, especially for large projects.
• Not Suitable for Agile: More applicable to traditional (waterfall) project
management methods.