Podcast
Questions and Answers
What does the Estimate At Completion (EAC) represent?
What does the Estimate At Completion (EAC) represent?
- Total planned value for the project
- The estimated total cost of the project upon completion (correct)
- The estimated cost to complete the remaining work
- The ratio of remaining work to funds remaining
How is the Cost Performance Indicator (CPI) calculated?
How is the Cost Performance Indicator (CPI) calculated?
- CPI = AC / EV
- CPI = EV / AC (correct)
- CPI = EV + AC
- CPI = PV / EV
What does a negative Schedule Variance (SV) indicate?
What does a negative Schedule Variance (SV) indicate?
- The project has exceeded its budget
- The project is ahead of schedule
- The project is behind schedule (correct)
- The project is on schedule
If the Actual Cost (AC) is $1200 and the Earned Value (EV) is $800, what does this imply about the project costs?
If the Actual Cost (AC) is $1200 and the Earned Value (EV) is $800, what does this imply about the project costs?
What is the planned value (PV) for the completion of side 1 of the project?
What is the planned value (PV) for the completion of side 1 of the project?
What does the To-Complete Performance Index (TCPI) indicate?
What does the To-Complete Performance Index (TCPI) indicate?
What is the overall project completion status indicated after Week 1?
What is the overall project completion status indicated after Week 1?
What does the Schedule Performance Indicator (SPI) of 0.8 signify?
What does the Schedule Performance Indicator (SPI) of 0.8 signify?
What is the primary purpose of Earned Value Management (EVM)?
What is the primary purpose of Earned Value Management (EVM)?
Which of the following is NOT a prerequisite for implementing EVM?
Which of the following is NOT a prerequisite for implementing EVM?
What does Schedule Variance (SV) measure?
What does Schedule Variance (SV) measure?
Which of the following correctly defines Earned Value (EV)?
Which of the following correctly defines Earned Value (EV)?
What does Cost Performance Index (CPI) indicate?
What does Cost Performance Index (CPI) indicate?
Which step is NOT involved in the application of EVM?
Which step is NOT involved in the application of EVM?
What does Budget At Completion (BAC) represent?
What does Budget At Completion (BAC) represent?
Which of the following is a measure of schedule efficiency?
Which of the following is a measure of schedule efficiency?
What is the formula used to calculate the Cost Performance Index (CPI)?
What is the formula used to calculate the Cost Performance Index (CPI)?
What does an SPI value greater than 1 indicate?
What does an SPI value greater than 1 indicate?
Which limitation of Earned Value Management (EVM) suggests that project quality might not be adequately captured?
Which limitation of Earned Value Management (EVM) suggests that project quality might not be adequately captured?
In a project with an SPI of 1.03 and a CPI of 0.81, what does the CPI indicate?
In a project with an SPI of 1.03 and a CPI of 0.81, what does the CPI indicate?
What does the To-Complete Performance Index (TCPI) help determine?
What does the To-Complete Performance Index (TCPI) help determine?
If a project has an actual cost of $20,000 and an earned value of $18,000, what is the CPI?
If a project has an actual cost of $20,000 and an earned value of $18,000, what is the CPI?
What does a Schedule Variance (SV) of zero indicate about a project?
What does a Schedule Variance (SV) of zero indicate about a project?
What is one reason why EVM may be difficult to implement in R&D projects?
What is one reason why EVM may be difficult to implement in R&D projects?
Flashcards
What's EVM used for?
What's EVM used for?
Evaluates a project's health by analyzing its schedule, cost performance, and other crucial factors like estimations, scope creep, inefficiencies, communication, and required corrective actions.
Planned Value (PV)
Planned Value (PV)
The budget allocated for work planned to be completed by a specific point in time.
Earned Value (EV)
Earned Value (EV)
The budget value of the work actually completed at a certain point in time.
Actual Cost (AC)
Actual Cost (AC)
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Schedule Variance (SV)
Schedule Variance (SV)
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Cost Variance (CV)
Cost Variance (CV)
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Schedule Performance Index (SPI)
Schedule Performance Index (SPI)
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Cost Performance Index (CPI)
Cost Performance Index (CPI)
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Estimate To Complete (ETC)
Estimate To Complete (ETC)
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Estimate At Completion (EAC)
Estimate At Completion (EAC)
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To-Complete Performance Index (TCPI)
To-Complete Performance Index (TCPI)
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Budget At Completion (BAC)
Budget At Completion (BAC)
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EAC (Re-estimate)
EAC (Re-estimate)
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EAC (Typical)
EAC (Typical)
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EAC (Atypical)
EAC (Atypical)
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EVM limitations - well-defined Scope, WBS, and Schedule required
EVM limitations - well-defined Scope, WBS, and Schedule required
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EVM limitations - Project quality and customer satisfaction
EVM limitations - Project quality and customer satisfaction
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Study Notes
Earn Value Management (EVM)
- EVM is a project management technique used to track project progress and performance
- Time is not regarded as time but cost, time is money
- EVM helps in project health check, schedule performance, cost performance, forecasting, issue identification (estimation problems, scope creep, inefficiency), and communication
- Pre-requisites for EVM include a well-defined scope, detailed work breakdown structure (WBS), project management schedule, and management support
EVM Steps
- Define work to be done
- Assign a monetary value to the work
- Apply earning values (e.g., 0/100, 20/80, 25/75, 50/50)
- Execute project and measure progress
EVM Terms
- Planned Value (PV): Budgeted Cost of Work Scheduled (BCWS), estimated monetary value of planned work at a specific point in time
- Earned Value (EV): Budgeted Cost of Work Performed (BCWP), estimated monetary value of completed work
- Actual Cost (AC): Actual Cost of Work Performed (ACWP), actual cost spent on the completed work.
- Schedule Variance (SV): difference between earned value (EV) and planned value (PV)
- Cost Variance (CV): difference between earned value (EV) and actual cost (AC)
- Schedule Performance Index (SPI): ratio of earned value (EV) to planned value (PV), measures schedule efficiency
- Cost Performance Index (CPI): ratio of earned value (EV) to actual cost (AC), measures cost efficiency
- Budget at Completion (BAC): Budget for the entire project, total planned value
- Estimate to Complete (ETC): estimated cost to complete remaining work
- Estimate At Completion (EAC): estimated total cost of the project when all work is complete
- To-Complete Performance Index (TCPI): Ratio of remaining work to remaining budget needed to meet a target
Definitions
- Planned Value (PV): Estimated monetary value of planned work at a given time
- Earned Value (EV): The estimated monetary value of the work that has been accomplished
- Actual Cost (AC): The actual costs incurred for the work accomplished
Schedule and Cost Performance
- Schedule Variance (SV): EV - PV
- Schedule Performance Index (SPI): EV / PV
- Cost Variance (CV): EV - AC
- Cost Performance Index (CPI): EV / AC
EV Plot
- A graph showing the relationship between earned value, planned value, and actual cost over time
Forecasts
- Estimate To Complete (ETC): Estimation of the remaining costs to complete a project
- Estimate At Completion (EAC): Estimation of the total cost to complete a project
EAC (Re-estimate)
- Original estimate is flawed
- Requires additional resources/time to complete the project
- Adjusted total cost will reflect additional time and resources allocated
EAC (atypical)
- Slippage due to special events (new requirements)
- Adjusted estimate based on additional time and resources
EAC (typical)
- Current performance to continue
- Additional time is required as per the revised schedule and revised estimate to complete the project
ETC (considering CPI and SPI)
- Project needs to meet the deadline
- Add more resources
- Estimate to complete the project
Estimate At Completion (EAC) Formulas
- Original estimate is flawed, adjusted estimate due to new factors
- Remaining work to be performed at original budgeted rate
- Remaining work to be performed at current CPI, different scenario
- The project needs to meet the deadline
To-Complete Performance Index (TCPI)
- Future cost performance to achieve target BAC or EAC
- TCPI = Remaining Work / Remaining Budget
- TCPI based on BAC
- TCPI based on EAC
Limitations of EVM
- Mental block: Time vs cost, focus on cost
- Earn schedule (ES) can be a remedy if the project finishes behind schedule
- No indication of Project Quality, or Customer Satisfaction
- Requires well-defined Scope, WBS, and Schedule
- Difficult to implement for dynamic work (like R&D projects)
- Benefits are proportional to the size / complexity of the project
Questions
- Question 1: CPI of a project, given planned, actual and earned values
- Question 2: Why a sponsor is concerned about the project progress, given SPI and CPI
- Question 3: Related to project management and cost calculations of developing and installing drivers
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Description
This quiz covers the essential concepts and steps of Earned Value Management (EVM) in project management. Learn about key terms like Planned Value, Earned Value, and Actual Cost, and understand the prerequisites for effective EVM implementation. Test your knowledge on how EVM can enhance project performance tracking and forecasting.
