Earned Value Analysis

Question 1

Earned Value Analysis (EVA) is an industry standard technique to measure the progress of a project at any given in time. It enables managers to forecast completion date and final cost, and analyze probable variances in both schedule and budget. It matches the planned amount of work with what has actually been accomplished, determining if the cost, schedule, and work are progressing in accordance with the plan. As it is completed, the project or task is considered "earned".

EVA is a snapshot over time; it can be used as a management tool, or as an early prevention system to detect deficient/endangered progress. The technique certifies a clear definition of tasks preceding others. It provides an objective measure of accomplishments, and an early and accurate picture of the project status. It can be as simple as tracking a cost estimate breakdown as a design progresses, or it can be calculated and tracked using a series of mathematical formulas. In both cases, it delivers a basis for courses of correction. EVA relates three core parameters:

BCWS: How much work should have been done so far? It refers to the Planned Value (PV), as the portion of the approved cost estimate planned to be spent on the given activity during a given period.

BCWP: What is the value of the work that has been accomplished so far? It allocates the Earned Value (EV), the value of the work actually completed.

ACWP: How much money has actually been spent to progress the project so far? It measures the total of the costs incurred in accomplishing work on the activity in a given period. This Actual Cost (AC) must correspond to whatever was budgeted for the Planned Value and the Earned Value (e.g. labor, material, equipment, and indirect costs).

By comparing these values, assessments can be made about how efficient a project is and where problems may lie. These comparisons would be systematically be generated by Microsoft Project.

These three values are combined to determine at...