Project Success Decoded: Using Earned Value Metrics to Answer Key Questions

Project Management can be a daunting task, especially when there are many moving parts to keep track of.

As a Project Manager, it can be challenging to answer critical questions about a project's progress and whether it is on track to meet its objectives.

However, with the help of Earned Value Management (EVM) performance measures, Project Managers can quickly assess a project's performance and make informed decisions to keep it on track.

In this blog, we'll answer ten essential Project Management questions using EVM performance measures. Buckle up and get ready to learn how to manage projects like a pro!

Q1: How are we doing time-wise?

Answer: Schedule Analysis and forecasts

Project Managers use Schedule Analysis to determine if the project is progressing according to the schedule. Schedule Analysis involves comparing actual progress against planned progress to identify Schedule Variances.

Project Managers use schedule forecasts to determine if the project is likely to be completed within the planned schedule. Schedule forecasts involve predicting the completion time based on past performance and adjusting the schedule to reflect any changes.

Q2: Are we ahead or behind schedule?

Answer: Schedule Variance (SV)

Schedule variance is the difference between the actual progress and the planned progress. It is used to determine if the project is ahead or behind schedule.

A positive Schedule Variance indicates that the project is ahead of schedule, while a negative Schedule Variance indicates that the project is behind schedule. The schedule variance is calculated as the earned value (EV) minus the Planned Value (PV).

SV = EV – PV

Q3: How efficiently are we using our time?

Answer: Schedule Performance Index (SPI)

Schedule Performance Index measures the efficiency of the project by comparing the actual progress to the planned progress.

SPI is calculated by dividing the Earned Value (EV) by the Planned Value (PV).

An SPI of 1 indicates that the project is progressing according to the planned schedule, while an SPI greater than 1 indicates that the project is ahead of schedule. An SPI less than 1 indicates that the project is behind schedule.

SPI = EV / PV

Q4: When are we likely to finish work?

Answer: Time estimate at completion

The time estimate at completion predicts when the project is likely to be completed based on the project's performance to date.

It is calculated by dividing the remaining work by the project's Performance Index (PI).

Time estimate at completion = Remaining work / PI

Q5: How are we doing cost-wise?

Answer: Cost analysis and forecasts

Cost analysis involves comparing the actual costs of the project against the planned costs to identify any cost variances.

Cost forecasts involve predicting the total cost of the project based on past performance and adjusting the cost estimate to reflect any changes.

Q6: Are we under or over budget?

Answer: Cost Variance (CV)

Cost Variance measures the difference between the actual costs and the planned costs.

A positive Cost Variance indicates that the project is under budget, while a negative cost variance indicates that the project is over budget.

The Cost Variance is calculated as the earned value (EV) minus the Actual Cost (AC).

CV = EV – AC

Q7: How efficiently are we using our resources?

Answer: To Complete Index (TCI)

To complete index measures the efficiency of the project by comparing the remaining budget to the remaining work.

TCI is calculated by dividing the remaining budget (BAC – EV) by the remaining work (EAC – AC).

A TCI greater than 1 indicates that the project is likely to be completed under budget, while a TCI less than 1 indicates that the project is likely to be completed over budget.

TCI = (BAC – EV) / (EAC – AC)

Q8: What is the project likely to cost?

Answer: Estimate at Completion (EAC)

The estimate at completion predicts the total cost of the project based on the project's performance to date.

It takes into account the actual costs to date, the planned costs for the remaining work, and any cost variances. There are several methods to calculate the EAC, including:

• Bottom-up EAC: This method involves calculating the cost of each remaining activity and adding them up to arrive at the total cost of the project.
• EAC based on performance: This method involves using the current performance of the project to predict the final cost. The formula for this method is:

EAC = AC + (BAC - EV) / CPI

Where CPI is the cost performance index, which is the ratio of the earned value (EV) to the actual cost (AC).

Q9: Will we be under or over budget?

Answer: Variance at Completion (VAC)

Variance at completion measures the difference between the budgeted cost of the project and the estimated total cost.

A positive VAC indicates that the project is likely to be completed under budget, while a negative VAC indicates that the project is likely to be completed over budget.

VAC = BAC - EAC

Q10: What will the remaining work cost?

Answer: Estimate to Complete (ETC)

The estimate to complete predicts the cost of the remaining work based on the project's performance to date.

It takes into account the actual costs to date, the planned costs for the remaining work, and any cost variances. ETC can be calculated using the following formula:

ETC = (BAC - EV) / CPI

In the high-stakes world of project management, every decision counts. By using EVM performance measures, Project Managers can confidently answer ten critical questions about a project's progress, enabling them to take corrective action when necessary and stay on track to meet their objectives.

So, whether you're building a bridge or launching a rocket into space, remember that EVM performance measures are your secret weapon. With this powerful tool in your arsenal, you can keep your project on track, impress your stakeholders, and deliver success.

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