EVA application; 35 days, Rs 8,00,000 spent

Applicability of EVA for monitoring

EVA is suitable for monitoring a construction project because it measures performance with one common unit, money. At every review the planned value (PV), earned value (EV) and actual cost (AC) are found. From them the schedule variance, cost variance and the SPI and CPI show whether the project is ahead or behind and over or under budget, and the EAC forecasts the final cost. Since the physical progress is converted to a value, the cost and time performance of different activities can be added and compared with the baseline at any date.

Given data

BAC = Rs 10,00,000; planned duration = 50 days; at day 35: progress = 60 %, cost spent = Rs 8,00,000. Planned work is assumed uniform with time.

Calculation

$$\begin{aligned} PV &= \frac{35}{50} \times 10{,}00{,}000 = 7{,}00{,}000 \\ EV &= 0.60 \times 10{,}00{,}000 = 6{,}00{,}000 \\ AC &= 8{,}00{,}000 \end{aligned}$$ $$\begin{aligned} SV &= EV - PV = 6{,}00{,}000 - 7{,}00{,}000 = -1{,}00{,}000 \\ CV &= EV - AC = 6{,}00{,}000 - 8{,}00{,}000 = -2{,}00{,}000 \\ SPI &= \frac{EV}{PV} = \frac{6{,}00{,}000}{7{,}00{,}000} = 0.86 \\ CPI &= \frac{EV}{AC} = \frac{6{,}00{,}000}{8{,}00{,}000} = 0.75 \\ EAC &= \frac{BAC}{CPI} = \frac{10{,}00{,}000}{0.7500} = 13{,}33{,}333 \\ ETC &= EAC - AC = 13{,}33{,}333 - 8{,}00{,}000 = 5{,}33{,}333 \\ VAC &= BAC - EAC = 10{,}00{,}000 - 13{,}33{,}333 = -3{,}33{,}333 \\ \text{Forecast duration} &= \frac{50}{SPI} = \frac{50}{0.8571} = 58.3\ \text{days} \end{aligned}$$

Comment

• Schedule: SV = -1,00,000 and SPI = 0.86, so the project is behind schedule; only 86 % of the planned work is done. If the same rate continues, the duration becomes 58.3 days against 50 days planned.
• Cost: CV = -2,00,000 and CPI = 0.75, so the project is over budget; each rupee spent has earned Rs 0.75 of work.
• Forecast: EAC = Rs 13,33,333 against BAC = Rs 10,00,000, i.e. a final overrun of Rs 3,33,333.
• Action: find the causes (low productivity, idle equipment, material delay, wastage), add resources or shifts on critical activities, tighten supervision and cost control, and revise the plan with the client.

Answer: SV = Rs -1,00,000, CV = Rs -2,00,000, SPI = 0.86, CPI = 0.75; behind schedule and over budget; EAC = Rs 13,33,333.