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Earned value analysis for performance control
Short answer
Earned value analysis compares planned value, earned value and actual cost to measure schedule and cost performance. For example, with BAC Rs 1,000,000, PV Rs 400,000, 35% complete and AC Rs 380,000, EV is Rs 350,000, giving CV -30,000, SV -50,000, CPI 0.921, SPI 0.875 and EAC Rs 1,085,714, so the project is over budget and behind schedule.
Discuss the use of earned value analysis (EVA) for performance control in a project, with example.
Earned value analysis (EVA) is a method of measuring project performance by comparing three quantities at a given date: the work planned, the work actually done and the money actually spent. It integrates scope, schedule and cost in one measure.
Basic terms
- BAC – budget at completion (total planned cost).
- PV (BCWS) – planned value: budgeted cost of work scheduled to date.
- EV (BCWP) – earned value: budgeted cost of work actually completed to date (= % complete × BAC).
- AC (ACWP) – actual cost of the work done to date.
Performance indicators
| Indicator | Formula | Meaning |
|---|---|---|
| Cost variance CV | EV − AC | negative = over budget |
| Schedule variance SV | EV − PV | negative = behind schedule |
| Cost performance index CPI | EV / AC | below 1 = cost overrun |
| Schedule performance index SPI | EV / PV | below 1 = delayed |
| Estimate at completion EAC | BAC / CPI | forecast total cost |
| Estimate to complete ETC | EAC − AC | cost still needed |
| Variance at completion VAC | BAC − EAC | final over/under budget |
Use in control
- It gives an early warning of cost overrun and delay, before they become large.
- It shows whether a delay or overrun is a trend (CPI, SPI) and helps to forecast the final cost and completion date.
- It guides corrective actions: more resources, rescheduling, value engineering, changes in methods.
- It gives an objective basis for reports to the client and for payment.
Example
A road project has BAC = Rs 1,000,000. At the end of month 4: PV = Rs 400,000, work done is 35%, so EV = Rs 350,000, and AC = Rs 380,000.
- CV = 350,000 − 380,000 = −30,000 (over budget).
- SV = 350,000 − 400,000 = −50,000 (behind schedule).
- CPI = 350/380 = 0.921 and SPI = 350/400 = 0.875.
- EAC = 1,000,000 / 0.921 = Rs 1,085,714.
The project is both over budget and late, so corrective action (more crews, better productivity, cost control) is needed.
✓ Answer checked by Claude Opus 5.5 (high effort)
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