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Earned Value Analysis (EVA) is a project management technique used to measure project performance and progress. It compares the planned work with the actual work completed and the associated costs. This method helps project managers identify variances early and make informed decisions to keep projects on track.
Key Components of Earned Value Analysis
The main components involved in EVA are Planned Value (PV), Earned Value (EV), and Actual Cost (AC). PV represents the budgeted cost of work scheduled to be completed by a specific date. EV indicates the budgeted cost of work actually completed. AC is the real cost incurred for the work performed.
Step-by-step Calculation Process
Follow these steps to perform Earned Value Analysis:
- Determine Planned Value (PV): Calculate the budgeted cost for the work scheduled up to the current date.
- Calculate Earned Value (EV): Assess the budgeted cost of the work actually completed by the current date.
- Record Actual Cost (AC): Sum the actual expenses incurred for the work performed.
- Compute Variances: Find Cost Variance (CV = EV – AC) and Schedule Variance (SV = EV – PV).
- Calculate Performance Indices: Determine Cost Performance Index (CPI = EV / AC) and Schedule Performance Index (SPI = EV / PV).
Interpreting the Results
Positive variances indicate the project is under budget or ahead of schedule, while negative variances suggest issues needing attention. Performance indices above 1.0 reflect good performance, whereas values below 1.0 highlight areas for improvement.