PMAN 650

Session 5 Individual Assignment (v3.1)

Earned Value Management

Introduction

All of you have had at least an introduction to earned value management in the project management
fundamentals course. Many of you may have had the opportunity to use earned value management in
your professional careers. In practice, most EVM analysis results are generated by scheduling software
or other applications. As a project manager, you must have a good handle on the concepts and be able
to verify the accuracy of EVM analysis results.

In this assignment, you will have an opportunity to brush up and expand upon your EVM knowledge and
skills by applying EVM concepts to a practical problem. THIS ASSIGNMENT REQUIRES A MANUAL
ANALYSIS - DO NOT USE MICROSOFT PROJECT.

Problem Background

Your project consists of seven activities with planned start and finish dates shown in the chart below:

Activity 7

Activity 6

Activity 5

Activity 4

Activity 3

Activity 2

Activity 1

1 3 5 7 9 11 13 15 17 19 21 23

Week
 PMAN 650
Session 5 Individual Assignment (v3.1)
Earned Value Management

Activity budgets and earned value (EV) accrual rules from you project cost management plan are as
follows:

Activity Budget EV Accrual Rule

1 25,000 Percent Complete with Gates

2 20,000 Fixed Formula - 0/100
3 50,000 Weighted Milestones
4 60,000 Percent Complete with Gates
5 30,000 Fixed Formula - 40/60
6 20,000 Fixed Formula -30/70
7 10,000 Fixed Formula - 100/0

Assumptions

1. Assume a five-day work week with no holidays occurring during the work week.
2. For all activities (except activities 3 and 4), assume the expenditure rate is constant over the
duration of the activity, i.e., the amount planned to be spent each week is the same. See the
conceptual profile below.

Weekly Expenditures –
Constant Expenditure Rate Activities

Expenditure
Rate

1 2 3 4 5 6... and so on
Week
 PMAN 650
Session 5 Individual Assignment (v3.1)
Earned Value Management

3. For activity 3, the planned expenditure profile is shown below:

Activity 3 Weekly Planned Expenditures

9000
8000
7000
6000
5000
4000
3000
2000
1000
0
1 2 3 4 5 6 7 8

4. For activity 4, the planned expenditure profile is shown below:

Activity 4 Weekly Planned Expenditures

12000

10000

8000

6000

4000

2000

0
1 2 3 4 5 6 7 8
 PMAN 650
Session 5 Individual Assignment (v3.1)
Earned Value Management

The project sponsor wants you (the PM) to present a project cost and schedule performance assessment
using data through the end of week 8. You have collected the following information:

Activity Actual Start Actual Finish Expended

1 Start of week 1 End of week 5 22,000
2 Start of week 6 End of week 8 25,000
3 Start of week 3 40,000
4 Start of week 8 8,000
5 0
6 0
7 0

For activity 1, three equally-valued gates have been established and all gates are complete as of the end
of week 8.

For activity 3, five milestones have been established with the following values: (1) milestone 1 – 10%;
milestone - 20%; milestone 3 – 15%; milestone 4 -20%; milestone 5 – 35%. Four of the milestones are
complete as of the end of week 8.

For activity 4, four equally values gates (milestones) have been established. As of the end of week 8,
none of the gates have been reached but the activity owner estimates 30% of the work required to
reach the first gate has been accomplished.

Show all work. Round dollar values to the nearest dollar. Calculate all other
variables to three decimal places.
 PMAN 650
Session 5 Individual Assignment (v3.1)
Earned Value Management

1. Earned Value Measures

a. Calculate earned value measures for each activity and for the cumulative project as of
the end of week 8; fill in the table below:

Activity Planned Value (PV) Earned Value (EV) Actual Cost (AC)

Activity One 22,000

Activity Two 25,000

Activity Three 40,000

Activity Four 8,000

Activity Five 0

Activity Six 0

Activity Seven 0

Entire Project
 PMAN 650
Session 5 Individual Assignment (v3.1)
Earned Value Management

2. Earned Value Performance Measures

a. Calculate earned value performance parameters for each activity and for the cumulative
project as of the end of week 8; fill in the table below:

Activity Schedule Schedule Cost Variance Cost

Variance (SV) Performance (CV) Performance
Index (SPI) Index (CPI)

Activity One

Activity Two

Activity Three

Activity Four

Activity Five

Activity Six

Activity Seven

Entire Project

b. Is the project ahead of schedule, on schedule, or behind schedule? What EVM

information are you using to make this assessment and why?
c. Is the project over budget, under budget, or on budget? What EVM information are you
using to make this assessment and why?

3. Earned Value Forecasts

a. What is the value of the “Cumulative CPI” Estimate-at-Completion (EAC)?
b. Using the “Mathematical” or “Overrun to Date” Estimate-at Completion, what is the
value of the Estimate-to-Complete (ETC)?
c. Using the “Cumulative CPI times SPI” Estimate-At-Completion, how much more or less
money (other than the current budgeted amount) will you need to finish the project?
d. How much would the Cost Performance Index (CPI) have to change in order to complete
the project within the original budget?