PMP Exam: Earned Value Management - Part 1, Basic Concepts

Sir Ganttalot helps you prepare for the PMP exam by explaining Earned Value Management. This is a three part lesson. Part 1 covers basic concepts, i.e. how to derive PV (Planned Value), EV (Earned Value) and AC (Actual Cost). (These terms are also known as BCWS, BCWP and ACWP respectively.) Part 2 shows how to apply these items to calculate variances (SV - Schedule Variance, CV - Cost Variance, SPI - Schedule Performance Index, CPI - Cost Performance Index). Part 3 explains how Earned Value Management is used to forecast project performance by calculating EAC - Estimate at Completion, ETC - Estimate to Complete, VAC - Variance at Completion, and TCPI - To Complete Performance Index.

Category:

Education

Tags:

• PMP
• Exam
• Preparation
• Sir
• Ganttalot
• SirGanttalot
• Earned
• Value
• Management
• PMBOK
• BCWS
• BCWP
• ACWP
• SV
• CV
• CPI
• SPI
• EAC
• ETC
• VAC
• TCPI

[baduh8guy4life]

question. if we are still looking at the work done end of day Tuesday to calc the PV shouldnt the calc be:

50+0.8(100)+(0.5*200)*(0.2)

The 0.5 for activity C is to account for the fact that end of day tuesday the most we could have completed would be half of the $200 total of activity C. SO knowing that the maximum amount we could have completed is $100 we take 20% of that? Is my thinking correct here?

[SirGanttalot]

Thanks for the question. I think you are asking about EV rather than PV? If so, then EV is the value of work actually accomplished (BCWP). For activity C, 20% of the TOTAL task has been accomplished by end of day Tuesday, rather than 20% of Tuesday's work. By that point, 50% of the TOTAL task should have been done (so the PV for activity C is $100, but only 20% has acually been done so the EV is $40. I hope this helps.

[den33775]

One thing I don't get - the PV, EV, AC calcs all make sense, but at this point, things look bad, because of the AC value of $200 against the EV of $170. But if task A is 100% complete and cost $60; task B is 80% complete and cost $110 (remaining 20% would be $27.50, making total cost of task B $137.50); and task C is 20% complete at $30 ($150 new planned value), saving us $50. So, A is $10 extra; B is 37.50 extra; C is $50 saving = 10+37.50-50 = $2.50 saving on original PV. Good news!?

[SirGanttalot]

Thanks for the question. A couple of things to factor in to your perceptive observations. When simplifying to 4 tasks as I have done in this video, some of the formulas for forecasting (see the part 3 video in this series) don't work as as well as in larger projects. We are also behind schedule, so in the real world we would keep staff on for longer than planned, costing more. Lastly, we haven't started task D yet. Two of the earlier tasks were late and/or overbudget, so D may be as well.

[manasefs]

Sorry...$170 is right...got carried away with waelwow arguement on 'B' activity...but 'A' is $50 at 100%. and NOT $100...so you were right...appologies.

I wonder which software would you recommend to learn and practice in my career as a construction engineer: Primavera or MS Project...I'm new on all of this and wonder which one shall I follow on the long run....looking forward 4 a quick reply....once again thans SIR for all ur videos...keep'em coming.

[SirGanttalot]

Primavera has a strong foothold in the construction field, but many organizations are moving to MS Project. As an engineer, unless you become the main scheduler for a team, you will likely update information in schedules created for you or by others. For your direct use, you could always have MS Project on your own desktop. Your scheduler can import schedules you create into Primvera. Basic familiarity with both products would help. Basic concepts are the same, but menu commands differ.

[konkarmilla]

this explanation was more in context of cost but i get very much confused when we talk about earned manhours. as once i had to update a excel sheet which was calculating earned manhours of a particular work performed with planned manhours

[saeednemati]

Thanks



[insomniacgrace]

Thanks for this video clip. Indeed, the title says it all. Informative and so comprehensive.

[baduh8guy4life]

@SirGanttalot I got ya. thx