The earned value analysis (EVA) is a project controlling procedure and is one of the key performance indicators of a project, like the. With the EVA, the planned and current costs of a project are identified on any desired reporting date, as well as the earned value, as well as other figures like time and cost efficiency. Based on these values, the future course of the project and the predicted completion cost can be calculated long before the end of the project.
Earned Value Analysis Template
For example, the earned value analysis answers the following questions:. Am I behind schedule if my actual costs are lower than the planned costs?. What will the project end up costing?
Is that within the budget?. Am I using the available time and resources efficiently?. How high will the profit/return on investment (ROI) be at the end of the project? Thinking back to the triangle of classical or agile project management, there are three values in a project: workload, time and scope. The scope is often called Result or Quality. In comparison to other project controlling methods the earned value analysis doesn’t just consider the time and workload through a comparison of the expected and actual situations, but also takes the extent of the earned value into the analysis – so how many work results have already been created.
Through this, different questions – for example, about exceeding the planned costs – can be answered: should that be assessed negatively, or has the work just been done more quickly than expected? It doesn’t matter whether you plan agile or classical – the earned value analysis can be implemented with both management forms, even using. The earned value is always calculated for activities or work packages. To evaluate the whole project, just calculate the earned value of the top project activity. Lower activities can also be calculated through the earned value analysis. That applies to classic, agile and hybrid projects. So in agile project management, the lower activities correspond to the release and sprint activities that are connected with backlogs or individual requirements. As the basis for the earned value analysis, you need the duration, the planned value and the actual cost of the activities.
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The earned value (EV) of an activity is calculated with the costs or the workload. Because many projects use agile or hybrid methods, it is recommended to calculate by workload, e.g., person-days. The basic formula for this is always: Earned value (EV) = planned value (PV). percent complete (PC) EV = PV. PC Percent complete is the progress. It is determined differently in classical and agile projects – an explanation can be found below in the section: The course of the planned costs, the actual costs and the earned value up until the selected analysis point can then be presented in an earned value diagram from which the first bits of information about the project status can be read.
To interpret this diagram, you have to be familiar with the estimation of the other values that can be calculated with the earned value analysis. With the help of the calculated completion value, further project values can be calculated: the cost performance index (CPI) and the schedule performance index (SPI): CPI (cost performance index ): EV / AC SPI (schedule performance index): EV / PV The values answer the questions of whether you have been working cost efficiently and on-schedule to a selected reporting day. If the value is 1, then you are within your plan. If it is higher than 1, then don’t worry, because you are working more quickly and cheaply than planned. If you are under 1, then you are not working time and cost efficiently. Even these values can be presented in a diagram to get an overview of the efficiency of your project.
In a classical earned value analysis, the PV of an activity applies as the whole planned cost for this activity. A value in a percentage is employed as the percent complete (PC). It says how much of the activity’s work is already completed. To calculate the total EV of your project:. Calculate the EV for each activity’s work package,. Add up the EV of the work packages to get an EV of the activity, and.
Add up the EV of the activities. EV project = EV activity 1 + EV activity 2 + EV activity 3 +. An activity has a planned workload of fifty person-days. After two weeks, you want to determine the earned value of this activity.
You see that those responsible have entered 15%. Now you can calculate the EV for the activity as: EV = 50 PT. 0.15 EV = 7.5 PT You now have three activities (without work packages) in your project with the following properties:. Activity 1: PV = 50 PT, Progress: 80%. Activity 2: PV = 30 PT, Progress: 25%. Activity 3: PV = 35 PT, Progress: 50% So: EV project = 40 PT + 7.5 PT + 17.5 PT = 65 PT.
As you can see, the calculation of a value seems to be very subjective: The employee thinks that 15% of the activity is completed. How did they reach this conclusion? Are there underlying objective standards that make it 15%? Or did they just guess? Normally, people are inclined to overestimate their degree of completion – the “90% rule” takes effect then: You think you’re almost finished, but the work takes a lot longer than the indicated remaining 10%. To be able to take this circumstance into account, the degree of progress can be included in the calculation of classical earned value analyses in four different ways. You have to weigh up which form is suitable for each activity in your project.
The agile earned value analysis can be used by agile teams, releases and project activities. The total PV of the project corresponds to the originally planned workload for the top project activity. There are two formulas for the degree of progress: Variant 1: PC = PV of all completed requirements at the time of analysis / originally planned PV of the top project activity Variant 2: PC = PV of all completed requirements at the time of analysis / PV of all planned requirements at the time of analysis Why can progress be calculated so differently? That is because of the agile nature of the project: the requirements to be implemented are planned from sprint to sprint. That results in realistic ways that the current planned workload of all requirements exceeds the originally planned workload. Would then the progress that is calculated with the originally planned workload correspond with reality?
Variant 1: Originially you planned 500 person-days for the project. You carried out a sprint and all the requirements are finished.
Earned Value Analysis
Together, that results in an effort of the finished requirements of 25. Then: EV = 500 PD. (25 PD / 500 PD) EV = 25 PD Variant 2: Originally you planned 500 person-days for the project. You carried out multiple sprints and planned even more requirements that show a total planned effort of 600 person-days. So the workload of the finished requirements is 25 PD. Then: EV = 500 PD.
(25 PD/ 600 PD) EV = 20, 83 PD If you had calculated 500 PD, then the earned value would have been higher than it is in reality, and the analysis would therefore be distorted. But what happens if you haven’t quite refined planned features or epics into user stories? How do you handle the calculation of the planned costs and progress so that your earned value analysis isn’t wrong? It is recommended to calculate with the planned costs of the features or epics until the user stories are completely derived. For example, you might plan sixty person-days in for an epic. From that you derive two user stories that result in a total of only fifty-five person-days and are finished. You know that you have to further refine the epic.
So use the planned cost of the epic of sixty person-days for the earned value analysis until the refinements are completely carried out. This way progress of 55/60 and not 55/55 will result. Your project, completely under control With the earned value analysis, you always know where you’re at in terms of costs and scheduling. But only considering the discrepancies of the planned and current states of things is not enough in complex projects.
Instead, you need a value for all the work that has been completed so far and to include this in the analysis as well. This way you can make sure, for example, that if your costs are higher than the plan, but you are also further on in the project than planned at this point.
Earned Value Analysis Template
To get this, and expressions like it, you need figures. Before you start the cumbersome work of calculating it all yourself, let a tool take over that offers a template for the earned value analysis. Based on the project activities and your planned expenditure, you can generate an earned value analysis in a few clicks and present values like the EV, CPI or SPI clearly in dragrams. Whether you plan agilely, classically or hybrid is irrelevant: you can use the tool for all project management types. Try it out for yourself!