Earned Value Analysis with MSP

Earned Value Analysis (EVA) is a powerful tool for project management that enables you to monitor and control project performance effectively. By integrating scope, schedule, and cost, EVA provides insightful metrics that help predict project success or potential challenges. This article explores the key concepts, calculations, and application of EVA using Microsoft Project (MSP).

Key Metrics of Earned Value Analysis

EVA revolves around three foundational metrics:

1. Budgeted Cost of Work Scheduled (BCWS): This represents the planned budget for scheduled work. It is also known as the Planned Value (PV).

   • Formula:

2. Budgeted Cost of Work Performed (BCWP): This is the budgeted amount for the work that has actually been completed. Also referred to as the Earned Value (EV).

   • Formula:

3. Actual Cost of Work Performed (ACWP): This is the actual cost incurred for the completed work, often referred to as the Actual Cost (AC). These costs typically include both direct and indirect expenses, such as materials, labor, and overhead.

   
   

Illustrative Example

Consider three activities (A, B, and C) with the following timelines:

• Activity A: Duration of 4 weeks

• Activity B: Duration of 3 weeks

• Activity C: Duration of 2 weeks

In the first week, 25% of Activity A is planned to be completed. By the fourth week, portions of all three activities are planned to be completed. Calculating BCWS for each week involves multiplying the planned progress by the budgeted amount. Similarly, BCWP and ACWP reflect actual performance and costs incurred.

S-Curve Analysis

The S-Curve is a graphical representation of BCWS, BCWP, and ACWP over time, providing a clear picture of planned, earned, and actual values. This curve helps assess project health by comparing budgeted costs with actual expenditures and earned progress.

Advanced Metrics in EVA

Using the foundational metrics, additional performance indicators are derived:

1. Schedule Variance (SV):

   • Positive SV indicates the project is ahead of schedule.

     
     

2. Schedule Performance Index (SPI):

   • SPI > 1 suggests the project is progressing faster than planned.

     
     

3. Cost Variance (CV):

   • A positive CV indicates cost savings.

     
     

4. Cost Performance Index (CPI):

   • CPI > 1 shows cost efficiency.

     
     

Implementing EVA in MSP

Microsoft Project (MSP) simplifies EVA by automating calculations and visualizations. Follow these steps to use EVA in MSP:

1. Navigate to the Gantt Chart View.

   
   

2. From the View tab, select Tables > More Tables.

   

3. Choose the desired table, such as "Earned Value Schedule Indicators" or "Earned Value Cost Indicators," and click Apply.

   

4. Key fields include:

   
   

   • BCWS (Planned Value)

   • BCWP (Earned Value)

   • ACWP (Actual Cost)

   • SV, SPI, CV, CPI

     
     

Customizing Baselines for EVA

MSP allows you to switch between different baselines (Baseline1 to Baseline10) for EVA calculations. To modify the calculation method:

1. Go to File > Options > Advanced > Earned Value Options.

   

   
   

2. Adjust the baseline or calculation method based on your project’s requirements.

   

Conclusion

Earned Value Analysis is an essential technique for monitoring project performance across time, cost, and scope. When integrated with MSP, it becomes a robust system for analyzing and forecasting project success. By leveraging metrics like BCWS, BCWP, and ACWP, and indicators like SPI and CPI, project managers can gain actionable insights to steer projects toward success.

For more insights and professional guidance in project management, contact MegaPlan today!