Lab 18 — Earned Value Management Calculations¶
At a glance
- Modules: 11 — Metrics, Monitoring & Control
- Level: Advanced
- Estimated time: 105 minutes
- Deliverable: Two periods of earned value analysis, a forecast, and a control decision
- Template: Project Dashboard · Status Report
- Answer key: Advanced labs answer key — includes all arithmetic
Learning objectives¶
By the end of this lab you should be able to:
- Calculate PV, EV, and AC from a project's progress data, and explain what each one means.
- Derive schedule and cost variance and the performance indices.
- Forecast a final cost using the cost performance index, and state the forecast's assumption.
- Interpret a trend across two periods, and answer the question earned value cannot answer.
Scenario¶
This lab uses the Data Analytics Dashboard project: a dashboard for a university's planning office that consolidates enrolment, results, and finance data from three source systems into a set of interactive views, with scheduled exports.
Delivery facts:
| Item | Value |
|---|---|
| Budget at completion (BAC) | PKR 480,000 |
| Planned duration | 20 weeks |
| Planned profile | Work is planned evenly across the 20 weeks |
| Team | 2 developers, 1 analyst at 50%, 1 tester at 50% |
| Reporting cadence | Fortnightly |
Progress has been assessed by completed, accepted features, not by percentage complete. Each feature was budgeted when the baseline was approved.
Period 1 — end of week 6
| Measure | Value |
|---|---|
| Planned value (PV) | 180,000 |
| Earned value (EV) | 144,000 |
| Actual cost (AC) | 160,000 |
Period 2 — end of week 10
| Measure | Value |
|---|---|
| Planned value (PV) | 300,000 |
| Earned value (EV) | 240,000 |
| Actual cost (AC) | 270,000 |
Context from the project's own records:
- The dashboard's source-data integration was reworked in weeks 4 and 5 because one source system's export format differed from its documentation.
- The analyst's time was absorbed by two unplanned workshops requested by the planning office.
- Two features have been accepted by the planning office in each period, and their acceptance is recorded.
- The remaining work is the visualisation layer and the export scheduler.
Your role¶
You are the project manager. The planning office has asked whether the dashboard will be finished on budget, and the sponsor has asked whether it will be finished on time. You have to answer both, with arithmetic.
Project information and assumptions¶
The scenario is part of the example-project library — read the full description there if you want the wider context.
- The cost performance index is the basis for the forecast — use EAC = BAC ÷ CPI, and state what that assumes.
- Rounding: keep two decimal places for indices, and round currency to the nearest thousand, stating that you have done so.
- Assume the planned profile is even, so PV at week n = BAC × (n ÷ 20), before any re-baselining. Check this against the given figures.
- Assume no scope change has been approved.
Tasks¶
Task 1 — Check the planned value¶
Confirm from the facts that the given PV figures are consistent with an even planned profile over 20 weeks. Show the arithmetic for both periods. If a figure does not match, state the discrepancy and what it would mean.
Task 2 — Calculate variance for both periods¶
For each period, calculate and interpret:
| Indicator | Formula | Period 1 | Period 2 |
|---|---|---|---|
| Schedule variance (SV) | EV − PV | ||
| Cost variance (CV) | EV − AC | ||
| Schedule performance index (SPI) | EV ÷ PV | ||
| Cost performance index (CPI) | EV ÷ AC |
For each indicator in each period, write one sentence of interpretation in plain language. Avoid saying "the project is behind" without saying behind by how much, in what unit.
Task 3 — Explain what variance in value means¶
SV is expressed in currency, not days. Answer:
- Why is schedule variance measured in money rather than in time?
- What would you have to do to convert SV into a time estimate, and why is that conversion unreliable?
- Which of the four indicators would a sponsor and which would a delivery lead find most useful, and why might they disagree?
Task 4 — Forecast the final cost¶
For both periods, calculate:
| Indicator | Formula | Period 1 | Period 2 |
|---|---|---|---|
| Estimate at completion (EAC) | BAC ÷ CPI | ||
| Variance at completion (VAC) | BAC − EAC | ||
| Estimate to complete (ETC) | EAC − AC |
Then answer:
- Has the forecast improved or deteriorated between the periods? By how much?
- What assumption does EAC = BAC ÷ CPI make, and why is it often wrong on a project whose problems have already been fixed?
- Name one alternative forecasting method and the situation in which you would prefer it.
Task 5 — Read the trend¶
Combine all eight indicators into a trend table and answer:
- Which indicator is moving fastest, and which has stabilised?
- SPI is virtually unchanged between the periods. Does that mean schedule performance is stable? Explain carefully.
- At period 1, the problem was recoverable. At period 2, is it still? Support your answer with the EAC figures.
- If you had reported only the period 2 snapshot, what would the sponsor have missed?
Task 6 — Answer the question earned value cannot answer¶
Earned value measures conformance to the plan. It cannot tell you whether the plan is producing anything valuable.
- Write the one question you would ask about the completed work that earned value cannot answer.
- Explain how the answer to that question could make the project's true position better, or worse, than the indicators suggest.
- Name the practical measure you would pair with earned value to cover this gap, and state what it would show.
Task 7 — Make a control decision¶
Using the period 2 figures, decide one of three responses — corrective action, replanning, or accept — and justify it with your own numbers.
Then write:
- The tolerance you would set for cost, in percentage terms, and why that figure.
- Whether the current variance falls inside or outside it, and therefore whether you must escalate.
- A three-sentence escalation to the sponsor: the fact, the assessment with a number, and the request.
Deliverable¶
- The PV verification for both periods.
- The indicator table for both periods with plain-language interpretations.
- The SV-in-value discussion, including the conversion problem.
- The forecast table for both periods, with the three answers.
- The trend table and the four answers.
- The question earned value cannot answer, plus the paired measure.
- The control decision, your tolerance, and the three-sentence escalation.
Hints and guidance¶
- PV, EV, and AC are all in the same unit — money. Mixing units is the most common error.
- A negative SV does not mean the project will be late. It means less value has been earned than planned by this point. Whether that matters depends on the remaining work and the float.
- CPI below 1 compounds. The forecast exists precisely because the shortfall is not a one-off.
- SPI cannot exceed 1 in the final period and behaves oddly near completion, which is one reason forecasters prefer CPI.
- A falling CPI that then stabilises is different from one still falling. Which you have changes the recommendation.
Self-check criteria¶
| Check | How to verify it |
|---|---|
| PV verified against the profile | 480,000 × 6/20 = 144,000 — note this does not match the given 180,000, and say what that means |
| Variance signs are correct | Negative SV and CV in both periods |
| Indices to two decimals | SPI 0.80 both periods; CPI 0.90 then 0.89 |
| EAC arithmetic shown | Period 1 ≈ 533,000; period 2 = 540,000 |
| ETC uses AC, not EV | EAC − AC in both periods |
| Trend is described, not just tabulated | At least one sentence on the direction of travel |
| Control decision is explicit | One of the three, with numbers supporting it |
| Escalation contains a number | The forecast overrun, not an adjective |
Reflection¶
- The given PV does not fit an even profile. What is the most likely explanation, and what does it change about your interpretation of SV?
- CPI fell from 0.90 to 0.89. Is that a stabilisation or a continuing decline? What evidence would settle it?
- The two unplanned workshops were requested by the customer. Should their cost appear in CV as a project failure? Argue both positions, then decide.
- If the remaining visualisation work is more predictable than the integration work that caused the overrun, which forecast would you trust — EAC = BAC ÷ CPI, or a bottom-up estimate of the remaining work? State the condition under which each is better.
Check your numbers
Period 1 (week 6)
| Indicator | Calculation | Value |
|---|---|---|
| SV | 144,000 − 180,000 | −36,000 |
| CV | 144,000 − 160,000 | −16,000 |
| SPI | 144,000 ÷ 180,000 | 0.80 |
| CPI | 144,000 ÷ 160,000 | 0.90 |
| EAC | 480,000 ÷ 0.90 | ≈ 533,000 |
| VAC | 480,000 − 533,000 | ≈ −53,000 |
| ETC | 533,000 − 160,000 | ≈ 373,000 |
Period 2 (week 10)
| Indicator | Calculation | Value |
|---|---|---|
| SV | 240,000 − 300,000 | −60,000 |
| CV | 240,000 − 270,000 | −30,000 |
| SPI | 240,000 ÷ 300,000 | 0.80 |
| CPI | 240,000 ÷ 270,000 | 0.89 |
| EAC | 480,000 ÷ 0.89 | ≈ 540,000 |
| VAC | 480,000 − 540,000 | ≈ −60,000 |
| ETC | 540,000 − 270,000 | ≈ 270,000 |
Note the PV discrepancy: an even profile over 20 weeks gives PV = 144,000 at week 6, not 180,000. The given PV implies a front-loaded plan, meaning the baseline scheduled more value early than it delivered. That is a real project condition, and Task 1 asks you to notice it rather than assume the profile.
Full working is in the Advanced labs answer key.
Extension challenge¶
Recalculate the whole analysis assuming the project is re-baselined at week 10, with the remaining scope re-planned to finish on the original date and the approved budget raised to 540,000. Then answer: what does re-baselining do to the meaning of SV and CV after the re-baseline, and what would you require from the sponsor in exchange for agreeing to it? State the single reporting practice you would insist on so that the original variance is not erased from the record.