Earned Value:

Integrating Costs and

Schedule
CIVE 484 Project Planning, Scheduling &
Control
Dr. Chung-Suk Cho
Spring 2022
Integration of Cost and Schedule

• Can Critical Path Method (CPM) be used as a

cost-monitoring system?
• Can CPM tell you how well the project is
adhering to its “cost schedule” or estimate?
• The true “status” of a project can only be
assessed if both cost and schedule data are
examined in conjunction with one another
• A well under budget project based on amount of money spent to date
(compared to what was projected) may not be good because the project is
well behind the schedule  What actual project costs are relative to
expected costs while also knowing where the project is on a time basis
Measurement of Project Status

• Percent completion (PC)

• Basis of defining the percent?
• PC assessment may based on a visual
inspection of the project
• However, assessing PC based on visual
inspection may be difficult depending on the
complexity of the project
• Need for more objective means of
determination for the PC
Development of Earned Value Concept

• In the 1960s, U.S. defense agencies combined

guides and requirements related to
integration of cost and schedule data into a
single system
• A key concept that evolved was termed
earned value
• The determination of how much work has
been performed on the basis of what was
budgeted for the work that has actually been
completed
• Contractor has “earned” whatever amount was budgeted for the work that has
actually been completed (EV, C/SCSC, PMS)
Earned Value Concept

• To obtain overall picture of project status, three primary data required:

• Budget Cost of Work Scheduled (BCWS)
• Budget Cost of Work Performed (BCWP)
• Actual Cost of Work Performed (ACWP)
• Budgeted Cost at Completion (BAC)
• Estimated Cost at Completion (EAC)

Curtain wall system

(non-structural outer building covering)
Earned Value Concept

• Budget Cost of Work Scheduled

(BCWS)
• Developed at the outset of the project as
it involves assigning to activities the
amount budgeted (estimated) for every
activity
• The amount of money budgeted relative
to time
• Cumulative cost curve

Installation of the entire curtain wall for this building:

Total budget cost = 4,000,000 AED (BCWS)
Total scheduled duration = 90 working days
Earned Value Concept

• Budget Cost of Work Performed (BCWP)

• Earned value
• Indicates what the budgeted costs are for the
work that has actually been performed to date
• The periodic worth of the work that is actually
performed, based on the initial estimate, and
has nothing to do with the actual costs incurred
in performing the work
• Assess the amount of work completed (time
schedule) to date and then applying the
appropriate budgeted amounts for this work

At 60% completion of curtain wall installation (at about 54 th working day),

the budget cost of this curtain wall (installed) is 2,400,000 AED (BCWP)
Earned Value Concept

• Actual Cost of Work Performed (ACWP)

• Actual costs to date
• The measure that combines monitoring of both
time schedule (work performed) and cost
records (actual cost)
• How would you measure the actual cost?

At 60% completion of curtain wall installation, the actual cost measured was
2,700,000 AED (ACWP)
Earned Value Concept

• Budgeted Cost at Completion (BAC)

• The original cost estimate of the total cost of construction
• Ideally, the total estimated cost to complete a project

• Estimated Cost at Completion (EAC)

• The forecast of the total actual costs required to complete a project based on
performance to date and estimates of future conditions
Earned Value Concept

• Schedule Variance (SV) =

BCWP - BCWS
• Schedule deviation in terms of dollars of
work
• Cost side remains constant (BC) so the
difference due to schedule deviation
• Negative value means the project is
behind schedule as the “value” of work
performed is less than that scheduled
• SV 0: Behind Schedule, SV
Ahead of Schedule
• %SV = 100 x SV/BCWS: the percent
deviation from the schedule based on
budgeted cost values
Earned Value Concept

• Cost Variance (CV) =

BCWP - ACWP
• Difference indicates the status of the
project in terms of cost
• Negative value means the project is over
budget as the actual costs exceed the
budgeted costs
• CV 0: Over Budget CV
Under Budget
• %CV = 100 x CV/BCWP: the percentage
deviation of the actual costs from what
was budgeted for the work performed
to date
Earned Value Concept

• Schedule Performance Index (SPI) = BCWP/BCWS

• Direct relationship between work performed and work scheduled based on
budgeted costs
• Value greater than 1.0 indicates that more work has been performed than was
scheduled and thus the project is ahead of schedule
• S Ahead of Schedule SPI Behind Schedule
Earned Value Concept

• Cost Performance Index (CPI) = BCWP/ACWP

• Direct comparison of budgeted costs to actual costs based on work performed
• Value greater than 1.0 indicates that the budgeted amount of the work is
higher than what it actually cost, and thus the project is under budget
• C Under Budget CPI Over Budget
Earned Value Concept

• Percent completion (PC) status of a project

• PC = BCWP/BAC (%) (Earned Value = PC x BAC)
• Planned percent complete (PPC) = BCWS/BAC (%)
• If the PPC is determined to be 60% and the PC 65%, the project is running
ahead of schedule

• Forecasting the costs at the end of the project using cost index and
its change over time, EAC
• EAC = ACWP + (BAC – BCWP)
• BAC – BCWP represents unearned hours

• Estimate at Completion Variance (ACV) = BAC – EAC

• If ACV > 0, the project is expected to be completed under budget
• If ACV < 0, the project is expected to overrun or exceed the budget
Earned Value Concept - Example

• A project consists of 12 activities (each Activity Cost Month 1 Month 2 Month 3 Month 4 Month 5 Month 6

require 1 month to complete) Sitework $22,000

Fencing $10,000
Paving $18,000
• Project costs = $257,000 (BAC = sum of the Excavation $30,000
costs of all activities) Foundation $50,000
Framing $40,000
• Project will be completed in 6 months Rough Electric $6,000
Rough plumbing $16,000
Drywall $13,000
• After 3.5 months, the sitework, excavation, Suspend ceiling $4,000
foundation, fencing, and rough electrical Interior finish $34,000
work are completed Carpeting $14,000
Total $257,000

• The framing is one-half complete, the

rough plumbing is three-fourths complete, Status of this project in terms of the
and the paving is half complete
schedule and the budget?
• The incurred costs to date are $152,000
Earned Value Concept - Example
Activity Cost Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
• ACWP = $152,000 (given) Sitework $22,000
Fencing $10,000
• BCWS = ($22,000 + $10,000 + $18,000 + Paving $18,000
$30,000 + $50,000) + ½ x ($40,000 + $6,000 + Excavation $30,000
$16,000) = $161,000 Foundation $50,000
Framing $40,000
Rough Electric $6,000
• BCWP = ($22,000 + $10,000 + $30,000 +
Rough plumbing $16,000
$50,000 + $6,000) + ½ x ($40,000) + ¾ x Drywall $13,000
($16,000) + ½ x ($18,000) = $159,000 Suspend ceiling $4,000
Interior finish $34,000
• SV = BCWP – BCWS = 159,000 – 161,000 = - Carpeting $14,000
2,000 Total $257,000

• SPI = BCWP/BCWS = 159,000/161,000 = .99

• %SV = 100 x SV/BCWS = 100 x (- Status of this project in terms of the

2000/161,000) = -1.2% schedule and the budget?
• Slightly behind schedule
Earned Value Concept - Example
Activity Cost Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
• ACWP = $152,000 (given) Sitework $22,000
Fencing $10,000
• CV = BCWP – ACWP = 159,000 – 152,000 = Paving $18,000
7,000 Excavation $30,000
Foundation $50,000
• CPI = BCWP/ACWP = 159,000/152,000 = Framing $40,000
Rough Electric $6,000
1.05
Rough plumbing $16,000
Drywall $13,000
• %CV = 100 x CV/BCWP = 100 x Suspend ceiling $4,000
(7,000/159,000) = +4.4% Interior finish $34,000
Carpeting $14,000
• Below budget Total $257,000

• PC = BCWP/BAC x 100% = 159,000/257,000 Although the project is slightly behind schedule, it is

x 100% = 62% complete performing under budget. The project is currently at
the 62 percent completion stage and is estimated to
• EAC = ACWP + (BAC – BCWP) = 152,000 +
be completed for a revised estimated cost of $250,000,
(257,000 – 159,000) = 250,000
a decrease from the original estimate