Advances in earned schedule and

earned value management

Anbari, Frank T. Anbari, F. T. (2011). Advances in earned schedule and
earned value management. Paper presented at PMI® Global Congress
2011—North America, Dallas, TX. Newtown Square, PA: Project
Management Institute.

Abstract

Earned value management (EVM) is a powerful methodology that gives

executives, project managers, and other stakeholders the ability to
visualize project status throughout the project life cycle and
consequently manage projects, programs, and portfolios more
effectively. The earned schedule (ES) allows EVM metrics to be
transformed into time or duration metrics to enhance the evaluation of
project schedule performance and to forecast the duration needed to
complete the project. When combined with schedule analysis, ES can
enhance the project manager’s understanding of project schedule
forecasts and provide further insights for making better decisions
about project schedules and related parameters.

Introduction

Earned value management (EVM) is a powerful methodology that gives

the executive, program manager, project manager, and other
stakeholders the ability to visualize project status throughout the
project life cycle and consequently manage projects, programs, and
portfolios more effectively. EVM helps managers in making evidence-
based decisions about project scope, resources, and cost, and as a
result, it supports effective control and project oversight. In its original
form, EVM was used to evaluate project performance and forecast the
cost of the project at completion. However, it was not used generally
to estimate the time needed to complete an activity, work package, or
project, or to forecast their completion date. Extensions to EVM have
been developed to use the same EVM data for that purpose. The
earned schedule (ES) concept allows EVM metrics to be transformed
into time or duration metrics to enhance the evaluation of project
schedule performance and to forecast the duration needed to
complete the project. When combined with appropriate schedule
analysis, this approach can enhance the project manager’s
understanding of the time estimate after the project, and provide
further insights for making better decisions about the project schedule
and other related parameters. This paper highlights valuable advances
in earned value project management and the earned schedule concept.

Elements of Earned Value Management

EVM integrates three critical elements of project management: scope

management, cost management, and time management. It requires the
periodic monitoring of actual expenditures and the amount of work
done (expressed in cost units).

 To determine cost performance, EVM compares how much we

have spent to what we planned to have spent to do the work we
have done.
 To determine time performance, it compares the amount of work
done to the amount of work scheduled to be done.
To make these comparisons, EVM calculates cost and schedule
variances, along with performance indices for project
performance management. Based on these results, it forecasts
the date and cost of the project at completion and highlights the
possible need for corrective action. EVM uses the following
project parameters to evaluate project performance (Exhibit 1):
Exhibit 1 – Components of Earned Value Management
(Adapted from Anbari, 2003; Kwak & Anbari, 2010; Turner et al., 2010)

Planned Value (PV): This is the cumulative planned cost for the work
planned to be done on the project up to a given point in time. It is the
approved budget for completing the work planned so far, and as such
it is the cost baseline for the project. It was previously called the
budgeted cost of work scheduled (BCWS).

Budget at Completion (ВАС): This is the total amount of money

expected to be spent on the project, and as such it is the value that PV
is planned to reach at completion.

Actual cost (AC): This is the cumulative actual cost spent on the
project so far, including all accrued costs on the work done. AC was
previously called the actual cost of work performed (ACWP).

Earned value (EV): This represents the cumulative amount of work

done up to a point in time, expressed in cost units. It is expressed as
the amount that was planned to have been spent on the work that has
been completed up to this point. EV was previously called the
budgeted cost of work performed (BCWP). To calculate the EV for a
given element of work, the planned cost is multiplied by the
percentage complete. The EV for the project is the sum of the EV for
all the work elements.

ВАС, PV, AC, and EV are expressed in cost units. That may be in units
of actual money, in any currency. Or it can be expressed in hours or
days of work done. PV, AC, and EV can be calculated for any element
of work to determine progress on that element of work.

Project Performance Measurement

Cost performance on the project is determined by comparing EV to AC.

The difference shows whether the project is overspent or underspent.
Schedule performance is determined by comparing the EV to the PV.
PV shows the amount of work that was planned to have been done and
EV represents the amount that has been done. By comparing the two,
we can determine whether more or less work has been performed than
should have been done and whether the project is ahead of or behind
schedule. We do these comparisons by calculating variances and the
performance indices.

Variances:

The following formulas are used to calculate the variances:

The cost variance (CV) is a measure of cost performance:

CV = EV – AC

The schedule variance (SV) is a measure of schedule performance:

SV = EV – PV

Variance Percentages

The following formulas are used to calculate the variance

percentages:

Cost variance percent (CV%):

CV% = CV ÷ EV

Schedule variance percent (SV%):

SV% = SV ÷ PV
In the above formulas,

 0 indicates that performance is on target.

 A positive value indicates good performance.
 A negative value indicates poor performance.

Performance Indices

The following formulas are used to calculate the performance indices:

Cost performance index (CPI) is another measure of cost performance:

CPI = EV ÷ AC

Schedule performance index (SPI) is another measure of schedule

performance:

SPI = EV ÷ PV

In the above formulas,

 1.0 indicates that performance is on target.

 More than 1.0 indicates good performance,
 and less than 1.0 indicates poor performance.

Forecasting of Project Outcome

Project management is primarily concerned with decisions affecting

the future. Therefore, forecasting is an extremely important aspect of
project management. EVM is particularly useful in forecasting the cost
and time of the project at completion, based on actual performance to
date using the following calculations.

Forecasting of Cost at Completion

The forecast of the cost of the project at completion is usually called

the estimate at completion (EAC) or the cost estimate at completion
(CEAC). The forecast cost remaining is usually called the estimate to
complete (ETC).
Several assumptions can be made about project cost performance in
the future (Anbari, 2003). Two major assumptions are:

 The remaining work will be performed according to the original

plan, therefore (Turner, 2009):
ETC = BAC – EV

EAC = AC + BAC – EV = BAC + CV

 The remaining work will be performed while continuing to

overspend or underspend at the same rate (Anbari, 2003; Project
Management Institute, 2005; Turner, 2009):
ETC = (BAC – EV) ÷ CPI

EAC = AC + (BAC – EV) ÷ CPI = BAC ÷ CPI

Cost Variance at Completion

The cost Variance at Completion (VAC) provides an indication of the

estimated cost underrun or overrun after the project:

VAC = BAC – EAC.

In this equation,

 0 indicates that the project is forecasted to be completed on

budget.
 A positive value indicates a forecasted underrun.
 A negative value indicates a forecasted overrun.

Earned Schedule

In its basic form, EVM has not been used to estimate the time to
completion or forecast end date. However, extensions to EVM have
been developed to use EVM data for that purpose (Anbari, 2003b;
Lipke, 2009; Lipke, Zwikael, Henderson & Anbari, 2009; Turner et al.,
2010).

The terminology in this area is not fully agreed upon as it is in EVM, so

the following terminology will be used:
Schedule at Completion (SAC): This is the original planned completion
duration (date) of the project.

Earned Schedule (ES): This duration from the beginning of the project
to the date on which the PV should have been equal to the current
value of EV. On the EVM chart (Exhibit 2), it is the date on which the
horizontal line through the current value of EV intersects the PV curve.

Actual Time (AT): This is the duration from the beginning of the
project to the status date.

The time variance (TV) is a measure of schedule performance in time

units rather than cost units:

TV = ES – AT

If this value is negative the project is behind schedule, and if it is

positive it is ahead of schedule. This is sometimes called the schedule
variance (time), SV(t), but that name could lead to possible confusion
with the schedule variance.

Exhibit 2 – Components of the Earned Schedule

(Adapted from Anbari, 2003; Lipke, 2009; Lipke et al., 2009; Kwak &
Anbari, 2010; Turner et al., 2010)
The time variance percent (TV%) can be calculated as:

TV% = TV ÷ ES

The time performance index (TPI) can be calculated as:

TPI = ES ÷ AT

This is sometimes called schedule performance index (time), SPI(t),

but again there is a possible risk of confusion with SPI. As with SPI, if
TPI is greater than 1.0, the project is ahead of schedule, and if it is
less than 1.0, the project is behind schedule.

Forecasting of Completion Time

As an important extension to EVM, ES is particularly useful in

forecasting the time at completion of the project, based on actual
performance to date using the same EVM data and the following
calculations.

Forecasting of Time at Completion

The forecast of time at completion can be called the time estimate at

completion (TEAC). The fact that the estimated cost at completion is
generally called the estimate at completion (EAC) and not the cost
estimate at completion (CEAC), whereas the estimated time at
completion has to be called the time estimate at completion (TEAC),
underlines EVM’s primary focus on cost control. The forecast of time
to complete the remaining work can be called the time estimate to
complete (TETC).

Several assumptions can be made about project schedule performance

in the future (Anbari, 2003). Two major assumptions are:
 the remaining work will be performed according to the original plan
and there will be no further delay to (or speeding of) the project,
therefore (Anbari, 2003; Turner et al., 2010):
TEAC = SAC + TV

 the remaining work will be performed while maintaining the same

rate of doing work for the rest of the project (Anbari, 2003; Lipke,
2009; Lipke et al., 2009; Turner et al., 2010):
TEAC = SAC ÷ TPI

TEAC can also be calculated using the SPI, but the calculations are
more complicated. They depend on whether the project has
reached the planned completion date and whether it is ahead or
behind schedule. If the date is earlier than SAC and the project has
not yet finished:

TEAC = SAC ÷ SPI

After the SAC is reached, SV tends toward and concludes at 0.0 and
SPI tends towards and concludes at 1.0 when the project is
completed. Hence, using SPI for schedule forecasting after the SAC
is reached would lead to erroneous results. Therefore, we define
the expected accomplishment rate (EAR) as the expected average
accomplishment rate per period from the status date to the
completion of the project or work package. Then:

TEAC = AT + (BAC – EV) ÷ EAR

When past schedule performance is a good predictor of future

schedule performance, EAR would be equal to the average actual
accomplishment rate (AAR) per period to date, which can be
obtained by dividing EV over AT: EAR = AAR = EV ÷ AT. Then:

TEAC = AT + (BAC – EV) ÷ AAR

Time Variance at Completion

The Time variance at completion (TVAC) indicates the estimated

amount of time that the project will be completed ahead or behind
schedule:
TVAC = SAC – TEAC

In this equation, 0.0 indicates that the project is expected to be

completed on schedule, a positive value indicates that the project is
expected to be completed ahead of schedule and a negative value
indicates that the project is expected to be completed behind
schedule.

Statistical Forecasting

EVM and ES have been integrated with statistical confidence limits to

derive the range of probable outcomes for the project's final cost and
duration. The results of this work demonstrated that the proposed
approach is sufficiently reliable for the general application of the
forecasting method for both cost and duration and that the ES
approach can be applied effectively regardless of the type of work or
the magnitude of cost and duration of the project (Lipke et al., 2009).

Example

The following example (adapted from Anbari, 2003; Kwak & Anbari,
2010) illustrates the concepts discussed in this paper. Consider a
project that has a baseline Budget at Completion of $100 (followed by
an appropriate number of 0’s) and a baseline schedule of 40 weeks.
The baseline indicates that by the end of week 20, the project is
planned to be 50% complete. At the end of week 20, it is reported that
40% of the project work has been completed at $60. The main
components of this example are shown in Exhibit 3.
Exhibit 3 – Main Components of the Example Project
(Adapted from Anbari, 2003; Kwak & Anbari, 2010)

Using the EVM method:

BAC = $iGG

AT = 2G weeks

AC = $6G

PV = 5G% x $iGG = $5G

EV = 4G% x $iGG = $4G

Therefore:

% Complete = EV – BAC = $4G – $iGG = 4G%

% Spent = AC – BAC = $6G – $iGG = 6G%

Cost and Schedule Variances:

CV = EV – AC = $40 – $60 = -$20

SV = EV – PV = $40 – $50 = -$10

Performance Indices:

CPI = EV – AC = $40 – $60 = 0.67

SPI = EV – PV = $40 – $50 = 0.80

Estimate at Completion and Variance at Completion:

EAC = BAC – CPI = $100 – 0.67 = $150

VAC = BAC – EAC = $100 – $150 = -$50

Earned Schedule:

PV Rate = $100 – 40 weeks = $2.5 per week

TV = SV – PV Rate = – $10 – $2.5 per week = -4 weeks

AT = 20 weeks

ES = 16 weeks

TV = AT – ES = 20 – 16 = -4 weeks

TPI = ES ÷ AT = 16 ÷ 20 = 0.80

TEAC = SAC ÷ TPI = 40 ÷ 0.80 = 50 weeks

TVAC = SAC – TEAC = 40 – 50 = -10 weeks

From the above equations, we can conclude that this project is in

serious trouble regarding both cost and schedule performance.
Corrective actions should have already been taken. It is critical to
conduct an immediate review of this project, evaluate the underlying
causes of the problems facing it, and make appropriate decisions
promptly.

Comparison and Integration of CPM and ES

Many professionals like to use network analysis, such as CPM/PERT for

schedule forecasting and EVM for cost forecasting. However, it is
important to note that these methods have different underlying
assumptions. CPM/PERT is primarily a planning tool, whereas EVM is
primarily a monitoring and control tool. CPM/PERT generally assumes
that future performance will parallel the original plan, unless changes
are made to the original plan scope, time, logic, resources, or cost.
CPM/PERT assumes initially that problems or opportunities that
affected performance in the past will not reoccur in the future and that
past performance is not a good predictor of future performance. By
contrast, the assumption generally associated with EVM is that past
performance is a good predictor of future performance, that
performance to date will continue, and that efficiencies or
inefficiencies observed to date will prevail to completion of the project
or work package. Which of these assumptions and related forecasts
will materialize depends greatly on decisions and actions taken by the
project manager, the project team, senior executives, and others in
the organization (Anbari, 2003; Turner et al., 2010).

Considering the above example, the project is four weeks behind

schedule as of week 20. Using CPM and assuming the worst case
scenario that the four weeks are entirely on the critical path, the
project would be forecasted to be completed in 44 weeks, with a delay
of four weeks. However, using ES the project would be forecasted to
be completed in 50 weeks, with a delay of 10 weeks. The four weeks
represent 10% of the original duration of 40 weeks and may be
considered a tolerable deviation in some organizations, whereas the
10 weeks represent 25% of the original duration of 40 weeks and
would be considered beyond tolerable deviations in most
organizations. This important difference affects resource utilization
and management decisions greatly. Applying CPM and ES with a clear
understanding of their underlying assumptions can enhance the
project manager’s decision-making to achieve various project
objectives.

It is advisable to ask functional managers and work package

managers to review cost and schedule mathematical forecasts and to
provide their own subjective forecasts for the work being performed in
their areas. Both mathematical forecasts and subjective forecasts
could be included in project performance reports. This approach
highlights performance deviations for various managers, encourages
them to consider appropriate, timely actions, and incorporâtes their
detailed knowledge of performance in their own areas, which may not
be evident from the mathematically forecasted values (Anbari, 2003;
Turner et al., 2010).

Forecasting in project management may well be a self-defeating

prophecy, and that may be good for the organization ultimately. Large
deviations usually attract management’s attention and result in
corrective action. Small deviations are usually left alone. By
quantifying and highlighting such deviations, bar (Gantt) charts,
project network analysis techniques, and EVM help focus
management’s concentration on projects or work packages that need
the most attention. As a result, these tools support the effective
management of projects and work packages collectively and enhance
the management of the enterprise project portfolio. Using these
techniques consistently to forecast project outcomes provides a
uniform approach to project reviews, builds confidence in the project
outcome as time progresses, and enhances management’s ability to
take corrective actions and make appropriate decisions affecting all
projects (Anbari, 2003; Turner et al., 2010).

Conclusions

EVM is a powerful methodology that helps the executive, program

manager, project manager, and other stakeholders in managing
projects, programs, and portfolios more effectively. ES is an important
extension to EVM that allows EVM metrics to be transformed into time
or duration metrics to enhance the evaluation of project schedule
performance, forecast the duration needed to complete the project,
augment the project manager’s understanding of the time estimate
after the project, and provide further insights for making better
decisions about project schedule and other critical parameters.