# EPM Baseline – EVM in MS Project

MS Project Server Earned Value management Basics:

i. Budgeted cost for work scheduled (BCWS), sometimes called the planned value.
ii. Budgeted cost for work performed (BCWP) or earned value (EV): Quantification of the “worth” of the work done to date.
a. Cumulative EV is the sum of the budget for the activities accomplished to date
b. Current EV is the sum of the budget for the activities accomplished in a given period
iii. Budget at completion (BAC) Total cost of the project
iv. Estimate at completion (EAC) which is comprised of the cumulative to date actual cost of work performed plus the estimate to complete the remaining work.
v. Actual Cost (AC) or Actual Cost of Work Performed (ACWP)
a. Cumulative AC is the sum of the actual cost for activities performed to date
b. Current AC is the actual costs of activities performed during a given period

Note:
i. Planned Value (PV) is determined by the cost and schedule baseline.
ii. Actual Cost (AC) is determined by the actual cost incurred on the project
iii. Earned Value (EV) tells you, in physical terms, what the project accomplished.

Formulae:

1. PV = BAC * % of planned work.
2. EV = BAC * % of Actual work
3. Cost variance (CV) = BCWP – ACWP.
CV = 0 (On budget)
CV > 0 is favorable (an underrun)
CV < 0 is unfavorable (an overrun) 4. Schedule variance (SV) = BCWP – BCWS SV = 0 (On Schedule) SV > 0 is favorable (ahead of schedule)
SV < 0 is unfavorable (behind schedule) 5. Variance at completion (VAC) = BAC – EAC VAC > 0 is favorable
VAC < 0 is unfavorable Performance Indexes Schedule Performance Index (SPI) = EV/PV= BCWP/BCWS {A measure of schedule efficiency on a project} SPI > 1 favorable condition
SPI < 1 unfavorable condition SPI of 1.1, that translate to your project recognizing \$1.10 for every \$1.00 spent to date on your project and if this remains same then project will finish ahead of schedule Cost Performance Index (CPI) = EV-AC=BCWP-ACWP {Measure of cost efficiency on a project} CPI >= 1 Favorable Condition
CPI < 1 Unfavorable Condition
CPI of \$0.90, which translates to your project recognizing \$0.90 for every \$1.00 spent to date on your project. Assuming your CPI efficiency remains the same throughout the reminder of work; your project will be over budget.
Estimates to Complete

Estimate At Completion (EAC):

• From now on according to plan: EAC = ACWP + (BAC – BCWP)
• Carry on as before: EAC = ACWP + (BAC – BCWP) / (CPI * SPI)
• No further schedule variance: EAC = ACWP + (BAC – BCWP) / CPI
(note: this is the formula used by Microsoft Project)

Here atypical means it is assumed that similar variances will not occur in the future.
Estimate to complete (ETC)
ETC = EAC – AC
= (BAC / CPI) – (EV/CPI)
= (BAC – EV) / CPI

Earned value therefore represents the costs which according to the original planning would have been necessary to reach the stage of physical completion attained on the status date.

How Earned Value Analysis with Microsoft Project Works?

To begin with, you should know: Microsoft Project calculates earned value for all tasks that have
• planned costs (Baseline Cost in MS Project),
• Their beginning before the status date,
• A stage of completion that is greater than zero.

For EVM calculation in MS Project following needs to be done:

1. Need to Update %Work Complete or % Complete or Actual hours
2. Baseline 0 is considered for EVM in MS project
3. Need to keep Status Date updated
4. Need to Baseline the assignment after assigning resource