EV & CVR ANALYSIS

Earned Value and Cost Value Analysis

Earned Value and Cost Value Reconciliation

Earned Value

Cost and Progress Monitoring Effectiveness

Project management institute defines earned value management as technique which integrates project scope, schedule and resources. Project performance is then reported from the phase of initiation to the phase of closeout.

Project managers across the globe have been using earned value management for 40 years. Earned value management allows construction projects portfolio analysis. The analysis is then incorporated in to the payroll system to disburse the amount to the human resource employed for the completion of the project. EVM principles allow the use of regression analysis which helps in development of curves. This analysis helps production managers to manage a large number of government contractors. The major reason of the cost risk is to complete the project on schedule and to incorporate changes into the projects initiated by the e government. Standardised curves are then generated (Alvarado et al, 2005 pp. 92-105).

Earned Value (EV) calculation involves three key values for each activity in Work Break down structure. Planned value or BCWS, which is the portion of approved cost to be spent. The actual Cost which is total costs incurred at that particular completion point and earned value or BCWP- the value of the work actually completed in term of Budgeted costs (Potts, 2008, p. 207).

Earned Value concept allows Project managers to break complex task into simple task which is known as Work Breakdown structure they can and then analyze and evaluate the performance of each task separately as separate components (Fleming & Koppelman, 1998, pp. 21-22).

A traditional management technique does not provide enough information about the progress of the projects. They just provide budgeted cost and actual costs incurred. Similarly when earned value component is added to the calculation it can be estimated the how much has been done and whether the task has been completed on the budgeted time or does require more time. At a particular point in time if actual cost are less than planned costs that means the project is utilizing less funds in order to achieve the desire target. That particular point does not clearly communicate the progress and scope of the project, whether the project is on schedule or not (Alvarado et al, 2005 pp. 92-105).

Earned value is used for scheduling performance. To check whether the project is on schedule and up to the required performance planned value is compared with earned value. The dashboard indicators which are the graphs of earned value are used to see the progress and performance of the projects and then take necessary actions (Alvarado et al, 2005, pp. 92-105).

The first task is to create budgeted cost of work scheduled (BCWS). When the project starts and moves up the life cycle the costs are then measured against the budgeted cost of work performed (BCWP). The difference between BCWS and BCWP determined the schedule variance (Howes, 2000, pp. 399-411).

Earned value analysis takes into account the whole projects and consider the breakdown of work ...