Controlling a project is key to the success or failure of the project. Earned Value Management (EVM) is a well-known technique to control the time and cost performance of a project and to predict the final project duration and cost. It is an easy tool to generate early warning signals to timely detect problems or to exploit project opportunities. An overview of the EVM metrics is given in “Earned Value Management: An overview”. In this article, it will be shown that the project baseline schedule plays a crucial role in EVM, and that the planned value curve is a direct translation of this baseline schedule in monetary terms. Project progress, and the measured project performance, is based on the current planned value, actual cost and earned value.
Figure 1 displays a project network with 8 activities and finish-start precedence relations between them. Each number above the node denotes the estimated duration of the activity while the number below the node is used to refer to the estimated activity cost. It is assumed, without loss of generality, that no renewable resource restrictions are imposed on the project.
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Figure 1: A fictitious example project network
Project baseline schedule: the planned value
The Planned Value (PV) is the time-phased budget baseline as an immediate translation of the schedule constructed from the project network (without or with resources, as discussed in “
The critical path or the critical chain? The difference caused by resources”). It is a cumulative increase in the total budgeted activity cost given the start and finishing times stipulated in the baseline schedule. The planned value is often called budgeted cost of work scheduled (BCWS).
The assignment of the total budgeted cost of each activity depends on the EVM measurement method that will be employed for the measurement of project performance. Indeed, costs can be assigned to activities in various ways, e.g. all costs can be incurred upon the start of the activity, or only after a certain percentage is finished, or as a stepwise function (e.g. 20% upon the start, 50% after a first meeting with the client and a final 30% upon the activity finish). In the Gantt chart of figure 2, it is assumed that the cost increase is linear over the activity duration, which is displayed by the cost amounts for each period (week) for each activity.
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Figure 2: Earliest start baseline schedule of the project of figure 1
Figure 3 shows the total cumulative increase of all planned values given by the activities of the baseline schedule, resulting in a total budgeted cost of € 150. Using the EVM terminology (see “
Earned Value Management: The EVM formulary”), the baseline schedule displays the following characteristics:
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Planned Duration (PD) = 9 weeks
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Budget at Completion (BAC) = € 150.00
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Figure 3: Planned value curve (S-curve)
