EARNED VALUE MANAGEMENT IN CONSTRUCTION PROJECTS

EARNED VALUE MANAGEMENT ILLUSTRATION

1. PROJECT PLANNING AND SCHEDULING EARNED VALUE MANAGEMENT MASTER OF BUILDING ENGINEERING AND MANAGEMENT 2020-2022 SCHOOL OF PLANNING AND ARCHITECTURE, DELHI Submitted by: Vidushi Kasana Semester I

2. EARNED VALUE MANAGEMENT: EVM is way to calculate work progress on a project using a work account based breakdown system, i.e., the method helps analyse project progress based on cost as well as time (schedule). It is based on forming a direct relationship between the percent of work completed and the budget for that amount of work. Hence, the project progress is determined addressing both cost and schedule.  On the basis of the four parameters of EVM: ACWP BCWP BCWS BCAC, and the relationships between each, the progress is analysed to be overbudget/on budget/under budget and behind schedule/ on schedule/ ahead of schedule. The four parameters of EVM BCAC: Budgeted Cost at Completion (initial budget that is set or any activity for its successful or 100% completion) BCWS: Budgeted Cost of Work Scheduled (budget that was anticipated for the work completed till the study date) ACWP: Actual Cost of Work Performed (cost incurred for the activity as reported on the study date being measured on the field) BCWP: Budgeted Cost of Work Performed or Earned Value (measured work hours till date of the work that we did)  COST STATUS: Measured by cost variance CV and cost performance index CPI CV= BCWP – ACWP, CPI= BCWP/ACWP CPI>1 or CV>0 => Accounts are within budget CPI<1 or CV<0 => Accounts are over budget SCHEDULE STATUS: Measured by schedule variance SV or schedule performance index SPI SV= BCWP – BCWS , SPI= BCWP/BCWS SPI>1 or SV>0 => Ahead of schedule SPI<1 or SV<0 => Behind schedule INTRODUCTION TO EVM

3. NUMBER ACTIVITY PREDECESSOR DURATION COST/DAY BCAC 1 Excavation 19 738 14025 2 Sub base Works 1 3 10536 31608 3 Foundation Works 2 23 6274 144300 4 Plinth beam & slab 3 15 5373 80600 5 Construction of Columns 4 13 3625 47125 6 Construction of Beam & Slab 5 28 3821 106990 7 Brick work 6 4 1350 5400 8 Plaster work 7 9 2875 25875 Total 114 455923 For a hypothetical project following 8 activities are considered, as shown in Table 1. As per the initial schedule and budgeting on the planning stage the anticipated duration (baseline duration) and Budgeted Cost at Completion for each activity is listed.  DEFINING THE PROBLEM Table 1 is used to set the baseline for the project activities on the basis of cost and schedule.

4. STUDY DATE: DAY 13-04-21 (start date 8-12-20) No. ACTIVITY Percent complete ACWP 1 Excavation 100 15498 2 Sub base Works 100 21072 3 Foundation Works 100 163124 4 Plinth beam & slab 100 53730 5 Construction of Columns 50 23562.76 6 Construction of Beam & Slab 10 10698 7 Brick work 8 Plaster work The project is studied at the field on 90th day and the percent complete for each activity in addition to the actual cost incurred is reported as per the Table 2 1 2 3 4 5 6 7 8 WORK AS PER THE SCHEDULE Further analysis on the work progress on the study date is done in the subsequent slides. STUDY DATE DATA Following chart shows the scheduled progress of the project that is initially anticipated. The field report for the 90th day of the work progress shows that some activities are behind schedule and over the anticipated budget.

5. SCHEDULE TRACKING As per the schedule, on the 13-04-21, 90th day, ie , the study date, activity 5 should have been 100% completed , and activity 6 should have been 43 % complete .  But as per the field report, activity 5 is only 50% complete and activity 6 is only 10% complete on the study date.

6. EARNED VALUE ANALYSIS For each activity CV, CPI and SV, SPI are calculated as summarised in Table 3. 1. For activity 5 , the actual cost incurred as per the field report on study date is Rs. 23,562.76, where 50% work has been completed. So, ACWP= Rs. 23,562.76 . But, according to the initial schedule, activity 5 should have been 100% complete on 90th day, so the Budgeted cost of work scheduled for the study date, 90th day, i.e., BCWS = BCAC= Rs. 47,125. For the 50% of work performed as reported on study date the budgeted cost or the earned value for the work performed is Rs. 23562.75.  BCWP= BCAC* (percent complete) CPI= BCWP/ACWP= 1 (on budget) SPI= BCWP/BCWS= 0.50 (behind schedule)

7. EARNED VALUE ANALYSIS: MSP When the tracking date is set as 14-4-2021, and the project is tracked for Cost status and Schedule status, the following are the summarised results: As per the table, the actual cost of work performed is calculated on the basis of the working hours of the resources, where resources for each activity are allotted with a per hour cost. The overall CPI = 1.06 and SPI= 0.79 Hence, the overall project is over budget and behind the anticipated schedule. In order to fast track the project a larger number of resources can be employed to finish the work on time, which will further reduce the CPI. If the total cost of the project is to be kept within the budget, the schedule might get affected, as the project is already behind the schedule.

8. EARNED VALUE ANALYSIS: EARNED VALUE OVER TIME As per the table, Earned Value Analysis done on MS Project, the Estimate at Completion (EAC) is Rs. 4,30,333.98, whereas the Budgeted Cost at Completion is  Rs. 4,55,920. Hence, the estimated cost at completion is lower than the budgeted cost.

9. EARNED VALUE ANALYSIS: VARIANCE and PERFORMANCE OVER TIME COST AND SCHEDULE VARIANCE COST AND SCHEDULE PERFORMANCE INDEX