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Earned Value Management (EVM) Example – Predicting Cost/Finish Date
By Umesh Dwivedi

The best way to understand an EVM example is to solve it.

Problem

A project is budgeted for $10M and scheduled for 10 months. It is assumed that the total budget will be spent evenly every month for 10 months. After 2 months the Project Manager finds that only 5% work was finished and a total of $1M was spent. What is the total cost of this project and how much time will it take to be finished?

Solution

PV = $2M
EV = $10M * 0.05 = $0.5M
AV = $1M

CV = EV-AC = 0.5-1 = -0.5M
CV% = 100 * (CV/EV) = 100*(-0.5/0.5) = -100% overrun

SV = EV-PV = 0.5-2 = -1.5 M
SV% = 100 * (SV/PV) = 100*(-1.5/2) = -75% behind

CPI = EV/AC = 0.5/1 = 0.5
SPI = EV/PV = 0.5/2 = 0.25

EAC = BAC/CPI = 10/0.5 = $20M
ETC = (BAC-EV) / CPI = (10-0.5)/0.5 = $19 M

Time to complete = (10-0.5)/0.25 = 38 Months

This project will take total of $20M (19+1) and 40 (38+2) months to complete.

Umesh Dwivedi is certified PMP (Project Management Professional) from PMI, USA. He is experienced in project planning, execution, monitoring and controlling of projects. He has worked in collaboration with cross-functional, cross-organizational teams for many clients internationally.
Visit his home page at http://www.freewebs.com/umeshspace.

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