4.6

## The Open University

Skip to 0 minutes and 1 secondSPEAKER: This video will show you how to conduct an earned value analysis of a project. Earned value analysis is a way of measuring a project's progress at a particular time. To do this, we will use our template with the previous example. First, we fill in the activity identification codes in column A. Then, we input all the budget costs in column B. Now, we look at how much work should have been done so far. We can do this by using the Gantt chart in row one. Looking at this, we can see that activities A, B, and C should be finished by the end of today, so we can put in 100%.

Skip to 0 minutes and 48 secondsActivity D is not expected to start before today, so we put 0%.

Skip to 0 minutes and 55 secondsIn column D, we fill in the actual progress of the activities. These are represented by the grey bars in the Gantt chart. In this case, activity A has been finished. So we can put in 100%. Activity B is 80% complete, and activity C has had 70% of the work done, while activity D hasn't started yet. So it is 0% complete. In this column, we put how much has been spent so far on these activities.

Skip to 1 minute and 29 secondsIt does not include any budget costs for activity D, because this activity is not scheduled for today. Because we know what work has been performed, earned value management can be used to track the progress of a project. The figure in this cell is the budgeted cost of work performed, also known as earned value. This figure shows how much the work that has actually been done was expected to cost.

Skip to 1 minute and 58 secondsThe figure in this cell is the actual cost of work performed. This shows how much has actually been spent to do the work that has been done so far.

Skip to 2 minutes and 11 secondsThis is called the schedule variance. This shows how far ahead or behind schedule a project is running. It is worked out by taking the budgeted cost of work performed, or earned value, and subtracting the budgeted cost of work scheduled, also known as planned value.

Skip to 2 minutes and 30 secondsThis is the cost variance. This shows how far the actual costs of the project have differed from the costs we had expected to spend. To calculate this, we need to take the budgeted cost of work performed and subtract the actual cost of work performed.

Skip to 2 minutes and 50 secondsThis is the schedule performance index. This is the ratio of earned value to the planned value. If the schedule performance index is less than one, this means that the project is running behind schedule, while a schedule performance index of more than one indicates that the project is running ahead of schedule. This is the cost performance index. This compares the earned value to the actual costs. When the cost performance index is less than one, it shows that the project is over budget. But when the cost performance index is greater than one, this shows that the project is running under budget.

Skip to 3 minutes and 33 secondsThis is a cost schedule index. This figure shows how likely it is to recover a project that is running late or is over budget. This is calculated by multiplying the schedule performance index by the cost performance index. The closer the index is to one, the more likely it is that the project can be recovered.

# How to calculate earned value measures

Calculating the earned value measures may sound quite complicated.

This video will guide you through conducting an earned value analysis of a project using an excel template. The analysis is the same proposed in the previous two steps, but you will see how it becomes simple when you use the Project value template.

The template contains formulas to make the calculations from your basic project data. This will help you to become familiar with earned value measures.

Calculating the earned value measures may have sounded quite complicated in the last few steps, so feel free to go over them more than once to consolidate your grasp of the principles. As often in project management, software tools can streamline the process in practice.