The situation today is that there is a real need for accurate and consistent information. Whether it is status information or hard figures, it is paramount for achieving successful project management. Most organizations deal with a number of complex and interrelated projects at once, or projects with many intertwined tasks. And government statistics say that 70% of all projects are over budget and behind schedule. In fact, over half of all projects finish just under 200% of their initial budget. Some, after huge investments of time and money, are never completed.

But there is hope with Earned Value Management. EVM is an industry standard method to measure a project’s progress, forecast the completion date and final cost, and provide schedule and budget variances along the way. And by integrating cost, schedule and work accomplished, Earned Value Management provides the consistent, numerical indicators with which we can all evaluate and compare projects. You need to know where you are on the schedule, on budget and how much work has actually been accomplished. Earned value management compares the planned amounts with what has actually been completed, so work is earned as it is completed.

Earned Value Management is needed because it provides an early warning and therefore calls for quick corrective action while there is still time to recover and possibly request more time or funding. But perhaps the biggest reason for using Earned Value Management techniques and practices is because The Office of Management and Budget requires it. In Circular A-11, Part 7, it states that “Agencies must use a performance based acquisition management system, based on ANSI/EIA Standard 748, to measure achievement of the cost, schedule and performance goals.”

Earned value analysis works best when work is organized ­ compartmentalized, if you will. And this is best achieved with a well thought out and planned Work Breakdown Structure. Work Breakdown Structure (WBS) is deliverables-oriented and the deliverables in question are accurately defined. There is a timeframe for delivery of the product, and a total cost to deliver the product, both direct and indirect.

New Terms

But even though Earned Value Management has been around for awhile there is some new lingo ­ terms like Budgeted Cost of Work Scheduled (BCWS), Actual Cost of Work Performed (ACWP), and Budgeted Cost of Work Performed (BCWP). Budgeted Cost of Work Scheduled (BCWS) is nothing more than the planned cost of the total amount of work scheduled to be performed by the milestone date. And the Actual Cost of Work Performed (ACWP) is the cost incurred to accomplish the work that has been done to date. And finally, the Budgeted Cost of Work Performed (BCWP) is the planned cost to complete the work that has already been done.


Sound simple? Now you know everything except for a few metrics. Schedule Variance (SI): a comparison of the amount of work performed during a specific period of time to what was scheduled to be performed. That’s comparing the BCWP and the BCWS, and a negative schedule variance means the project is behind schedule. Not a good thing.

A Cost Variance (CV), is a comparison of the BCWP and ACWP ­ budgeted cost of work performed with actual costs. And a negative cost variance is also not a good thing. It means the project is over budget.

Schedule Performance Index (SPI): Divide the BCWP with the BCWS and if the resulting figure is less than 1, then you know your project is behind schedule. Likewise, the Cost Performance Index (CPI) divides the ACWP into the BCWP and if the result is less than 1, the project is over budget. Cost Schedule Index (CSI) is equal to CPI multiplied by SPI, and the further the CSI is from 1, the less likely project recovery will happen. The CPI and SPI are statistically accurate indicators of final cost results.

So what is the value of all of this? With Earned Value Management principles and practices, you are able to accomplish schedule status reporting, cost status reporting, and forecasting.

Requirements of Earned Value Management

To use Earned Value Management, your organization must have a proper Work Breakdown Structure design. Additionally, there must be baseline budget control accounts and a baseline schedule, work measurement, and good project management practices.

Unfortunately, Earned Value Management has a few shortcomings. Quantifying or measuring work progress can be difficult, and the time required for data measurement, input, and manipulation can be considerable. But software solutions such as xpdOffice take the worry out of these efforts and seriously reduce the time spent managing numbers and resources. In fact, as stated in the very first paragraph, today there is a need for accurate and consistent information. And that is one of xpdOffice’s most valuable contributions to your Earned Value Management effort.

xpdOffice will help you reduce the guesswork involved in measuring performance and in forecasting. It aids your current project management practices by incorporating EVM concepts into your contract, task and sub-task management. And xpdOffice is DCAA compliant as well.

In today’s competitive marketplace, the ability to deliver a project on time and within the agreed upon budget is imperative. Whether the contract is several months or several years in length, there is never any time for games or guesswork, and you need to be prepared for every eventuality. With xpdOffice, you have a true partner ­ a tool that will do much more than hold information for you, but will provide you with an accurate understanding of the health of your projects by giving you the power to identify, address and resolve problems early.