How to use Earned Value Management in Primavera P6

Primavera P6 provides a powerful technique called Earned Value Management (EVM) to monitor and control project performance.

This article explains the concept of EVM and demonstrates how it works in Primavera P6 through a simple example.

Example Project

We have a small project to cast 10 columns:

• Productivity: 1 column per day
• Cost: $100 per column
• Resource: Each activity is assigned to Resource A

Step 1: Create a Baseline

To use EVM, we first need to create a baseline for the project:

• Navigate to Project → Maintain Baselines
• Click Add, then OK to create the baseline

Step 2: Assign the Baseline

Next, assign the baseline to the project:

• Go to Project → Assign Baselines
• Select the baseline under Project Baseline, then click OK

Step 3: Display Earned Value Columns

To analyze EVM data:

• Right-click on the Activity Table → Columns
• Select columns from the Earned Value group

Step 4: Calculate Key Metrics

At the end of Day 5, let’s calculate:

Planned Value (PV)

How many columns should have been completed?

• Baseline indicates 10-day duration, so by Day 5 → 5 columns
• PV = 5 × $100 = $500

Earned Value (EV)

How many columns were actually completed?

• Report shows 3 columns finished
• EV = 3 × $100 = $300

Actual Cost (AC)

How much did those 3 columns cost?

• Report shows $200 per column
• AC = 3 × $200 = $600

Step 5: Variance Analysis

• Schedule Variance (SV) = EV – PV = 300 – 500 = –$200
  Negative SV means the project is behind schedule (about 2 days late).
• Cost Variance (CV) = EV – AC = 300 – 600 = –$300
  Negative CV means the project is over budget by $300.

Step 6: Forecasting

• Budget at Completion (BAC) = $1,000
• Estimate to Complete (ETC) = BAC – EV = 1,000 – 300 = $700
• Estimate at Completion (EAC) = ETC + AC = 700 + 600 = $1,300

To follow PMI standards, include Cost Performance Index (CPI):

• CPI = EV ÷ AC = 300 ÷ 600 = 0.5
• ETC = (BAC – EV) ÷ CPI = 700 ÷ 0.5 = $1,400
• EAC = ETC + AC = 1,400 + 600 = $2,000

(Enable this option in WBS → Earned Value tab → PF = 1 / CPI before updating the project.)

Step 7: Visualize with Diagrams

• Click Activity Usage Profile
• Right-click → Activity Usage Profile Options
• Enable Earned Value display options

You’ll now see the EVM diagram with cost plotted on the right axis.

I also attach a theory diagram of Earned Value Management for your reference.

Conclusion

Using Earned Value Management in Primavera P6 allows you to track project performance, identify schedule and cost variances, and forecast total project cost accurately.