Primavera provides a method named Earned Value Management technique to control project performance.
This article addresses the concept of Earned Value Management and how it works in Primavera P6 by going through the example below.
We have a simple project to finish casting 10 column.
- 1 column / day.
- 100 $ / column
Each activity is assigned resource A.
First we have to create baseline for this project.
Go to Project -> Maintain Baselines. Click on Add and OK to create a baseline.
We will assign this baseline for our project.
Go to Project -> Assign Baselines. Click on Project Baseline and select our baseline. Then click OK.
We can show columns as display in below picture to analyze Earned Value Management.
Right click on Activity Table -> Column. Select columns in Earned Value group.
At the end of day 5 of the project:
How many column should have been built? (This is the Planned Value)
The answer is 5 column
(This value is automatically calculated by using Baseline we assign previously. Baseline said that Project’s duration is 10 days, today is 5th day, so 5 column should be completed)
PV = 5 x 100 = 500 $
How many column have actually been built? (This is the Earned Value)
We receive report from construction site and it said only 3 columns finish.
(This is value based on the Performance % Complete which is equal to Activity % Complete by default)
EV = 3 x 100 = 300 $
How much did it cost to build those three column? (This is Actual Cost)
We receive report from Accountant department and it said 200 $ / column.
(This value is based on Actual Units)
AC = 3 x 200 = 600 $
Then we can show “Schedule Variance” and “Cost Variance”.
Schedule Variance SV = EV – PV = 300 – 500 = -200 $
A negative number indicates that the project is behind schedule.
1 day for 1 column for 100 $. So it means we are late 2 days.
Cost Variance CV = EV – AC = 300 – 600 = -300 $
A negative number indicates that the project is over budget.
It means we are currently over budget 300 $.
Then we can show “Estimate to Complete” and “Estimate at Completion”
ETC = BAC – EV = 1000 – 300 = 700 $
EAC = ETC + AC = 700 + 600 = 1300 $
According to PMI standard, we should take CPI into account to calculate these 2 values. So we can change the way Primavera calculate by :
Go to WBS window -> Earned Value tab. Check on PF = 1 / Cost Performance Index
ETC = = = 1400 $
( CPI = = = 0.5 )
EAC = ETC + AC = 1400 + 600 = 2000 $
However you have to configure this option at the beginning of project (before update anything). Otherwise it doesn’t affect.
We can also make diagram report
Click on Activity Usage Profile button.
Right click on the diagram and select Activity Usage Profile Option
Check in option as display in below picture
Now you can see the Earned Value diagram. You will use the cost axis on the right side (not the left one).
I also attach a theory diagram of Earned Value Management for your reference.
With Earned Value Management in Primavera we can easily see our project performance and forecast the total cost at the end of project.