We have all seen the “Earned Value Calculation” option in Admin Preferences but do you know how it affects your Earned Value calculations? These options are helpful when we use a Revised Baseline and that baseline is delayed from plan. We can choose whether to use Planned dates, Start/finish dates or At Completion Dates for EV calculations.
Let’s take a look at how these settings affect Earned Value (EV), Planned Value (PV) And Schedule Performance Index (SPI).
Schedule Performance Index (SPI) = Earned Value (EV) / Planned Value (PV)
Earned Value = Budget at Completion (BAC) x Performance PCT
Planned Value = Budget at Completion (BAC) x Schedule PCT
1: Assigning Costs
We create an activity A1and assign a resource with cost to it. Since the project is not progressed, SPI is zero.
2: Project is updated and is on schedule
We update this activity by a couple of days and check the SPI
SPI is 1 cause the project is on schedule.
3: Project is updated again and is behind schedule
We deliberately delay the activity A1 by a couple of days and check the values for it.
The Performance % Complete (above) remains the same but the Schedule% complete increases cause the schedule is delayed.This makes the PV increase and the SPI decrease.
4: Increase the At Completion Cost for activity (A1) from 80,000 to 100,000
Increasing At Completion Cost simulates a cost overrun and helps explaining the third option in earned Value settings.
We would now save this baseline and change the Earned Value Calculations settings in Admin Preference to see what effect does it have on the calculations.
6: Choosing different Admin Preference options
a) Budgeted values with planned dates
When we choose this option Primavera calculates EV, PV, SPI using activity’s Planned Dates in the baseline. You will see no change in the values after choosing this option.
Here Schedule% = (Current DD- BL Start)/BL Duration = (24-20)/10 = 40% , hence the values for PV & SPI do not change.
b) Budgeted values with current dates
When we choose this option Primavera calculates the durations from Start/finish dates hence you will notice that the Schedule % and PV decrease causing the SPI to increase.
Here the BL duration is calculated using the Start/Finish dates and BL Duration = 12 therefore Schedule %=(24-20)/12=33.33%
c) At Complete values with current dates
When you choose this option Primavera calculates EV and PV using the following formulas :
EV Cost = At Complete Cost * Performance PCT
PV Cost = At Complete Cost * Schedule PCT
SPI = EV Cost / PV Cost
PV = 100000*33.33=33,333
These options help us when we are creating a Revised Baseline and want to monitor our earned value against the current rate of progress as opposed to what was planned.