Earned Value Analysis

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This assignment is based on an Earned Value analysis performed by a cost account manager, who has received a variance report (given below) from a performance measurement system. I have calculated the appropriate variances and included corrective measures for each of them.


Variances are calculated as follows:

CV (cost variance) = BCWP – ACWP
SV (schedule variance) = BCWP - BCWS

Cost Variance$2,450-$2,000-$1,000$7000$1000
Schedule Variance-$5,000-$10,000-$1,000$2,000-$16,000

A positive cost variance indicates that work was accomplished for less resource expenditure than planned. A negative cost variance indicates that work accomplished cost more than planned resource value. A positive schedule variance is an indication that in-process work is ahead of schedule. A negative schedule variance indicates that the in-process work is behind schedule.

In essence, we only need to describe action plans for negative cost variance and negative schedule variance as the positive cases show that we are on track with budget and schedule of the process.

Cost Variance of A – We have a positive CV of $2450. This means that we are operating on costs well above the budget. We do need to an action plan.

Schedule Variance of A – We have a negative schedule variance of $5000. We need to improve efficiency of the process. This can be done by increasing the number of man hours involved in the task. This way we can still account for the budget as we have a +ve CV, and get more work done.

Cost Variance of B – We have a negative cost variance of $2000. This could be due to poor coordination of functions in the project organization. We can handle it by creating simple and easy system for coordination procedures and responsibility of units.

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