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What is Earned Schedule? - An Emerging Earned Value Technique

Updated: Sep 27, 2021

The Earned Value Management (EVM) and the Critical Path Method (CPM) are widely accepted methods and are often used simultaneously to evaluate project performance. The common practice is to use EVM to evaluate the status of project cost and forecast the project's cost at completion while using CPM to evaluate the status of project schedule and forecast the project's completion time. However, EVM and CPM are based on different assumptions about the future and using them simultaneously can lead to the wrong decisions about the project.

The Earned Schedule (ES) allows EVM metrics to be transformed to time or duration metrics to enhance the evaluation of project schedule performance and to forecast the duration needed to complete the project. ES extends the use of EVM data to the assessment of the project's schedule status and the forecast of its completion time. These additional insights regarding the schedule are gained without the need for additional data collection and related cost. ES and EVM use the same underlying assumptions, leading to consistent forecasts about project outcomes. When combined with schedule analysis using CPM, ES enhances the project manager's understanding of project schedule status and forecasts and provides further support for making better, evidence-based decisions about the project's schedule and other parameters.

EVM, ES, and CPM are powerful methods that give executives, project managers, and other stakeholders the ability to visualize project cost and schedule status throughout the project life cycle and consequently manage projects, programs, and portfolios more effectively.

Keywords: Earned Schedule (ES); Earned Value Management (EVM); Critical Path Method (CPM); forecasting project outcomes; underlying assumptions.

Introduction

The Earned Value Management (EVM) method helps managers in making evidence-based decisions about project scope, resources, and cost; as a result, it supports effective project cost control and oversight. EVM gives the executive, program manager, project manager, and other stakeholders the ability to visualize project cost status throughout the project life cycle and consequently manage projects, programs, and portfolios more effectively. In its original form, EVM was used to evaluate project performance and forecast the cost of the project at completion. Usually, project control is established at the work package or cost account level. EVM data were generally not used to estimate the time needed to complete an activity, work package, or project, or to forecast their completion date. Project schedule network analysis techniques, such as the Critical Path Method (CPM) method, has been used widely to evaluate project schedule performance and forecasts of completion time. However, EVM and CPM are based on different assumptions about the future and using them simultaneously can lead the project manager to make the wrong decisions about the project. Extensions to EVM have been developed to use EVM data for schedule performance assessment and forecasts. The Earned Schedule (ES) concept allows EVM metrics to be transformed to time or duration metrics to enhance the evaluation of project schedule performance and to forecast the duration needed to complete the project. When combined with appropriate schedule analysis, this approach can enhance the project manager's understanding of the time estimate at completion of the project, and provide further insights for making better decisions about the project schedule and other related parameters. This paper highlights the main elements of EVM; presents the ES concept; compares ES with CPM; and integrates EVM, ES, and CPM.

The use of EVM in private industry and support by popular project management software packages have been rapidly growing in recent years. Details of the method were provided in Practice Standard for Earned Value Management—Second Edition (Project Management Institute, 2011) and in other sources (Anbari, 2003; Association for Project Management, 2006; Humphreys, 2002; Kerzner, 2009; Project Management Institute, 2008; Turner, 2009; Turner, Huemann, Anbari, & Bredillet, 2010). There has been a high degree of acceptance among users of EVM, who tend to agree that EVM can improve the cost, schedule, and technical performance of their projects. Non-believers in EVM claim that the method is hard to use, that it applies primarily to very large projects, and that they do not need it (Fleming & Koppelman, 2010; Kim, Wells, & Duffey, 2003). Anbari, (2003), Kwak and Anbari (2010), Turner (2009), and Turner et al. (2010) show how the method can be simplified and implemented effectively while retaining its essential features. The interest in EVM and its use in differing types of projects are growing globally, particularly in the public sector, with notable progress in Australia, Japan, Sweden, the United Kingdom, and the United States.

ES is a valuable extension to EVM, requires no additional data collection, and provides valuable insights into the project schedule and forecast of its outcome. The use of ES is still very limited in practice.

Elements of Earned Value Management

EVM integrates three critical elements of project management: scope management, cost management, and time management. It requires the periodic monitoring of actual expenditures and the amount of work done (expressed in cost units). To determine cost performance, EVM compares how much we have spent with what we planned to have spent to do the work we have done. To determine time performance, it compares the amount of work done with the amount of work scheduled to be done. To make these comparisons, EVM calculates cost and schedule variances, along with performance indices for project performance management. Based on these results, it forecasts the cost and date of the project at completion and highlights the possible need for corrective action. EVM uses the following project parameters to evaluate project performance (Exhibit 1):

Planned Value (PV): This is the cumulative planned cost for the work planned to be done on the project up to a given point in time. It is the approved budget for completing the work planned so far, and as such it is the cost baseline for the project. It was previously called the budgeted cost of work scheduled (BCWS).

Exhibit 1: Components of earned value management. (Adapted from Anbari, 2003; Kwak & Anbari, 2010; Turner et al., 2010)

Budget at Completion (BAC): This is the total amount of money expected to be spent on the project, and as such, it is the value that PV is planned to reach at completion.

Actual cost (AC): This is the cumulative actual cost spent on the project so far, including all accrued cost on the work done. AC was previously called the actual cost of work performed (ACWP).

Earned value (EV): This represents the cumulative amount of work done up to a point in time, expressed in cost units. It is expressed as the amount that was planned to have been spent on the work that has been completed up to this point. EV was previously called the budgeted cost of work performed (BCWP). To calculate the EV for a given element of work, the planned cost is multiplied by the percentage complete. The EV for the project is the sum of the EV for all the work elements.

BAC, PV, AC, and EV are expressed in cost units. These may be in units of actual money, in any currency, or expressed in hours or days of work. PV, AC, and EV can be calculated for any element of work to determine progress and status of that element of work.

Project Performance Measurement

Cost performance on the project is determined by comparing EV with AC. AC represents what has actually been spent and accrued to do the work so far, and EV represents what was planned to be spent to do the work so far. The difference shows whether the project is over-spent or under-spent. Schedule performance is determined by comparing the EV with the PV. PV shows the amount of work that was planned to have been done and EV represents the amount that has been done. By comparing the two we can determine whether more or less work has been performed than should have been done, and whether the project is ahead or behind schedule. We do these comparisons by calculating the variances and the performance indices.

Variances

The following formulas are used to calculate the variances:

The cost variance (CV) is a measure of cost performance:

  • CV = EV − AC

The schedule variance (SV) is a measure schedule performance:

  • SV = EV − PV

Variance Percentages

The following formulas are used to calculate the variance percentages:

Cost variance percent (CV%):

  • CV% = CV ÷ EV

Schedule variance percent (SV%):

  • SV% = SV ÷ PV

In the above formulas, 0 indicates that performance is on target. A positive value indicates good performance; a negative value indicates poor performance.

Performance Indices

The following formulas are used to calculate the performance indices:

Cost performance index (CPI) is another measure of cost performance:

  • CPI = EV ÷ AC

The schedule performance index (SPI) is another measure of schedule performance:

  • SPI = EV ÷ PV

In the above formulas, 1 indicates that performance is on target; more than 1indicates good performance; and less than 1 indicates poor performance.

Forecasting of Project Outcome

Project management is primarily concerned with decisions affecting the future. Therefore, forecasting is an extremely important aspect of project management. EVM is particularly useful in forecasting the cost and time of the project at completion, based on actual performance to date using the following calculations.

Forecasting of Cost at Completion

The forecast of the cost of the project at completion is usually called the estimate at completion (EAC) or the cost estimate at completion (CEAC). The forecast of the cost remaining is usually called the estimate to complete (ETC).

Several assumptions can be made about project cost performance in the future (Anbari, 2003). Two major assumptions are:

  • The remaining work will be performed according to the original plan, therefore (Turner, 2009):

  • ETC = BAC − EV

  • EAC = AC + BAC − EV = BAC + CV


  • The remaining work will be performed while continuing to over-spend or under-spend at the same rate (Anbari, 2003; Project Management Institute, 2011; Turner, 2009):

  • ETC = (BAC − EV) ÷ CPI

  • EAC = AC + (BAC − EV) ÷ CPI = BAC ÷ CPI


Cost Variance at Completion

The cost Variance at Completion (VAC) provides an indication of the estimated cost under-run or over-run at the completion of the project:

  • VAC = BAC − EAC

In this equation, 0 indicates that the project is forecasted to be completed on budget. A positive value indicates a forecasted under-run; a negative value indicates a forecasted over-run.

Earned Schedule

In its basic form, EVM has not been used to estimate the time to completion or to forecast the end date. However, extensions to EVM have been developed to use EVM data for that purpose (Anbari, 2003; Lipke, 2009; Lipke, Zwikael, Henderson & Anbari, 2009; Turner et al., 2010).

The terminology in this area is not as fully agreed on as in EVM, so the following terminology will be used:

Schedule at Completion (SAC): This is the original planned completion duration (date) of the project.

Earned Schedule (ES): This duration from the beginning of the project to the date on which the PV should have been equal to the current value of EV. On the EVM chart (Exhibit 2), it is the date on which the horizontal line through the current value of EV intersects the PV curve.

Actual Time (AT): This is the duration from the beginning of the project to status date.

The average PV per time period can be calculated by dividing the BAC by SAC, and can be called the PV Rate or the Planned Accomplishment Rate (PAR):

  • PAR = BAC ÷ SAC

SV can be transformed to time units by dividing SV by PAR. The result is a measure of schedule performance in time units rather than cost units and can be called the Time Variance (TV):

  • TV = SV ÷ PAR

ES can be calculated by dividing EV by PAR:

  • ES = EV ÷ PAR

Alternately, TV can be calculated by subtracting AT from ES:

  • TV = ES − AT

If TV value is negative, the project is behind schedule and if it is positive, it is ahead of schedule. This is sometimes called the schedule variance (time), SV(t), but this name can lead to possible confusion with the schedule variance.

Exhibit 2: Components of the earned schedule. (Adapted from Anbari, 2003; Lipke, 2009; Lipke et al., 2009; Kwak & Anbari, 2010; Turner et al., 2010)

The time variance percent (TV%) can be calculated as:

  • TV% = TV ÷ AT