Multiple Projects Performance Analysis using the Earned Value Method

The assumption made here is that anyone reading this example has some background in Earned Value Management. If not please consult this link Earned Value Management for related literature and references.

For the purpose of illustrating this method, I have created a table containing three hypothetical projects with their respective baselines. Each baseline is defined in terms of duration, effort and cost for each single project.

The idea is to carry out a performance control half way down the timeline for each project and verify that all projects are in line with their respective plan. This could be a major milestone or a check point. Normally, there are many planned check points throughout the life cycle of a project, but for the purpose of this example only one point is taken into consideration.

This method uses the actual cost of the work done, at a given point, and the planned cost to calculate and compare values for cost and schedule variations. This information is also calculated in terms of cost and schedule performance indexes.

The actual cost factor is what really links the operating company to the ongoing project and could comprimise the project or the company or both if not properly monitored and controlled.

The following table summarizes the calculations needed for graphing and deducing the results relative to project performance at a given point.

Cost and Schedule Variances

Variances: positive variance is good; negative is bad.

Situation at half time:
Project A: CV is less than 0 and SV is greater than 0; the cost of the actual work exceeded the value of the work done (the project is over budget and ahead of schedule).
Project B: CV is less than 0 and SV is less than 0; the amount of work done is inferior to the budgeted amount.
Project C: CV is greated than 0 and SV is greater than 0; the cost of the actual work is inferior to the value of the work done and the amount of work produced exceeded the budgeted amount.

Atlhough Project A is ahead of schedule, it's using up too much money too fast with respect to the plan. The risk is that it will use up all the budget before completion of the project.

Cost and Schedule Performance Index

Performance index: greater than 1 is good, less than 1 is bad.