This course introduces the types of cost estimation from the conceptual design phase through the more detailed design phase of a construction project. In addition, the course highlights the importance of controlling costs and how to monitor project cash flow. Students will work on a break-even analysis of construction tasks in a project.
EVM Favorable Performance
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En provenance du cours de Columbia University
Construction Cost Estimating and Cost Control
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À partir de la leçon
Earned Value Method (EVM)
In this module, Professor Odeh goes deeper into the Earned Value Method of Cost Control.
Rencontrer les enseignants
Ibrahim Odeh, Ph.D., MBAInstructor, Department of Civil Engineering and Engineering Mechanics, Columbia University
Director of Research and Founder, Global Leaders in Construction Management
Now let's go for scenario number four.
For scenario number four, I want to have similar to scenario number one but
flip the ACWP with the earned value.
So in this case, this is the earned value,
BCWP and this the actual cost of work performed.
So with this switch, what we did is,
the earned value is more than the actual cost of work performed,
so this will give us, This on the equation here.
A positive number which will give us more advantage so
the account here is under budget.
And this is the cost variance.
So, the relation between the earned value and
the budget of cost of work performed, is the schedule,
Variance, but this is giving us a delayed,
a negative schedule variance.
So in scenario number four here,
if we flip the BCWP with the ACWP from scenario number one,
we're getting a cost under budget.
And still here we have a delay in the schedule because the curve for
the earned curve is less than the budgeted curve.
So that's why it is a negative or behind schedule, delay.
And the earned curve is above the actual curve,
then account is under budget here.
So that's scenario number four.
Now for scenario number five, If we have,
The budgeted cost of work performed or the earned value, the curve for
the earned value is above the curve of the budgeted value.
And the actual curve or the actual work of work performed is,
actual cost of work performed is somewhere here, and
here's what we can refer to as the actual curve.
So that what's giving us,
is the account actually is very good, it's the earned value above the actual,
so the difference is between the one here and the actual here.
This is is the cost variance, let's say, as we're doing very well,
is a positive variance for the cost, so it is under budget.
And the earned value comparing it to the budgeted cost of work performed.
Schedule variance between these two.
The earned curve is above the budgeted curve,
so the account is ahead of schedule, so it's a positive.
And cost variance, let's say it's a negative,
it's also a positive, I'm sorry, it's under budget.
So the BCWP or the earned value minus the ACWP is positive.
So this is for scenario number five.
Now for scenario, the last one, scenario number 6,
we have let's say the budgeted cost of work performed or the earned value.
And the actual cost of work performed.
Let's say they are both here.
So, you have the actual curve and
the earned curve, approximately both like that.
And here, and here we have the budgeted cost of work
performed and the actual cost of work performed.
And because the earned value is greater than the actual cost of work performed.
This is the cost variance and it's a positive
In this case this account is under budget.
And the actual cost of work performed comparing to the budget cost of work
performed, let's say somewhere here.
This is the schedule variance is I'm sorry.
We have the relation between the budget of cost of work performed and
the earned value.
This is the schedule variance.
And this also budget, it's a plus.
The earned value BCWP minus the BCWS giving us the scheduled value.
So positive then the account is ahead of schedule.
So also this is very favorable of course scenario.
So this is the last scenario of all these
six scenarios that we have for this possibilities.
So that being said from these six scenarios I also want to highlight for
you that sometimes you might get then a report.
Or if you want to mention or refer to the status of your project or
specific work activity.
So sometimes you might get like something like this.
They say, this is the schedule index and this is the number of weeks.
Say you have one, two, three, four, so on.
And sometimes what you would get is let's say the schedule index here,
let's say goes from 0 all the way to 1.
And let's say,
you are getting here,
let's say 0.8,
0.78, 0.81,
0.75 and so on.
With the first scene, if you look at schedule index per week for
your project and you see this kind of trend and lets say, this one 0.71.
You can tell that you are not performing well.
That there is no clear
trend of whats the status of your project, but it is not going very well.
It is between the 0.7 and the 0.8 or
[INAUDIBLE] 0.81 for the last couple of weeks, but
we wanted to increase it a little bit more to go above 1.
Because as I mentioned, here it paused the variance as well as an index of 1 or
greater is a formidable performance.
So if you get a sheet like this and it tells you,
okay what's the situation we have.
From the schedule point of view or even a cost index point of view.
You can tell that, okay the trend is not very clear but we are less than one.
We prefer to push it little more to have the earned value of in our
project tool jump above the actual core support performed.
And above the budgeted course of work scheduled.
So this is also a trends that or
a report of how you can look at your status of the project.
So let's move forward with an actual example of the Earned Value Method
and use the following three work packages we have
in our project, which is A, B, and C.
And I mentioned to you that the budgeted cost at completion for
that small project of these 3 [INAUDIBLE]
packages, are a 115, 60 and 70.
So the total budgeted cost at completion for
the entire project, is the summation of only 3 of 245.
And the actual cost of work performed had been reported to you,
as the following numbers, 40, 39, and 38, for A, B, and C.
With a total actual cost of work performed under 27.
And we mentioned to you that, from the field,
a percent completed in each of these four
packages 44 A, B 65%, and C 80%.
We'll ask you, what is first the earned value
of each of the work packages, as well as the earned value for the entire project.
So we used the following equation as PC
equal to the percent complete as of the study
date that we are trying to highlight
the stats of the course and the schedule.
And the earned value for a given work package or
the BCWP is equal to the PC times the second column there, BCAC.
So 40 times 115, 46,
65 times 60, 39, and
70 times 80% equal 56.
So these are the earned value or the BCWP for all the work packages.
And the total is the summation of all the earned values for
all the work packages we have in the project which giving us 141.
So moving forward if I ask you,
what in the curve, the BCWS the budgeted cost for
work scheduled is 55, 39 and 42 for the A, B and C.
And I ask you to calculate the cost and
schedule status for A, B, C all into 5.
Is A above schedule, or behind schedule,
delayed or on schedule?
Same go for the course.
So let's go one by one.
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