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EV Question.

11 replies [Last post]
Mon, 2006-01-16 08:46
Marcio Sampaio
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Hello PP members;

On Admin/Admin Preverences/EV, u have this option:

When calculating earned value using a primary baseline use:

Budgeted values: Choose to use the primary baseline’s budgeted values for earned value calculations.

At Completion values: Choose to use the primary baseline’s At Completion values for earned value calculations.

Which one is the most common to use?

Thanks in advance;

Marcio Eduardo
Rio de Janeiro - Brazil

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Replies

Fri, 2006-02-03 09:07
#1
Henk van der Heide
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Dear all,

Of course you can have difference between your baselinebudget,budget,budget at completion etc. I consider myself as a senior planning engineer and i understand it. But i see a lot of managers and planning engineers ho don’t understand it or want to keep it simple because they have other tools for EV costcontrol or what so ever.

So when you want to keep it simple, make this value’s equal to each other so the number of mistakes will be less.

Kind regards

Henk
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Wed, 2006-02-01 07:53
#2
Gordon Blair
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Your manager’s a lot sharper than mine... mine struggled with the concept of buying apples....
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Wed, 2006-02-01 07:21
#3
Joao Ribeiro
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IMHO, the option should be "budget values". More, in a baseline I think the two should be the same, since you are not forecasting budget deviations from the very begining.
Budget at completion, is the value forecasted (in this case by Primavera) for the final activity cost according to your defined criteria. E.g. cost per day*remaining duration + actual cost to date or the sum of AC with a index corrected figure for the other part, usually 1/CPI or 1/(CPI*SPI) or some other variation.

I do not see why managers don’t understand the difference between the two. If your budget is time dependent, and the schedule changes, final cost doesn’t have to be initial cost and budget at completion is a form to estimate that final cost and its deviation.

Hope this helps to clarify.
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Wed, 2006-02-01 05:39
#4
Gordon Blair
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Henk,

Forgive me, I’ve not quite woken up yet, and think I may have bird flu, but it sounds like your suggesting changing the budgeted and baseline budgeted costs to match the at completion cost?

Sort of defeats the object of EV, you’ll lose track of how much more you’ve spent than budgeted (you’ll end up with a CPI of 1, even if you’vespent double the budgeted cost).

If management are having trouble understanding the difference between budgeted + at completion, tell them a story, ie:

I want to buy an apple a week for the next year, apples cost a pound, so I’m going to set aside £52, this is my budgeted cost.

6 months later, I’ve found out my greengrocer is a robbing git, he’s actually been charging me £1.25 for my apples (I know this because my last 26 weeks worth of apples have cost me £32.50). He has promised however, that he’ll go back to charging a pound per apple for the rest of the year, my new budgeted cost at completion is £58.50. This wold give a cost variance of £6.50 and a CPI of 0.9.

Being a cynic, I would predict that the overspend would continue at the same rate, and my next 6 months worth of apples would cost me at least as much as the first, another £32.50 (you just can’t trust greengrocers these days), so my Expected Cost at Completion would be £65 (giving a CPI of 0.8).
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Tue, 2006-01-31 17:28
#5
Henk van der Heide
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Whats important (i think)
When u use budget at completon for earned value calculation your percentage (and your ev) will change when budget (at completion)changes. This can happen by a number of reasons and its not always what you wanted
Most manager find a different between budget and budget at completion very hard to understand so you can avoid alot of question by keeping budget/blbudget/budget at completion the same. I usualy do this by running a global change after each progress import and scheduling.


Kind regards Henk.

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Tue, 2006-01-24 09:53
#6
Marcio Sampaio
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Thanks Mohammed Abo El Magd
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Tue, 2006-01-24 08:24
#7
Mohammed Abo El Magd
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The normal option and the default one is Budgeted values with planned dates. The first and third options are concerning using current dates. The current dates options use the Start/Finish dates for an activity or resource assignment.

Meaning that if you chose to update using Duration %, the EV calculations will be effected by these options.
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Tue, 2006-01-17 07:45
#8
Marcio Sampaio
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Thanks Gordon and Steve.

Kind regards.

Marcio Eduardo.
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Tue, 2006-01-17 06:13
#9
Gordon Blair
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The ’at completion’ value, as I understand it gives the facility of recognising overspend on the partially progressed baseline.

Whether you use this facility depends on a number of things:

1) If your Primary Baseline (within the software / not necessarily a contractual baseline), was partially progressed when you made it a Baseline (otherwise you would expect the ’At Complete’ and ’Budgeted’ Values to be identical.

2) If the over/underspend on your activities is as a result of extra work that does not warrant a change in the plan.

To be honest, I’d never use the at completion figure... if you’ve got extra work, put it in as a change and show it properly; if you’re just overspending, then unless you want to brush the fact under the carpet by masking the figures in the baseline, you want to be tracking against the Budgeted Values.

Just my opinion, of course, but I’m right. ;o)
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Mon, 2006-01-16 18:01
#10
Steve Keys
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I think the earned value purists would suggest using the primary baseline’s budgeted values.
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Mon, 2006-01-16 08:47
#11
Marcio Sampaio
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And what is the difference between them?
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