Sample Earned Value Calculation
See this example of how Cobra ensures that earned value never exceeds the work package budget.
Assume that a work package is budgeted to take 1,000 hours over a period of three months:
- Month 1: 250 hours at $20/hour for a total of $5,000
- Month 2: 500 hours at $21/hour for a total of $10,500
- Month 3: 250 hours at $22/hour for a total of $5,500
The total dollar budget is $21,000.
Also assume that there are five equally weighted milestones for this work package. In the first month, the first two milestones are achieved.
Because these two milestones represent 40% of the total, the cumulative total number of earned hours is 400. Using this result, the cumulative dollar value is calculated by taking the first 250 hours at $20/hour, and the remaining 150 hours at $21/hour. This results in a cumulative dollar value of $8,150.
| Earned Hours | Earned Dollars |
|---|---|
| First 250 Hours at $20 | $5,000 |
| Remaining 150 Hours at $21 | $3,150 |
| Total | $8,150 |
Notice that the total, when calculated in this manner, is not exactly 40% of the dollar budget, which would be $8,400.
As there is no previously calculated earned value for this work package, a time-phased record is created with 400 hours and $8,150 of earned value.
In this example, no new milestones are achieved in the second month. The same cumulative calculations are performed, and of course, the same cumulative results are obtained. As this amount of earned value is already calculated, no new record is created for the second month.
In the third month, another two milestones are achieved. This brings the cumulative total to four out of five, and as the weights are equal, the cumulative earned value is calculated as 800. The cumulative dollars are calculated by the same method as before, this time arriving at $16,600.
| Earned Hours | Earned Dollars |
|---|---|
| First 250 Hours at $20 | $5,000 |
| Next 500 Hours at $21 | $10,500 |
| Remaining 50 Hours at $22 | $1,100 |
| Total | $16,600 |
After subtracting the previously calculated earned value ($8,150), the record for the third month will contain 400 hours and $8,450. In the fourth month, when the final milestone is achieved, the cumulative earned value is equal to the budget: 1,000 hours and $21,000. Again, the previously calculated data is subtracted to produce an earned value record for the fourth month containing 200 hours and $4,400. (Notice that this cross-checks with the fact that the final 200 hours were budgeted at $22/hour.)
Although budget rates have been used above to make this example easy to understand, the actual calculation is not performed from the rates in the rate file, but from the ratios implied by the derived costs that are actually stored in the budget records.
For example, the dollar value of the first month is actually calculated as:
5,000 + [150 (10,500/500)] = $8,150
Thus, the results will be correct even if the rate set is changed after the budget is produced.
The % Comp progress technique assigned to the resource allows you to calculate earned value at the resource level, as shown in the following examples:
| Activity | Resource | Hours | Percent Complete |
|---|---|---|---|
| 1000 | A | 100 | 100% |
| B | 60 | 100% | |
| 1010 | B | 200 | 50% |
| 1020 | A | 100 | 20% |
| C | 40 | 20% | |
| 1030 | D | 500 | 0% |
Assuming these activities are all linked to a single work package in Cobra, the earned value is calculated as follows:
| Activity | Resource | Calculation |
|---|---|---|
| 1000 | A | 100 hrs x 100% complete = 100 hrs |
| B | 60 hrs x 100% complete = 60 hrs | |
| 1010 | B | 200 hrs x 50% complete = 100 hrs |
| 1020 | A | 100 hrs x 20% complete = 20 hrs |
| C | 40 hrs x 20% complete = 8 hrs | |
| 1030 | D | 500 hrs x 0% complete = 0 hrs |
At the work package level, the earned value is calculated as follows:
- Resource A = 120 hrs
- Resource B = 160 hrs
- Resource C = 8 hrs
- Resource D = 0 hrs