Earned Value at Week Six: Optimistic Percent Complete
A 12-week structural package has a budget of $480,000, planned to be earned linearly. At the end of week 6 the project controls report shows planned value (PV) of $240,000, earned value (EV) of $205,000 and actual cost (AC) of $232,000. The site supervisor has been crediting 100% of each floor's structural steel as soon as the steel is delivered and bolted, before alignment, plumbing and final torqueing are complete. Two deliveries of the second-floor steel arrived late, and the crew has been working Saturdays to catch up. The project manager wants to know whether the package will finish over budget, and whether to approve a night-shift acceleration at a premium of 18% on the remaining labour cost.
1. Calculate CPI, SPI, CV and SV. What do the numbers say about cost and schedule performance?
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Calculations:
- CPI = EV / AC = 205,000 / 232,000 = 0.884
- SPI = EV / PV = 205,000 / 240,000 = 0.854
- CV = EV − AC = 205,000 − 232,000 = −$27,000
- SV = EV − PV = 205,000 − 240,000 = −$35,000
Interpretation. Both indices are below 1.0, so the package is behind plan and spending more than it has earned. For every dollar spent, only about 88 cents of earned value has been produced. The schedule position is also weak: at the end of week 6, approximately 42.7% of the work (205,000/480,000) is earned against 50% planned.
Caveat: the EV figure may be overstated. Crediting steel as 100% complete at bolting ignores alignment, plumbing and final torqueing. If those activities are 30–40% of the steel erection value, the true EV is lower, the CPI and SPI are worse, and the apparent 'catch-up' is an artefact of the measurement rule. Verify the percent-complete basis before acting on the indices.
2. Forecast the completion cost using CPI and assess whether that forecast is credible given the late deliveries and Saturday work.
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CPI-based forecast: EAC = BAC / CPI = 480,000 / 0.884 ≈ $543,000, an overrun of about $63,000. ETC = 543,000 − 232,000 = $311,000 for the remaining work.
Is it credible? Treat it as a first indicator, not a commitment:
- The CPI is based on only six weeks of data and may be distorted by front-end mobilisation and the late steel deliveries.
- The EV rule appears optimistic, which biases the CPI upward - the true overrun may be larger.
- Saturday working adds premium labour cost that is already showing in AC but may not yet be fully reflected.
- Remaining work is not identical to completed work; if the remaining scope is more labour-intensive, a bottom-up forecast will be more reliable than a straight extrapolation.
A defensible approach is to re-baseline the remaining work by activity, apply current productivity rates and known premiums, and compare that bottom-up ETC with the CPI forecast. Present both to the project manager, with the assumptions stated.
3. The PM proposes an 18% labour premium for night-shift acceleration. What must be true for acceleration to make sense, and what would you recommend?
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Test the arithmetic. Remaining work = BAC − EV = 480,000 − 205,000 = $275,000. If the remaining six weeks are planned linearly, PV remaining is $240,000. To finish on the original budget in six weeks, the crew must earn $275,000 in six weeks, about $45,800/week. Current performance is $205,000 over six weeks, about $34,200/week. That is roughly a 34% productivity increase, not a marginal stretch.
Test the economics. An 18% premium applies only to remaining labour, but acceleration also brings supervision, lighting, fatigue and quality risks. If the delay damages or liquidated damages exceed the premium plus the risk allowance, acceleration can be justified. If not, it simply adds cost to an already over-budget package.
Recommendation. First correct the EV measurement rule, because accelerating against an inflated EV means accelerating the wrong scope. Then model the recovery in cost terms: premium cost versus delay cost, with a contingency for lower night-shift productivity. Approve acceleration only for activities on the critical path, with a written recovery schedule and daily progress measurement. Otherwise, re-sequence and re-forecast rather than buying speed blindly.