Page 166 -

140 • Green Project Management

efficient. You have four weeks to modify these identical boilers.
Each boiler is planned to take 20 staff hours—for a total of 200
staff hours, at $50 per hour. In other words you have an overall
$10,000 budget for labor. Materials are provided by government
stimulus grant money (in the form of boiler upgrade kits) so there
are no expected material costs.
• At the halfway point of your schedule (two weeks elapsed), your
site managers report the following:
• Labor use: 120 staff hours, plus $500 in material costs (unex-
pected purchase of special tools and fittings).
• Number of boilers installed: 4
• So … how done are we?
• Are we 40% done because we have 4 out of 10 boilers
completed?
• Are we 50% done because we have spent two of our four
weeks?
• Are we 60% done because we have spent 120 of our 200 staff
hours?
• Are we 65% done because we have spent $6,500 of our budget
of $10,000?
• You can see that there is ambiguity in the way progress is reported
here. The earned value technique is meant to avoid that ambi-
guity and report progress in a standardized way, geared toward
monetized units.

In this case, we can calculate earned value (EV) as follows:

• Our total budget is 200 staff hours × $50 per hour, or $10,000, or
$1,000 per boiler.
• EV = 4 (boilers done) × $1,000 (planned expenditure per boiler)
= $4,000
• AC = labor + material costs (which is 120 hours × $50/hr) + $500,
or $6,500
• PV = The amount we planned to have spent by the second week
= $10,000/2 or $5,000

With these three basic numbers, we can calculate the variances and
indices: