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TOPIC: 2 things need to be verfied

2 things need to be verfied 5 years 2 months ago #2545

  • Wing Ho Chan
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Hello Cornelius,

I have 2 questions regarding Earned Value and Net Present Value:

1. On page 182 of Pimbox guide (4th edition), line four of the 2nd paragraph about Earned Value said "The EV being measured must be related to the PV baseline (PMB), and the EV measured cannot be greater than the authorized PV budget for a component."

Is it true that EV cannot be greater than PV? If so, why there's possibility that Schedule Performance Index (SPI) may be greater than 1?

2. In your episode E07.05, the PV example at roughly 16 min from the beginning may need to be verified:

Your equation: PV=1 million/(1+12)^3=0.00045 million.
According to my education, the equation is PV=1/(1+0.12)^3=711,780

It is greatly appreciated if you can help clarify.

Thanks for your help and look forward to hearing from you.

Regards,

Michael

Re:2 things need to be verfied 5 years 2 months ago #2548

  • Cornelius Fichtner
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Michael,

1.) EV can be greater than PV. Example: In a construction project you planned to have 2 houses completed at the end of the second month, but because the work is progressing much better than expected you are able to finish 3 houses. So PV=2 houses and EV=3 houses. Therefore your EV is greater than you PV.

2.) That is a known errata. Please see episode "E00.03 PM PrepCast Errata" where we list all the known little bugs in the PrepCast
Until Next Time,
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