# The Enhanced-Earned Value Management (E-EVM) Model: A Proposal for the Aerospace Industry
## 4 Defining the Enhanced-Earned Value (E-EVM) Model
### EVM Background and First improvement of the E-EVM Model  
The EVM uses a cost and schedule planning as a baseline, given by the Planned Value (denoted by \(PV\)) and defined as the time-phased budged package. Moreover, it considers two parameters to monitor the project: the Actual Cost (represented by \(AC\)) and the Earned Value (denoted by \(EV\)), where \(AC\) is the actual time cost and \(EV\) is the work carried out [2]. On the one hand, the \(EV\) is given by the following equation:  
\[EV:=\text{Project}\quad\text{progress}\quad\times PV. \tag{1}\]  
The technique of \(EV\) requires evaluating of the variance between the parameters \(EV\), \(AC\), and \(PV\). In this way, Cost Variance (denoted by \(CV\)) is employed to identify if the project evolves more or less, according to the planned value:  
\[CV:=EV-AC. \tag{2}\]  
If \(CV\) is negative, then the project cost is greater than the budgeted one, whilst if it is positive, then the project cost is under the budget. On the other hand, the so-called Schedule Variance (represented by \(SV\)) is the indicator which represents the advance in the project schedule:  
\[SV:=EV-PV. \tag{3}\]  
The interpretation of \(SV\) is similar to that of \(CV\). In effect, a positive value of \(SV\) means that the project is ahead of the planned schedule, and a negative value means that the project is delayed with respect to the planned schedule. On the other hand, the Cost Performance Index (denoted by \(CPI\)) and the Schedule Performance Index (represented by \(SPI\)) evaluate the project's efficiency by cost and schedule, respectively:  
\[CPI:=\frac{EV}{AC} \tag{4}\]  
and  
\[SPI:=\frac{EV}{PV}. \tag{5}\]  
The main acronyms and definitions of EVM are given in the Practice Standard for Earned Value Management of PMI [46]. Additionally, this model provides a projection of the so-called Estimate at Completion (denoted by \(EAC\)) which may differ from the original project budget, called the Budget at Completion (\(BAC\)). That parameter allows analysis of the \(PV\) by means of an estimate of the cost (\(AC\)) and schedule estimation (derived from \(EV\)) from the current time. Three different ways to compute \(EAC\):  
1. The projected cost according to the initial budget: \[EAC:=AC+(BAC-EV).\] (6)  
Depending on whether it is below or above the initial budget, the cost of the remaining work will be carried out as originally budgeted. 2. The projected cost according to the current \(CPI\):  
\[EAC:=AC+\frac{BAC-EV}{CPI}. \tag{7}\]  
Depending on the efficiency in the use of resources, the costs of remaining work of the project will maintain the same level of efficiency in the future. The projected cost according to the _CPI_ and the _SPI_:  
\[EAC:=AC+\frac{BAC-EV}{CPI\times SPI}. \tag{8}\]  
In this case, the \(EAC\) of the work will be calculated according to the ratio of efficiency, which takes into account both the rate of cost performance (_CPI_) and the index of schedule performance (_SPI_), the schedule delays, and the costs. Finally, we can define the following two parameters:  
1. The Estimate to Complete (_ETC_): \[ETC:=EAC-AC.\] (9)
2. The Variance at Completion (_VAC_): \[VAC:=BAC-EAC.\] (10)  
The first improvement introduced by [PERSON] and [PERSON] [45] is the use of unit of time (hours) instead of unit of cost (EUR) as the main input. Therefore, the \(EAC\) parameter can be measured in units of time. Through the easy application of an hourly rate, it is possible to manage hours and euros without any constraint, offering this E-EVM both inputs: the time necessary to complete the project and its estimated cost. This implies that what is really relevant for this model variant is the deliverable (in our case study, it might be an airplane or a wing). This is highly relevant because projects usually face problems regarding their completion on time. In this way, project management acquires this \"double vision\" so useful for managers since they can apply corrective measures focused either on the duration of activities or on its budget.