ProjStream is pleased to announce the release of EVMax version 126.96.36.199 which will include bill of material budgeting, earned value and actual quantity tracking capability. This is significant as the Department of Defense Earned Value Management Interpretation Guide (EVMIG) identifies price and usage variance as a significant attribute of section 5.2 (correlates to Guideline 23 of EIA-748), analyzing significant variances.
Historically this capability was reserved for being done offline in spreadsheets and gathering source data from MRP systems. With this release of EVMax, quantities can be planned with unit cost, and earnings can be taken against the quantities by entering the data directly in EVMax, actual quantities and unit pricing can be imported via excel or from the MRP system directly.
Cost Variance (Material) = Price Variance + Usage Variance. These two items make up the total variance for material cost variance. The price variance can be thought of as what is the variance between what I planned to spend unit price wise vs. what was the actual unit price? The usage variance can be thought of in terms of how did I perform on material usage, that is was there a difference on what I plan to use vs. the quantities used.
Price Variance = (BCWP Unit Price – ACWP Unit Price) x ACWP Quantity
Usage Variance = (BCWP Quantity – ACWP Quantity) x BCWP Unit Price
A more detailed explanation of Price and Usage Variance can be found on Humphreys and Associates Website.