Earned Value Management (EVM) analysis is a technique in Project Cost Management that determines the current status, tracks the progress and helps in forecasting the likely future performance of the project. It helps project managers to measure project performance.
Earned Value Management (EVM) technique is one the few techniques in the PMBOK Guide that involves mathematical calculation, others are in Time and Risk Management.
Since these techniques involve mathematical calculation, many people find this concept difficult and try to ignore it. However, if you closely look at these concepts, they are not really as difficult as they appear to be.
Anyway, I’m going to make all EVM stuff easy for you. Just stay tuned with me.
In this blog-post, I will discuss briefly about Earned Value Management (EVM) and its three basic elements; e.g. Actual Cost (AC), Planned Value (PV) and Earned Value (EV). Afterwards, we will move into further details in forthcoming blog posts.
OK, let us get started.
Earned Value Management (EVM): Earned Value Management (EVM) analysis is a Project Cost Management Technique used to track the progress and current status of the project in terms of scope, cost and schedule
As per PMI,
“Earned Value Management (EVM) in its various forms is a commonly used method of performance measurements. It integrates project scope, cost, and schedule measures to help the project management team assess and measure project performance and progress.”
Earned Value Management (EVM) is a very strong management control tool that provides reliable and robust data. It tells you-
Current status of the progress; e.g.
• How much work have been completed and how much is balance?
• How much budget has been spend and how much is left?
Tracking the progress compare to planned progress; e.g.
• How much work have been completed vs how much was plan for a given time?
• How much work have been completed vs how much was plan for a given cost?
Answers various performance related queries; e.g.
• Is the project over budget or under budget?
• Is the project behind schedule or ahead of schedule?
• How much work (scope) is completed?
By analyzing these results you can find very easily
• If your project is deviating from any performance measurement baseline (scope, cost and schedule baseline).
• About the potential risk areas (and then you will be in better position to create a risk mitigation plan for those risks).
Earned Value Management (EVM) has three basic elements:
1. Planned Value (PV)
2. Earned Value (EV)
3. Actual Cost (AC)
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