The 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 the project managers to measure the project’s performance.
Earned Value Management (EVM) technique is one the few techniques in the PMBOK Guide that involves mathematical calculations. Other mathematical techniques are in the Time and Risk Management knowledge areas.
Since these techniques involve mathematical calculations, many people find it difficult and try to ignore them. 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 Earned Value Management (EVM) and its three basic elements; Actual Cost (AC), Planned Value (PV) and Earned Value (EV). And then we will move into further details in forthcoming blog posts.
Okay, let’s get started.
Earned Value Management (EVM): The 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:
- How much work has been completed and how much is the balance?
- How much budget has been spent and how much is left?
Tracking the actual progress compared to the planned progress:
- How much work has been completed vs how much was planned for a given time?
- How much work has been completed vs how much was planned for a given cost?
Answers various performance related queries:
- 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).
- the potential risk areas (and then you will be in a better position to create a risk mitigation plan for those risks).
The Earned Value Management (EVM) has three basic elements:
- Planned Value (PV)
- Earned Value (EV)
- Actual Cost (AC)
We will talk about these elements in our next blog post.
Now, you can safely move to the next blog covering the three basic elements of EVM; i.e. Planned Value, Earned Value & Actual Cost
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