Earned Value Management (or EVM) is an objective method for measuring project performance and progress. EVM compares original or planned scope, time and costs to the current status of each of those as the project progresses. As a result, you know exactly where the project stands at any point in time and you can more accurately predict how the project will turn out.
Central components of EVM include:
- Planned Work – identifies the schedule of work to be done
- Planned Value – the budget and the schedule of its consumption
- Earned Value – quantified accomplished work as the project progresses (budgeted cost of work performed)
As the Actual Work and Costs come in, they are calculated into an Earned Value and compared to the Planned Work and Value. The comparison tells you whether the project is on schedule and on budget.
Applying EVM Example
A project is planned for a duration of 2 years with a budget of X. The plan says that 50% of the work will be complete in 10 months and 50% of the budget will be spent in those first 10 months as well. If 10 months later a project manager reports that 50% of the budget has been spent, it appears the project is on budget. However, after close Earned Value Analysis, only 25% of the work has been completed. In this case, EVM is indicating that you are spending twice as much as planned to complete the work and the work is taking twice as long as planned.
Earned Value Management System
EVM is best handled, as described on Wikipedia, “in a single integrated system” or an Earned Value Management System. An EVMS can provide real-time information regarding the current state of the project and accurate forecasts of the project performance.
Project Business Automation from Adeaca provides fully integrated and automated earned value management and analysis capabilities.