In this article, we will discuss Earned Value Management (EVM), which is a process for measuring project performance and progress. EVM allows us to track how much work has been completed on a project, how much money has been spent, and how close the project is to complete on schedule and within budget.
What is Earned value management?
Earned value management is a tool used to measure project performance. It calculates the percentage of work completed against budget and schedule.
Earned Value Management is a critical project management method that helps an organization evaluate the performance of its investments. Earned value can be applied to both individual projects and programs.
How does Earned value management work?
Earned value management (EVM) is a project management technique that measures the progress of a project by calculating the earned value of work completed to date. This calculation takes into account the budgeted cost of the work completed and the actual cost of that work.
EVM can be used to identify potential problems with a project early on, so that corrective action can be taken before the project falls too far behind schedule or costs exceed the budget.
The earned value calculation is based on three factors: budget, schedule, and actual cost. The budget is the amount of money allocated for a project, typically expressed as an estimated total cost. The schedule is the planned completion date for a project, and the actual cost is the amount of money spent to date on the project.
The earned value for a project is calculated by multiplying the budgeted cost of work completed by the percentage of that work that has been completed. This calculation gives a measure of the value of the work that has been completed to date. The actual cost is subtracted from the earned value to give a measure of the project’s progress against the schedule.
Examples of EVM in action
EVM is often used in conjunction with a project management tool like Microsoft Project, which can track budgeted cost, actual cost, and schedule data. Here are a few examples of how EVM can be used to track the progress of a project:
-If the earned value is greater than the actual cost, the project is ahead of schedule and under budget
-If the earned value is less than the actual cost, the project is behind schedule and over budget
-If the earned value is equal to the actual cost, the project is on schedule
-If the budgeted cost of a project exceeds the actual cost, the project has gone over budget
These examples show how EVM can be used to track a project’s progress and identify potential problems. By monitoring the earned value and comparing it to the actual cost, managers can make decisions about how to proceed with a project.
Drawbacks to using EVM
There are a few drawbacks to using EVM. First, the calculation is based on estimates, so it can be inaccurate if the estimates are not accurate. Second, the earned value calculation does not take into account changes in scope or schedule. Finally, EVM can be time-consuming to calculate and requires detailed data about the project budget and schedule.
Despite these drawbacks, EVM is a widely used tool for measuring project progress. It provides a snapshot of how the project is doing against the budget and schedule and can help managers make informed decisions.