Earned Value Management
Earned Value Management (EVM) is a systematic project management process that helps project managers track project performance. It is used to find variances and deviations in projects by comparing work planned and work performed. EVM is quite useful in project forecasting and provides data crucial for project decision making.
The Basic Concept of Earned Value Management
Earned Value Management is an umbrella term that includes 32 guidelines that define a set of requirements that must be met by a contractor’s management systems. What are the objectives of an EVM system? The objectives are to:
• Capture work progress against the original plan. • Provide managers a practical summary for the best decision making. • Provide audit-able, timely, and valid data for proactive project management analysis and action. • Relate schedule, technical, and cost performance.
The fundamental principle of EVM is that the value of a certain amount of work is equal to the amount of funds dedicated to its completion. EVM is based on three metrics:
• Planned value. The approved budget for the project planned to be completed by the set date. • Earned value. The cumulative value that is actually earned by a particular point in the project timeline. • Actual cost.
The actual cost of the work completed by the set date. When a project’s planned value equals earned value, its scope requirements have been successfully delivered.
Benefits of Earned Value Management
A well-implemented EVM system can provide more qualitative information than normal project tracking. It provides us with the necessary resources for answering some tough questions: Where are we in the project? Have we made it to where we want to be? When are we going to finish the project? With an EVM system, we can give more accurate answers. The value-added approach enables us to achieve better control and visibility of our activities, which eventually helps us to respond to issues in the project’s early stages. This improves project accountability and visibility, provides a clear communication of all the associated activities, and makes it possible to meet our project timelines.
Earned Value Management has demonstrated that it’s one of the most effective systems for scheduling performance and monitoring project cost. Project managers who use it are able to quickly reveal the inability to execute a good or poor project plan. One of the most useful tools in EVM is Oracle’s Primavera P6 – a tool that gives unparalleled monitoring, control, and insight to employers, project managers, planners, stakeholders, schedulers, and everyone else involved in a particular project.
Designed to keep the math easy, Primavera P6 empowers us to conduct a rudimentary EVM analysis thanks to the three metrics we mentioned earlier in the text. The tools can help you break down complex projects, mitigate risks, increase visibility and compliance with regulations, enhance collaboration and communication, and predict unplanned project activities. Seasoned Project Managers and DOD Acquisition Professionals at Titanium Cobra Solutions often use tools like Primavera P6 to create comprehensive schedules to manage their services and deliveries on behalf of our customer’s programs.
Having a project under control is often key to the failure or success of a project. Earned Value Management systems help you control the cost and time performance of a project, but also enables you to predict the final project cost and duration. It can help you detect early warning signals of unplanned activities and optimize your project budget the right way.