The Basics of Earned Value Management
As a project manager, one thing you want to ensure is that your project runs on schedule and within budget.
Straying off course is often disastrous for projects not only because of the project delays and added costs but also due to the risk of a complete project failure.
Project management disciplines can help.
Earned Value Management is one such discipline.
If you are wondering what earned value management is, what it entails, the calculations and terminologies involved you have come to the right place.
In this blog post, we will go over all the basics of earned value management.
So, let’s get right to it!
What is Earned Value Management?
Earned Value Management of EVM is a type of project management approach that provides all levels of management.
This management approach allows you and your team to gain early visibility, especially in regard to schedule and cost-related issues .
EVM integrates costs, schedule, and scope to allow you to measure project performance. With calculations based on your planned values versus actual values, EVM can allow you to predict outcomes and be prepared.
You can thus track your project’s performance against project baselines .
There are three terms associated with EVM and in order to fully understand this project management approach you need to be aware of all three.
These three terms are: earned value management , earned value management systems , and earned value analysis .
The first is what this blog post will be focusing on which is Earned Value management. EVM is a methodology that measures project performance and is often based on the project’s work breakdown structure. To learn more about the work breakdown structure check out our blog post here .
Secondly, is the Earned Value Management System or EVMS which is the group of processes, procedures, tools, and templates that help achieve EVM and organize EVM.
Finally, there is Earned Value Analysis or EVA which is a quantitative project management technique . EVA measures project performance by predicting likely project results. You achieve these predictions by the comparison of progress and budget of work planned against that of actual costs.
Benefits of Using Earned Value Management
EVM may seem complicated and a bit confusing at first but we are sure after reading this blog post things will start to make more sense.
However, before we get into how EVM works, the terminology and calculations used it is beneficial to know what benefits you can gain from adopting EVM.
Here are just some of the benefits of this project management methodology.
EVM has a powerful predictive capability thus making it a great project cost control measure.
This methodology provides more in-depth information than simple project tracking thus giving you a range of other advantages as well.
Some of the things you can gain from EVM include the following:
