Earned Value Management

What is Earned Value Management?

Have been working on same for past 6 months so thought of putting in my perspective on the blog. Loads of data can be obtained from the net from just typing it out on Google. It essentially is a Tracking and Monitoring methodology for checking on project performance in $ terms .It assists project manager by providing objective, accurate and timely data for effective decision making.

Basic concept:

I got budget for an activity to be done (BAC- Budget At Completion).

I divide the activity into sub tasks and assign $ value to each (PV-Planned Value).

Now I measure at regular intervals (weekly /monthly /quaterly /yearly) based on activity period how much work got done with respect to what was planned . This is called as EV(Earned Value). Since I am getting the $ value against all the work which I accomplish it is called Earned Value.I will earn same $ after completing the task against $ I had planned for.

How much did it cost me in actual $ to perform that activity , how much I had to spend in actual to complete the task is referred as AC (Actual Cost). This is most likely to be different from the planned $ for a particualr task.

PV, EV & AC constitute the basic EVM.

As one can see from the chart EVM gives project manager a perspective of project both from schedule and cost angle in $ terms. All curves are cumulative figures. PV at end is equal to BAC.

There are various metrics derived out of these basic values:

EV-AC - Cost Variance(CV)

EV-PV - Schedule Variance(SV) * in dollar terms

EV/AC - Cost Performance Index(CPI)

EV/PV - Schedule Performance Index(SPI)

CPI*SPI- Cost Schedule Index (CSI)

BAC/CPI- Estimate at Completion (EAC) gives an estimate of cost of completion of activity based on current cost performance

EAC-BAC - Variance at Completion(VAC)

EAC-AC - Estimate to Complete (ETC)

Quite simple yet very powerful tracking and monitoring method . Since gives $ value perspective very well understood by all.