Feedback is critical to the success of any project. Timely and targeted feedback can enable project managers to identify problems early and make adjustments that can keep the project on time and on budget.
Earned Value Management (EVM) is a project management technique for measuring project performance and progress in an objective manner. It combines the measurements of scope, time and budget (the triple constraint) into a single integrated system. EVM has proven itself to be one of the most effective project performance measurement and feedback tools. EVM has been called “management with the lights on” because it can help clearly and objectively illuminate where a project is and where it’s going. EVM uses the fundamental principle that patterns and trends in the past can be good predictors of the future.
EVM plays a critical role in helping management answer the following questions about the progress of their project(s):
- Are we ahead or behind of schedule?
- Are we ahead of behind on budget?
- How efficiently are we using our time?
- When is the project likely to be completed?
- What is the remaining work likely to cost?
EVM not only measures where we are (and where we are likely to go), but also helps the project manager to identify:
- Where problems are occurring
- Whether the problems are critical or not
- What it will take to get the project back on track
EVM relies on 4 basic data points:
- Planned Value (PV) - describes how far along project work is supposed to be at any point in time (i.e. the projected cost baseline for the project)
- Earned Value (EV) - the snapshot of work progress at a given point in time
- Actual Cost (ACWS) - an indication of the level of resources that have been expended to achieve the actual work performed to date
- % complete - measured in total project hours/hours already worked
EVM is measured in relation to schedule and cost:
- Schedule performance index - measures whether the project is behind or ahead of schedule
- Cost performance index - measures whether the project is behind or ahead of budget
CALCULATIONS
- EV = PV * % complete
- CPI = EV/AC (>1 means you're below budget)
- SPI = EV/PV (>1 means ahead of schedule)
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