Earned Value Management and What Does it Entail

EVM is a management strategy that, upon implementing any kind of program, gives all levels of management early visibility into issues with cost and timeliness.EVM provides information for proactive management action, links technical, time, and cost performance, and gives managers a summary of successful decision-making. It also aids in providing the basis for evaluating work progress against a baseline plan.

Advantages of EVM

In order to respond to problems early on and keep the project on schedule, the value added strategy helps create greater visibility and control over the project operations. It promotes project visibility and accountability and enables clear communication of the tasks involved.

The fundamental tenet of earned value management (EVM) is that a project's worth is equal to the amount of money allocated to finish it.

• Planned value: This is the agreed-upon cost for the work that is expected to be finished by a specific date.
• Earned value: This is the amount of money allocated to the project that was actually finished by the deadline.
• Actual costs: The expenses actually incurred to execute the work by the deadline.

You utilize the following metrics to evaluate the schedule and cost performance of your project using EVM:

• Schedule variance (SV): This is a measurement of the discrepancy between the amount of work that was actually completed and that which was anticipated. This makes it obvious whether or not the project is on schedule.
• Cost variance (CV):This is the difference between the budgeted cost for the work that needed to be done and the actual amount spent on the work that was completed. This demonstrates whether the project is on or above budget.
• Schedule performance index (SPI): This is the proportion of the approved budget for work that has been completed to the approved budget for work that was initially intended. This gauges the project's relative time effectiveness.
• Cost performance index (CPI): This is the ratio of the approved spending for the work that was completed to the actual spending for the approved job. It serves as a comparative indicator of the project's cost effectiveness and can be used to calculate the cost of the remaining work.

To learn more about the topic, register in our Earned Value Management training course