Earned Value Management

Earned Value Management (EVM) helps project managers to measure project performance. It is a systematic project management process used to find variances in projects based on the comparison of worked performed and work planned. EVM is used on the cost and schedule control and can be very useful in project forecasting. The project baseline is an essential component of EVM and serves as a reference point for all EVM related activities. EVM provides quantitative data for project decision making

EVM Measures

EVM consists of the following primary and derived data elements. Each data point value is based on the time or date an EVM measure is performed on the project.

Primary Data Points

  • Budget At Completion (BAC)
    Total cost of the project.
  • Budgeted Cost for Work Scheduled (BCWS) / Planned Value (PV)
    The amount expressed in Pounds (or hours) of work to be performed as per the schedule plan.
    PV = BAC * % of planned work.
  • Budgeted Cost for Work Performed (BCWP) / Earned Value (EV)
    The amount expressed in Pounds (or hours) on the actual worked performed.
    EV = BAC * % of Actual work
  • Actual Cost of Work Performed (ACWP) / Actual Cost (AC)
    The sum of all costs (in Pounds) actually accrued for a task to date

Cost Forecasting:

  • Estimate At Completion (EAC)
  • The expected TOTAL cost required to finish complete work.
  • EAC= BAC / CPI
    • = AC + ETC
    • = AC + ((BAC – EV) / CPI) (typical case)
    • = AC + (BAC – EV) (atypical case)

Typical means it is assumed that similar variances will not occur in the future.

  • Estimate to complete (ETC)
  • The expected cost required to finish all the REMAINING work.
  • ETC = EAC – AC
    = (BAC / CPI) – (EV/CPI)
    = (BAC – EV) / CPI

EVM Benefits

  • Preventing scope creep
  • Improving communication and visibility with stakeholders
  • Reducing risk
  • Profitability analysis
  • Project forecasting
  • Better accountability
  • Performance tracking
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