What is Earned Value Management?
Earned Value Management (EVM) is a project control process based on a structured approach to planning, cost collection and performance measurement. It facilitates the integration of project scope, time and cost objectives and the establishment of a baseline plan for performance measurement.
EVM is used to inform management decisions on a project. It necessitates the integration of project scope, time and cost objectives and the establishment of baselined plans against which physical performance can be measured during the execution of a project. Furthermore, it provides a sound basis for problem identification, corrective actions and re-planning as required.
The purpose of measuring earned value is to provide information in order to determine:
- What has been achieved of the planned work
- What it has cost to achieve the planned work
- Whether the work achieved is costing more or less than was planned
- Whether the project is ahead or behind the planned schedule.
Using this measure of earned value, EVM will provide:
- Ongoing performance measurement
- Variance and trend analysis
- Measures of efficiency
- Prediction of outturn cost and final duration
- Information to assess whether corrective actions are required.
EVM will accurately show deviations from the baselined plans, but it may not be immediately evident that the plan is flawed. Accurate management information can only be extracted if accurate management information is in place from the start of the project.
A theoretical foundation needs to be established for users of EVM.