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What is
Earned Value Management?
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Earned
Value Defined
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| The
Earned Value Management (EVM) technique is a valuable
tool for managing all kinds of projects. EVM
lets the project manager combine schedule
performance and cost performance to answer the
question: "What did we get for the money we spent?" |
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Without
earned value, projects can easily fail!
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| Many
project managers measure their project's cost
performance by simply comparing the amount of
money spent to date to the amount of money they
allocated for the project.
While this might
seem like a good idea, it really tells nothing
about the project's performance. What if
half the money has been spent but only 10% of the
work has been done?
The
example below compares budget to actual spending.
It looks like things are going well. After
all, less money is being spent than has been
allocated, right?
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| Earned
value improves on the first process (comparing
budget to actual spending) by quantifying the work
that has been done on the project.
Using earned
value, management can easily compare the amount of
work that has been completed to the amount of work
planned. Earned Value forces the project manager
to plan, budget and schedule the work in a
time-phased plan. As work is accomplished, it
accrues "earned" value.
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Earned
Value gives better project visibility
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| Here's the same project schedule with one big
difference. This one reports the project's
Earned Value. It uses some slightly different
terminology (AC for Actual Costs and PV for Planned
Value), but the main addition is the EV, or
Earned Value, column.
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| Now, we can see that this project is actually
not performing as well as planned. Because
several tasks are behind schedule (as indicated
by the yellow progress markers), the Earned
Value of the project is less than planned: |
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