Earned Value Management (EVM) - a project management technique that combines schedule & cost performance and it is about the investment returns in a given project.
It helps to answer the following question:
“What did we get for the money we spent?”Basic concepts of EVM:
- All project steps “earn” value as work is completed.
- The Earned Value (EV) can then be compared to actual costs and planned costs to determine project performance and forecast performance trends.
- Actual physical progress is measured in terms of dollars, hence schedule and cost performance can be analyzed in the same terms.
- Planned Value (PV)- the timephased budget and schedule, incremental plan which gives cost and schedule baseline.
The DOD Australia, DMO website on Performance Management defines the following as such:
- PV - The sum of the budgets for all work effort planned to be accomplished (ie. the plan).
- EV - The sum of the budgets for all work effort actually accomplished.
- Actual Cost (AC) - The actual costs incurred to date.
- Budget At Completion (BAC) - The sum of all budgets allocated to the contract. This does not include the contractor Management Reserve.
- Estimate at Completion (EAC) - Actual costs to date plus an estimate for work remaining.
In the next post, I will talk about the other EVM terms and formulae and how these help in measuring project performance.
Labels: ac, bac, cpi, cv, eac, etc, evm, forecast, measure, measurement, MS project, performance, predict, pv, reporting, spi, status, sv, tcpi