Earned-Value Management (or EVM for short) is a technology that is the gold standard in project planning and budget management. In a matter of fact, it is so popular and effective to a great extent that the US government still uses it today to measure and track the success of its programs to this day. It is a project management technique that allows you to measure and extent your progress. While the project is running, you need to monitor the status of the project so that the project budget is according to the schedule and quality. Earned-value management and earned value technology is one way to analyze actual performance concerning the values offered.
It can combine triangle dimensions for project management: scope, time and cost. The earned-value analysis is an important tool and technology for project cost management. However, passing the Project-Management-Professional (PMP) paper is very important, therefore PMP certification training is obliged to pass the exam. The reason is that many mass questions are based on the values of the formula obtained by the PMP test.
Use a value-based formula to measure and analyze the distance between a project and a program to help measure the effectiveness of the project management process. If you understand the terms and value of the acquired formula well, it will give you a chance to test from the first try. EVM is a tool that helps us understand the cost and schedule of a project. It also helps us predict the success of the project if we continue as we are.
- The budget on end: That is the cost of the project budget. It can be as important as the time spent on the approved budget. Or it can be cumulative – this is the total amount of the planned budget that is planned for a certain period.
- Budget-Costs (Planned-Value or P-V): Again, you will see this cumulatively or depending on the current situation.
- Estimated Project Cost (Earned-Value or EV): This is the budget value of all projects completed so far.
Why Is EVMCrucial?
If we look at all of these different factors, it also allows us to look at projects that are not on time or in the budget (above or below) and see how well these two factors work together. If we adopt these indicators and apply them to the rest of the project (or future work), we will find it easier to predict how things will develop in terms of cost, performance, and organization, given that the degree of combustion does not vary. But remember – it’s a great prerequisite, so it’s important to be flexible and aware of the impact of change on these things. Thus, the management of earned values helps to repeat:
- Where have we been?
- Where are we now?
- Where are we going?
How to Calculate Earned Value Management in Project
Earned value management is a way to measure and monitor how much work is being done on a project according to plan. Simply put, this is a quick way to find out if you completed a project too late or with a big budget. For example, if you’re 60% complete and your project budget is $ 100,000, that’s worth $ 60,000. However, some additional calculations need to be considered with the purpose of use the earned value properly.
The main advantage of the value obtained is cost analysis and time allocation. It is reliable and predictable for the development so far, when the project will be completed and how much it will cost. EVM also allows you to compare the performance of projects of any size. The three pillars of ELV are scope, time budgeting and data development. You can compare earned value to actual costs to determine if your budget is above or below.
Advantages of Measuring the Earned Value
The main advantages of measuring the earned value of the project are:
It Allows You to React Quickly
To ensure the success of all your projects, you need to recognize the difference between the real, organized and real value in the early stages of the project life cycle. As it says? Once you have identified the gap, you can improve your tasks and achieve efficiency in the implementation of the project phase. It’s the heart of recognizing the value you’ve gained: it allows you to better monitor your projects.
Improves Productivity and Communication
The calculation of the earned value provides even more information than the usual project monitoring. This ensures that all project managers are where they want to be in the project before they arrive. This helps project managers gain visibility and control over all project work, and this makes it easier and faster to achieve project goals and stays on track. It also improves communication between the project manager and project stakeholders, as it allows clear communication on all activities related to project implementation.
It Allows You to Step Back
Getting value can steer you in the right direction. You can easily identify the time you have exceeded your budget, the most difficult tasks, and the impact of stakeholders on deadlines. Keep in mind that these are all lessons that will allow you to scale the following tasks and improve your understanding of any situation.
How EVM Works
Compare this to traditional methods of tracking progress and you will soon see why it is better to consider project planning and budgeting rather than relying on both.For example, if a project is to last five months and the project manager considers only elapsed time as a measure of project completion, it can assume that after a month the project will be 20%, even if it is only 10% completed with the necessary works. Without a clear understanding of the current situation of the project and the destination, disaster awaits us.When you return to the five-month deadline, if you managed to replace the hardware and accessories at the end of four months, you completed 80% of the work and produced 80% of the value. 80% of cases set aside time. The ratio used to determine the earned value is based on the percentage of each project in the total or completed project plan.
Earned value management is multiple technologies and there are many ways to achieve it. Good preparation is important for the best chance of success. Take the time to make a plan and invest in project management software. It not only helps to track your progress when you are in the middle of a task. It is also useful for collecting data on plans and costs so that when the time comes to analyze an EVM, you have everything you need at your fingertips.