Earned Value Management (EVM) is a project management technique for measuring a project’s performance by comparing work performed with the work planned.
The project’s progress can also be tracked using the EVM metrics.
Benefits of EVM
- EVM predicts the future, gives visibility through clear metrics.
- Improves control over overall project performance.
- Predicts completion of the project and final cost.
- Identifies the problem by analyzing the data that has been captured and provides early warning of issues.
- Integrates work, schedule, and costs using a work breakdown structure.
Metrics in EVM
Planned Value (PV)
The planned Value of a project allows users to know the baseline cost or planned value of the cost of the project at any given point in time. If the whole project is estimated at $500,000 and 50% of the work is planned to be completed as of today, the planned value of the project is 50% of $500,000 = $250,000.
Planned Value (PV) = [ Total Planned Cost * Planned % Completion]
Earned Value (EV)
Earned value of a project refers to the actual amount earned in the project based on the actual work done. It tells users the budgeted cost of the work performed. If the actual work done is only 40% (against the planned work of 50%), the earned value is 40% of $500,000 = $200,000.
Earned Value (EV) = [Total Planned cost * Percentage Completion of Task/100]
Cost Variance (CV)
Cost Variance shows deviation from the planned budget. If the actual cost of the project is $210,000 when 40% of the work is completed, the cost variance is $200,000 – $210,000 = -$10,000. A negative value indicates the project has already exceeded the budget. A positive value indicates that the project is well within budget. Zero indicates that the project budget matches the planned budget.
Cost Variance (CV) = [Earned Value – Actual Cost]
Schedule Variance (SV)
Schedule Variance is a measure of the deviation in project schedule. In our example, the schedule variance is $200,000 – $250,000 = -$50,000. A negative value indicates that the project is behind schedule. A positive value indicates the project is ahead of schedule. A zero indicates that the project is on schedule.
Schedule Variance = [Earned Value – Planned Value]
Schedule Performance Index (SPI)
Schedule Performance Index gives a perspective on the efficiency of the project in terms of schedule. In our example, the SPI is $200,000/$250,000 = 0.8. An SPI value less than 1 indicates the project is behind schedule. A value of 1 and above indicates health efficiency.
Schedule Performance Index (SPI) = [Earned Value / Planned Value]
Cost Performance Index (CPI)
Cost Performance Index gives a perspective on the efficiency of the project in terms of cost. In our example, the CPI is $200,000/$210,000 = 0.95. A CPI value less than 1 indicates that the project is earning less than the cost and is over budget. A value over 1 indicates the project is recovering a higher value for every $ spent.
Cost Performance Index (CPI) = [Earned Value / Actual Cost]
Forecasted Cost (Typical)
Forecasted cost (typical) is the projected total cost of the work done in the project at a given point of time.
Forecasted Cost (Typical) = [Actual Cost * 100 / Percentage Completion of Task]
Forecasted Cost (Atypical)
Forecasted cost (Atypical) gives a futuristic picture based on a project’s current performance.
Forecasted Cost (Atypical) =[(((100 – % Completion) * Planned cost)/100) + Actual cost]
Earned Value Analysis Report
This chart is the overall view of the project’s progress over a specific period.
The X-axis represents the time taken (weeks or months) and the Y-axis represents the amount based on the project type.
- Earned Value
- Planned Value
- Actual Cost
- Planned Cost
EVM Project Performance Report
This chart is the visual representation of the project’s overall performance. The X-axis refers the CPI and Y-axis refers the SPI.
Lines will be plotted for
EVM Cost / Schedule Variance Report
In this chart, the X-axis represents the Cost Variance and the Y-axis represents the Schedule Variance of the project. Lines will be plotted for
EVM Reports in Project Portfolio Dashboard
EVM Cost / Schedule Performance Report
This chart is a quadrant graph that shows the performance based on the actual cost and schedule of the projects. The size of the bubble indicates the project’s size.
The four quadrants in the graph are,
- Healthy
- Ahead of schedule & over budget
- Behind schedule & under budget
- Behind schedule & over budget
