Earned Value Management (EVM) is a technique for measuring and reporting the cost of work accomplished. It can be used to measure performance on any project, but it is especially useful for government and defense contracts where there are tight restrictions on both time and budget.
EVM ( Earned Value Management ) calculates three key values: Planned Value (PV), Earned Value (EV), and Actual Cost (AC). PV is the value of the work that has been planned to be done, EV is the value of the work that has actually been completed, and AC is the total cost of the work that has been completed.
How to Calculate EVM
To calculate EVM ( Earned Value Management ), you need to know three things: the budget, the earned value, and the actual cost. The budget is the amount of money that has been allocated for a project. The earned value is how much work has been completed, as measured by the budget. The actual cost is how much money has been spent on a project, including both the budget and any additional costs.
EV = Total Project Budget * Completed % of Project Budget
Benefits of using EVM
EVM ( Earned Value Management ) can be used to answer important questions such as:
-Are we on track to finish the project on time and within budget?
-What is the status of the project?
-What has been accomplished so far?
-What is the projected final cost of the project
-What is the trend in our project’s budget and schedule?
-How does our current performance compare to our original plan?
-What can we do to improve our project’s performance?
EVM ( Earned Value Management ) is a valuable tool for project managers and can help to ensure that projects are completed on time and within budget. By tracking the progress of the project and the money spent, EVM can help to identify potential problems and correct them before they become too costly. EVM is a key part of good project management and should be used on any project where time or money is a concern.
Why should you use EVM in your organization?
There are many benefits to using earned value management (EVM) in your organization. EVM ( Earned Value Management )can help you track project performance, identify issues early, and make better decisions about how to allocate resources.
One of the biggest benefits of EVM ( Earned Value Management ) is that it allows you to track progress against budget. You can use EVM ( Earned Value Management ) to compare the budgeted cost of a project to the actual cost, and then track how much progress has been made towards completing the project. This information can help you identify issues early and make decisions about whether to continue or abandon a project.
EVM ( Earned Value Management ) can also help you identify potential problems with a project. For example, if the budgeted amount for a project is significantly higher than the actual cost incurred to date, it may be an indication that the project is headed for trouble.
Conclusion
By comparing the budgeted amount for a project to the actual cost incurred to date, you can see whether you are on track to meet your budget goals. If not, you may need to reallocate resources to ensure that the project is completed on time and on budget.