Earned Value Analysis

What is it?

Earned Value Analysis, or EVA, is a method used by project managers in order to measure how much work is actually performed on a project beyond the basic review of cost and schedule reports (Chance W., 2006). Using EVA allows a project manager to measure the project based on progress that has been achieved.

Why is it important?

- Helps in realistic project planning by allowing the project manager to define the project baseline, including schedule, cost, and scope.

- Ability to get real time visibility of centralized information by integrating schedules and budget into the system and using Gantt charts, it helps to provide necessary insights on reports and analytics.

- Measures schedule and budget accuracies in the event of any unforeseen circumstances by calculating and implementing schedule variances and cost variances.

- Anticipate risks and intervene early.

- Enhances accountability and motivation by allowing employees to track their time and report on their progress.

(Negi, 2021)

Earned Value Management can be divided into three areas from which data is collected:

· Planned Value (PV): this refers to the estimated value of work that scheduled for completion within a set timeframe.

· Earned value (EV): this is the approved budget for the work that is to be completed by a set date.

· Actual Cost (AC): finally, this is the actual expenses that have been incurred for the work completed by the set date.

Based on the following indicators, you can analyse a projects schedule and cost performances:

· Schedule variance (SV): this refers to the difference between the actual work done, against the estimates. It will highlight, whether or not the project is on schedule by using the formula SV = EV – PV.

· Cost variance (CV): this is the difference between Earned Value (EV) and the Actual Cost (AC). This highlights if the project is within budget or not by using the formula CV = EV – AC.

· Schedule performance index (SPI): this indicator will measure the projects time efficiency, with the formula SPI = EV/PV.

(Negi, 2021)

References

Chance W., R., 2006. Earned value management (EVMS) "you too can do earned value management". [Online] Available at: https://www.pmi.org/learning/library/earned-value-management-systems-analysis-8026 [Accessed 11 November 2021].

Negi, S., 2021. Crucial Benefits of Earned Value Management. [Online] Available at: https://www.saviom.com/blog/crucial-benefits-of-earned-value-management/ [Accessed 11 November 2021].