Earned value

[dimpy.handa]

Earned value compares the work the project team has finished so far with the estimates they made in the beginning of the project. This gives a measure of how far the project is from completion. By extrapolating from the amount of work already put into the project, the project manager can get an estimate on how much resources the project will have used at completion.

This technique is based on the critical path concept. An alternative project performance measurement and management technique is critical chain, which utilizes buffer management instead. The reason is that the earned value management method does not distinguish between the progress on the project constraint (i.e. its critical chain) from progress on the non-constraints (i.e. other paths in the project network). This can sometimes lead the project manager to expetite non-critical work at the expense of critical work in pursuit of better earned value measures, resulting in delayed project completion. This is a case of local optimalization, resulting from a lack of subordination of local measures to global measures.

 

[satyamsaxena0786]

Earned value management (EVM) is a project management technique for measuring project performance and progress in an objective manner. EVM has the ability to combine measurements of scope, schedule, and cost in a single integrated system. Earned Value Management is notable for its ability to provide accurate forecasts of project performance problems. Early EVM research showed that the areas of planning and control are significantly impacted by its use; and similarly, using the methodology improves both scope definition as well as the analysis of overall project performance. More recent research studies have shown that the principles of EVM are positive predictors of project success. Interest and use of EVM have grown significantly in recent years.

 

[swatiraohnlu]

Earned value makes more effective performance measuring possible. For example, in Robert R. Kemps book "Fundamentals of Project Performance Management," the three principal data elements (budget, actual cost, and earned value) that impact performance are compared. The book states that, "Earned value is the key element because it represents progress of work." The book goes on to define how earned value can be compared to the budget and actual cost data elements to more effectively measure project progress.

 

[dimpy.handa]

EVA works most effectively when it is compartmentalized, i.e. when the project is broken down into an organized Work Breakdown Structure, or WBS. The WBS is used as the basic building block for the planning of the project. It is a product-oriented division of project tasks that ensures the entire Scope of Work is captured and allows for the integration of technical, schedule, and cost information. It breaks down all the work scope into appropriate elements for planning, budgeting, scheduling, cost accounting, work authorization, progress measuring, and management control. The two most common WBS systems are the Construction Specifications Institute (CSI) format, and the Uniformat.