What cannot be measured cannot be managed! Measurements help track, control and take corrective actions for the project.
Using data driven project management, projects should measure (at a minimum):
Benefits include being able to measure:
A data driven “project management dashboard” helps projects to ensure they are on track.
Earned Value is an approach where you monitor the project plan, actual work and work-completed value to see if a project is on track. Earned Value indicates how much of the budget and time should have been spent, with regards to the amount of work done to date. It answers the “What did we get for the money we spent?” question.
When properly applied, EVM (Earned Value Management) provides an early warning of performance problems. Additionally, EVM promises to improve the definition of project scope, prevent scope creep, communicate objective progress to stakeholders, and keep the project team focused on achieving progress.
EVM can play a crucial role in answering management questions that are critical to the success of every project, such as:
The project manager can use the EVM methodology to help identify:
| Term | Description | Interpretation |
|---|---|---|
| PV (BCWS) | Planned Value (Budgeted Cost of Work Schedule) | What is the estimated value of the work planned to be done? |
| EV (BCWP) | Earned Value (Budgeted Cost of Work Performed) | What is the estimated value of the work actually accomplished? |
| AC (ACWP) | Actual Cost (Actual Cost of Work Performed) | What is the actual cost incurred? |
| BAC | Budget at Completion | How much did you BUDGET for the TOTAL JOB? |
| EAC | Estimate at Completion | What do we currently expect the TOTAL project to cost? |
| ETC | Estimate to Complete | From this point on, how much MORE do we expect it to cost to finish the job? |
| VAC | Variance at Completion | How much over or under budget do we expect to be? |
| Name | Formula | Interpretation |
|---|---|---|
| Earned Value (EV) | Total Estimated Cost * % Complete | Amount of budget earned so far based on physical work accomplished, without reference to actual costs |
| Cost Variance (CV) | EV – AC | NEGATIVE is over budget POSITIVE is under budget |
| Schedule Variance (SV) | EV – PV | NEGATIVE is behind schedule POSITIVE is ahead of schedule |
| Cost Performance Index (CPI) | EV / AC | I am getting _____ cents out of every $1 |
| Schedule Performance Index (SPI) | EV / PV | I am progressing at ___% of the rate originally planned |
| Estimate At Completion (EAC) Note: There are many ways to calculate EAC | BAC / CPI | As of now how much do we expect the total project to cost $_____. Used if no variances from the BAC have occurred |
| AC + ETC | Actual plus a new estimate for remaining work. Used when original estimate was fundamentally flawed | |
| AC + BAC – EV | Actual to date plus remaining budget. Used when current variances are atypical | |
| AC + (BAC – EV) / CPI | Actual to date plus remaining budget modified by performance. When current variances are typical | |
| Estimate To Complete (ETC) | EAC – AC | How much more will the project cost? |
| Variance At Completion (VAC) | BAC – EAC | How much over budget will we be at the end of the project? |