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Earned Value

Earned Value (EV) is a project management technique used to measure and evaluate project performance and progress. It integrates scope, schedule, and cost parameters to provide a comprehensive view of how a project is performing relative to its baseline plan. Here’s an overview of the key concepts and how Earned Value is used in project management:

Key Concepts:

  1. Planned Value (PV): The authorized budget assigned to scheduled work up to a specific point in time. It represents the value of work planned to be completed.
  2. Actual Cost (AC): The total cost incurred for the work performed up to a specific point in time. It includes direct and indirect costs.
  3. Earned Value (EV): The value of work actually performed up to a specific point in time, measured in terms of the budget assigned to that work.

Key Formulas:

  1. Schedule Variance (SV):

SV=EV−PV

Indicates whether the project is ahead of or behind schedule.

  1. Cost Variance (CV):

CV=EV−AC

Indicates whether the project is under or over budget.

  1. Schedule Performance Index (SPI):

SPI=EV / PV

Measures schedule efficiency.

  1. Cost Performance Index (CPI):

CPI=EV / AC

Measures cost efficiency.

How It Works:

  1. Baseline Plan: Establish a baseline plan that includes the project scope, schedule, and budget. This plan serves as the reference point for measuring performance.
  2. Tracking and Reporting: Continuously track and report project performance using the key metrics (EV, PV, AC).
  3. Analysis and Decision Making: Use SV, CV, SPI, and CPI to analyze project performance and make informed decisions. These metrics help identify deviations from the plan and areas that require corrective actions.

Example:

Imagine a project with a total budget of $100,000 and a planned completion time of 12 months. By the end of month 6:

  • Planned Value (PV): $50,000 (work planned to be completed by month 6)
  • Actual Cost (AC): $55,000 (total cost incurred by month 6)
  • Earned Value (EV): $45,000 (value of work actually performed by month 6)

Calculating the metrics:

  • Schedule Variance (SV):
  • SV=EV−PV

SV=$45,000−$50,000=−$5,000

(Project is behind schedule by $5,000)

  • Cost Variance (CV):

CV=$45,000−$55,000=−$10,000

(Project is over budget by $10,000)

  • Schedule Performance Index (SPI):

SPI=$45,000 / $50,000=0.9

(Project is 90% as efficient as planned in terms of schedule)

  • Cost Performance Index (CPI):

CPI=$45,000 / 55,000=0.82

(Project is 82% as efficient as planned in terms of cost)

Benefits of Earned Value:

  • Comprehensive Performance Measurement: Integrates scope, schedule, and cost for a holistic view of project performance.
  • Early Warning System: Identifies deviations from the plan early, allowing for timely corrective actions.
  • Objective Data: Provides objective, quantifiable data for performance analysis and decision-making.
  • Forecasting: Enables accurate forecasting of future project performance and outcomes.

By using Earned Value in project management, organizations can effectively monitor and control projects, ensuring they stay on track and within budget.

There are several project management software options that are highly regarded for tracking Earned Value (EV). Here are some of the top choices:

1. Oracle Primavera

  • Best for: Mid-Market and Enterprise
  • Features: Comprehensive EVM capabilities, real-time data, customizable dashboards, and integration with other project management tools.
  • User Satisfaction: High user satisfaction ratings.

2. Deltek Cobra

  • Best for: Defense & Space industries
  • Features: Flexible architecture, security options, and robust EVM functionalities.
  • User Satisfaction: Positive reviews for its usability and features.

3. Microsoft Project

  • Best for: Those already invested in the Microsoft ecosystem
  • Features: Project baseline, data consolidation, real-time EV calculation, and customizable dashboards.
  • User Satisfaction: Good user ratings and comprehensive project management features.

Example of Reports Generated as Part of the Instructional Design process.

4. Teamhood

  • Best for: Visual project management and EVM analysis
  • Features: Out-of-the-box EVM analysis, integrated project management features, Gantt view, Kanban, and List views.
  • User Satisfaction: Excellent user ratings and free plan available.

5. EcoSys

  • Best for: Large-scale projects
  • Features: Real-time EV calculation, data consolidation, KPI definition, and customizable dashboards.
  • User Satisfaction: Positive reviews for its comprehensive EVM capabilities.

6. ProjectManager

  • Best for: Real-time project performance tracking
  • Features: Real-time dashboards, variance analysis, and integration with other project management tools.
  • User Satisfaction: High user satisfaction for its real-time data and ease of use.

These tools offer a range of features to help you effectively track Earned Value and manage your projects.