Earned Value Management EVM

The project's earned value management (earned Value MANAGEMENT,EVM) is a method of measuring project performance with three independent variables associated with schedule, cost budgeting, and actual cost.

There are three more important parameters, which can be used to calculate cost deviation, schedule deviation, cost performance index and progress performance index, etc., with these three parameters.

1. The planned value (PV, plan value) is also called the budgeted cost of the planned workload (BCWS, budgeted costs for work scheduled).

Refers to the budgeted work (or cost) required for the amount of work to be completed during a phase of the project implementation. That is, the current progress of the live, how much money should be spent.

2. Actual costs (AC, Actual cost) are also known as the actual cost of the completed workload (ACWP, Actual costing for work performed).

Is the amount of work (or cost) consumed by the actual work done during a certain stage of the project's implementation. Is how much money is actually spent.

3. Earned value (EV, earned value) is also called the budgeted cost of the completed workload (BCWP, budgeted costs for work performed).

Refers to the amount of work (or cost) calculated on the basis of the budgeted quota for the actual work performed at a certain stage in the project implementation process. That is the amount of work done.

The next step is to use the values calculated from the three basic parameters above:

1. Progress deviation (SV, Schedule varicance)

SV = EV-PV

SV > 0 o'clock, which shows that the earned value is greater than the planned value, that is, the work done is more than the planned work. Indicates progress ahead.

SV = 0 o'clock, indicating that earned value equals the planned value, that is, the work done is as much as the plan. Indicate that progress is consistent with the plan.

SV < 0 o'clock, indicating that the earned value is less than the planned value, that is, the amount of work done is less than the plan. Indicate that progress is lagging behind.

2. Cost deviation (CV, costing Variance)

CV = Ev-ac

CV > 0 o'clock, it means that the earned value is greater than the actual cost, that is, spend less money, dry more work. The explanation saves money, the cost has the balance.

CV = 0 o'clock, which means that the earned value equals the actual cost, which is the same as the amount of money spent on the job. It means the cost is the same as the plan.

CV < 0 o'clock, it means that the earned value is less than the actual cost, that is, spend more money, do less work. Describes cost overruns.

3. Cost performance indicator (CPI, Price performed index)

CPI = Ev/ac

CPI > 1 o'clock, shows that the earned value is greater than the actual cost, that is, spend less money, do more work. The explanation saves money, the cost has the balance.

CPI = 1 o'clock means that the earned value equals the actual cost, which means that the money spent is as much as the amount of work done. It means the cost is the same as the plan.

CPI < 1 o'clock, indicating that the earned value is less than the actual cost, that is, spend more money, do less work. Describes cost overruns.

4. Progress performance indicator (SPI, Schedule performed index)

SPI = EV/PV

SPI > 1 o'clock means that the earned value is greater than the planned value, that is, the work done is much more than the planned activity. Indicates progress ahead.

SPI = 1 o'clock, indicating that earned value equals the planned value, that is, the work done is as much as the plan. Indicate that progress is consistent with the plan.

SPI < 1 o'clock shows that the earned value is less than the planned value, that is, less work done than planned. Indicate that progress is lagging behind.

The best case of deviation is equal to 0. Demonstrate the accuracy of the plan and the accuracy of the execution.

The best case for the value of the indicator is equal to 1. Ditto.

Note: The first parameters of both indicators are EV, see the progress of the PV ratio, look at the cost and AC ratio.

By:albert Li, 2015-08-19

Earned Value Management EVM