What is Earned Value?

  1. What is Earned Value?

Extant performance is the best pointer of future performance, & therefore using trend information, it’s possible to forecast cost and schedule overruns at an early stage in the project. The most pervasive trend analysis technique is the Earned Value method.

In an explanation, Earned Value is an approach where you monitor the project’s plan, actual work, or work completed value to see if a project is on way. Earned Value displays, how much of the budget & time should have been spent with respect to the amount of the work done. It is necessary to get actual expense incurred for the project from the organization’s accounting systems. This spent’s cost is compared with the earned value to displays an overrun and under run.  Earned Value provides to the project manager with an aims way of measuring the performance or predicting future results. This can enable him & her to report progression with greater confidence or highlight any overrun earlier.

It’s true that the past performance is a good pointer of future’s performance. Earned Value is a very useful tool for predicting the results of projects in terms of time to closure, cost to completion or expected final costs. The Earned Value is also known as the Performance Measurement, Management through Objectives, Budgeted Cost of Work Performed or Cost Schedule Control Systems.

Earned Value Management

An Earned value management is the project management technique for measuring the project performance or progresses. It has the capability to combine the measurements of the project management triangles:

  • Schedule
  • Costs
  • Scope

Features of any EVM implementation involve

  • A project plan that identifies the work to be completed.
  • A valuation of the planned work, known as Planned Value (PV) and Budgeted Costs of Works Scheduled (BCWS).
  • Pre-defined earning rules to quantify the achievement of work, known as Earned Value (EV) and Budgeted Cost of Work’s Performed (BCWP).

EVM applies for the large & complex projects involve many features, such that pointers and forecasts of the cost performance or schedules performance. However, the most basal need of an EVM systems that it quantifies the progress using Planned Value or Earned Value.

Advantages of earned value management:

A Single System

Probably the biggest advantage to applying EVM is that its single system that can tracks the project in terms of work, time or money; Project managers don’t have to cognize one or more systems. EVM can measures the amount of work really accomplished; fore-cast the cost & completion date; compare the genuine performance of the project Vs plan; or tracks the project’s budget in actual time.

Variance with systems:

It is an inquiry used in EVM of what caused of the difference between of the projected baseline & the genuine performance. The procedure for determining the variance depends on various factors including industry, and the parameters used or standards. Always verify data when analyzing the variance. It’s a important to have complete, right information at the time of the calculations.

Performance Indices

The schedule of the performance index and cost performance index are both profitable tools in Earned Value Management. Metrics can helps to prescribe the current status of project, be early warnings indications if the project goes off-track & estimation of the total cost or time frame. Schedule Performance Indicator measures all the work completed on the project & calculates, whether project will meets, beat and miss it is planned finish calendar date. Cost Performance Indicator is considered through the most project managers to be most valuable EVM metric.


When the outcomes of the metrics used in EVM it shows that changes are required, the project manager can adjust the work and budget to help brings the future performance of the project back in line with the projections. Metrics can also pin-point where any problems are within project. Project manager can then take the settings aside efforts to reduce the possibilities of those problems occurring again.

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