Earned Value Management for EVERY Project

Earned Value Management (EVM) is the most powerful project management tool ever. It is called project management with the lights on. Unfortunately it is often not used, because it is not well understood, and takes some time to set up.
This tip explains without getting into too many details what EVM is, how to set it up, what the advantages and disadvantages are and that EVM can be used on EVERY project.
EVM is a project management tool to keep track of the progress of your project. Conventional methods use the schedule to report progress. EVM looks at the monetary value of what was realized at a given time during the project. The monetary value of what was realized is called the earned value (EV). This EV is then compared to the monetary value of what was planned to be realized at that time. The monetary value of what was planned to be realized at that time is called the planned value (PV). The EV is also compared to the actual cost (AC) made on the project at that time.
The easiest way to set up your EVM is to use scheduling software with EVM capability. You can set it up yourself or you can ask the scheduler on your team to do it for you. All you need is the schedule of the project and cost of the activities in the schedule. The scheduling software will then generate the planned value for your project.
The advantage of using EVM is that it shows you the monetary value what you have realized on the project, compared to what you had planned and what you have spent on the project. Conventional methods will show you schedule wise how you stand, but not money wise.
The disadvantage of EVM is that many people find it difficult to set up. My experience is that setting up EVM for the first time does take some time. But once you have it set up, you have a powerful tool that will generate one page overviews of your entire project and much more.
I once heard someone say that EVM is only for certain types of projects. Let’s see if that’s so:

1. Does EVERY project have a schedule?
2. Does EVERY project have a cost?

The answer to both questions is yes. So EVM can be used on EVERY project, since all you need to set up your EVM is a schedule and the cost of the activities.

Earned Value Management can be used on EVERY project.

4 thoughts on “Earned Value Management for EVERY Project”

  1. Thank you Nzube for your very positive comment. Do send me your Thesis on the link between EVM and governance. Sounds interesting. I will sure like to publish it on our blog. We need all the help we can get to make EVM more accessible to our prefession.

  2. Dear Victor,
    I am so glad to have read this page. This is a very nice piece of writting by you. I am so happy to see and hear a long practiced experience project manager advocating and sermonizing the EVM. It is a shame indeed that most project managers today has ignored this practice. As an Engineer, I developed particular interest in EV and I have also written a Thesis on the link between EVM and governance. I can give you the abstract should want to upload it on your blog.
    To Milind,
    I believe Victor is right, MS project is quite effective for EVM management, but it is so sad that most PM software has failed to integrate the EVM system to ther profile. Meanwhile, I would reccomend you buy this new software by Oracle and Primavera. The Primavera P6 Professional Project Management is perfectly designed to handle most Portfolios and large-scale, highly sophisticated and multifaceted projects with ease. Infact, it is far more easier to use compared to Ms Proffessional in terms of Balance resource capacity and soon. It is also good for EVM but no matter what software you adopt, you have to compliment with a good statistical software like the Excel or SPSS. That helps you to pretend your data.
    I hope it all helps!

  3. Milind,
    I can certainly recommend EVM software at a reasonable proce.
    For small businesses I have used MS Project in combination with MS Excel to do EVM with very good and nice results at a reasonable cost.
    What you do is determine your budget as described in my blog post of November 7th 2011. You can do all of this in MS Project. MS Project 2003 and later has the capability of developing your Planned Value and producing a complete EVM table. You can then export the PV, EV and AC to Excel to generate a graphical presentation of the EVM table.
    There may be other software packages available,but I am not familiar with them. I can only recommend what I have used.
    I hope that this was useful. Feel very free to contact me if you have any more questions. I will be publishing more on EVM in the future.

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