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.