Earned Value Management


Talking about management systems, earned value management is really of major importance. We first need to understand, what exactly is earned value management. It’s importance in our business sectors. And how we need to implement it for best outcomes and results for our business and it’s success.

Earned value management , can also be known as performance management is a worldwide known technique for performance measurement and progress in objective manner. It’s the ability to combine the measurements of three important factors. Scope , schedule and cost. When talking about a single integrated system, performance management or earned value management is usually able to provide accurate forecasts of project performance problems which is an important contribution towards your earned value management system.

The essential features of earned value management system includes:

1. A proper completely designed project plan that identifies work to be accomplished.

2. an evaluation of planned work , which is called planned value (PV) or budgeted cost of work performed (BCWP)



3. pre defined ”earning rules” (also known as metrics) to measure or quantify the accomplishment of work. Called earned value (EV) or budgeted cost of work performed(BCWP)

Earned value management implementations for large or complex projects include a number of features such as forecasts and indicators of cost performance (over budget or under budget) and schedule the performance , which may be behind schedule or ahead schedule.

Earned vale management originally emerged in US as a financial analysis in the 1960’s , but has since become a vital part in project management and cost engineering . implementation can be implemented to fit projects of all sizes and complexities. Research investigating the contribution of EVM to project suggests a moderately strong positive relationship.

Primavera earned value management helps organizations better manage project costs, measure earned value  and analyze budget , actual, forecast and performed costs. Without a comprehensive earned value performance, troubled projects can get out of control without the problem being recognized. With primavera earned value management , organizations can generate the statistically accurate estimates needed to understand and communicate project performance while there is still time to deal with  and address the issues.

Main features are:

1. monitor project performance using earned value management techniques.

2. calculate project costs using the direct and indirect costs per source.

3. accurately measure both cost and schedule performance.

4. track the differences between what was budgeted and how it was executed.

5. produce reports that comply with the U.S office management and budget (OMB) 300 directive.

The benefits that can be earned through earned value systems:

1. analyze and communicate the project performance data

2. increase program visibility through different factors like effective and stream lined communication with all stakeholders

3. systematically determine some factors, which may include

-> whether the project is behind the schedule

->ahead of schedule

->under budget

->over budget

This all can be done by analyzing the earned value KPI’s

It can nearly be impossible to build annual budgets that consider forecasted budget and program plans with detailed data of cost management and cost effectiveness. The more challenging part is uniting the actual program costs and actual program scheduled tasks. Oracle’s primavera project management’s earned value system’s gives the best solution in this regard.526

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