Earned Value Management

What are the benefits of using Earned Value Management?

In a typical spend plan analysis, physical progress is not taken into account when analyzing cost performance. Instead, a project’s actual costs to date are simply compared to planned costs, often with misleading results.

Example: A task has a planned value (PV) of $1000, and actual costs (AC) of $1000. It appears this task has perfect cost performance, and is in good shape to finish on-budget (Figure 1).	Figure 1
Figure 2		However, if physical progress is taken into account, the results may differ. In Figure 2, the project has spent $1000 in actual costs, but is behind schedule and has only achieved $750 of Earned Value. This is called a cost overrun, and this project would have a Cost Variance (CV) of -$250.
From this example, we can see that EVM expands on the two-dimensional analysis– “Has this project spent more or less money than planned?”– by adding the third dimension– “What did we get for the money we spent?”