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).

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?"

For further reading, try this free Earned Value Management eBook:

Successfully Presenting Earned Value is a free e-book which will help you learn to implement and present Earned Value schedules. It offers both an explanation of Earned Value Management principles, and step-by-step instructions. This e-book is offered at no charge. After reviewing it, you may be interested in downloading our Milestones Professional software. Milestones Professional was used to produce the presentation-ready Earned Value reports shown in the e-book and can be used to make schedules in many formats, including Gantt charts, Milestone charts, Summary charts, Resource Charts and more.

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