Earned Value Management

Earned Value Management is a technique used to compare the progress of the project with respect to cost and or schedule baseline. This technique is used to measure the progress at any convenient point during the project. The key parameters that are measured are Planned Value, Actual Cost and Earned Value.

Planned Value (PV) is the amount of work that should be done as on day

Earned Value (EV) is the amount of work that has been accomplished as on day

Actual Cost (AC) is the cost which is incurred as on day to accomplish the work.

Using these parameters one can calculate the variances namely schedule variance (SV) and cost variance (CV) and the performance indices Schedule Performance Index (SPI) and Cost Performance Index (CPI).

SV= EV-PV, CV=EV-AC, SPI=EV/PV and CPI=EV/AC.

Ideally SV & CV should be zero and SPI & CPI should be 1.

If SV is negative then the project behind the schedule and if SV is positive then the project is ahead of the schedule. Similarly, if SPI is less than 1, then the project behind the schedule and if SPI is greater than 1, then the project is ahead of the schedule.

If CV is negative then the project over budget and if CV is positive then the project is under the budget. Similarly, if CPI is less than 1, then the project over budget and if CPI is greater than 1, then the project is under the budget.

Earned Value Management technique is used under the process Control Costs.