When is earned value used

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Resources Glossary Earned value calculations in project management Schedule Variance SV : Schedule variance is the difference between your planned progress and your actual progress to date. But, from experience, you know that there is bound to be some discrepancy from your estimate. Planned value, actual cost, and earned value numbers are fundamental to variance calculations. At this point, the project manager wants to know how far off we are from the project baseline.

This can be determined through schedule and cost variance. Schedule variance is a quantitative indicator of your divergence from the initial planned schedule. A negative SV indicates that we are behind schedule, a positive SV indicates that we are ahead of schedule and zero means that we are exactly on schedule. To arrive at these costs though, we needed to know the scope of work planned and completed.

This is how the three pillars—scope, time and cost come together in EVM. Cost variance is a quantitative indicator of your divergence from the initial planned budget. A negative CV indicates that we are over budget, a positive CV indicates that we are under budget and zero means that we are exactly on budget.

Again, this is an instance of how scope, time and cost come together to give you a clear picture of where you stand at the moment in your project. Another way of looking at project performance, apart from variance, is through indexes. Here again, we have two parameters—schedule and cost index. CPI gives a sense of project performance from a cost perspective. Earned value management is all about measuring and benchmarking against a well-defined plan.

Therefore, you can only perform this in organizations with a certain key elements in place. The 32 guidelines defined under the EIA standard discuss, in detail, the fundamental processes and systems for the implementation of EVM. These guidelines are outlined as part of five broad principles. But again, the level of detail and overhead to implement should vary based on factors including organizational maturity, project size and complexity and contractual requirements.

The five guidelines documented as part of this principle recommend us to create three important documents:. The objective of the guidelines in this principle is to help define the project baseline in concrete terms.

We hope you are in a better position now to understand and implement it in your software company to effectively manage projects. As experts in managed app development, we utilize a range of strategies to ensure that client builds come in on time and under budget. If you're looking for vetted PMs and developers, get in touch with Crowdbotics today. Have an app idea? Connect with a Development Expert. Start Building. Search articles:. Project Manager. Product Management. What is the Definition of Earned Value Management?

These questions are: Where are we currently? Where are we going? How long will it take to finish it? The graph below shows the progress of the project at the time of the EVM analysis. Image courtesy of PMI. It is calculated by subtracting planned value PV from the earned value EV.

Indexing Performance The next considerations are a project's performance indices, which are its cost performance index CPI and schedule performance index SPI. EVM helps in estimating the future costs and time required in finishing the project at hand.

As a manager, you can identify the loopholes or pain points in the project which are outside the scope, time, and cost estimates. However, not everything is hunky-dory with EVM, as there are certain limitations involved in using it: Though EVM methodology calculates variances for you, it does not tell you how to correct these variances. It can produce bizarre results if the data used has been manipulated or is inaccurate. EVM fails to ensure the quality of work in the project and customer satisfaction subsequently.

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