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Earned Value Management (EVM)

Earned Value Management: The key to aligning project performance with cost and schedule metrics for optimal project control

What is Earned Value Management (EVM)?

Earned Value Management (EVM) is a project performance measurement technique widely used in construction and other project-based industries. It goes beyond simply tracking costs to provide a comprehensive picture of project progress and predict future performance.

  • EVM analyzes progress and predicts future performance, helping project managers identify potential issues early on and make informed decisions.
  • EVM relies on three key concepts:
    • Planned Value (PV)The budgeted cost of work scheduled for completion by a specific date.
    • Earned Value (EV): The value of work completed by a specific date (estimated based on percentage of work done).
    • Actual Cost (AC): The real money spent on the project by a specific date (all project expenses).

  • EVM uses these core concepts to calculate metrics that assess project health:
    • Schedule Performance Index (SPI) : Compares EV to PV (1 = on schedule).
    • Cost Performance Index (CPI) : Compares EV to AC (1 = within budget).

    EVM provides further data points with calculations like:
    • Cost Variance (CV) : Difference between EV and AC (positive = under budget).
    • Schedule Variance (SV) : Difference between EV and PV (positive = ahead of schedule).

By understanding and applying EVM, project managers can leverage data to make informed decisions, improve project delivery, and achieve success.


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