Earned value management

Earned value management (EVM), or Earned Value Project/Performance Management (EVPM) is a project management technique for measuring project performance and progress in an objective manner.

Earned value management is a project management technique for measuring project performance and progress. It has the ability to combine measurements of the project management triangle:

In a single integrated system, Earned Value Management is able to provide accurate forecasts of project performance problems, which is an important contribution for project management.

Early EVM research showed that the areas of planning and control are significantly impacted by its use; and similarly, using the methodology improves both scope definition as well as the analysis of overall project performance. More recent research studies have shown that the principles of EVM are positive predictors of project success. Popularity of EVM has grown in recent years beyond government contracting, a sector in which its importance continues to rise (e.g., recent new DFARS rules), in part because EVM can also surface in and help substantiate contract disputes.

Essential features of any EVM implementation include

EVM implementations for large or complex projects include many more features, such as indicators and forecasts of cost performance (over budget or under budget) and schedule performance (behind schedule or ahead of schedule). However, the most basic requirement of an EVM system is that it quantifies progress using PV and EV.

Project A has been approved for a duration of 1 year and with the budget of X. It was also planned that the project spends 50% of the approved budget in the first 6 months. If now 6 months after the start of the project a Project Manager would report that he has spent 50% of the budget, one can initially think, that the project is perfectly on plan. However, in reality the provided information is not sufficient to come to such a conclusion. The project can spend 50% of the budget, whilst finishing only 25% of the work, which would mean the project is not doing well; or the project can spend 50% of the budget, whilst completing 75% of the work, which would mean that project is doing better than planned. EVM is meant to address such and similar issues.

EVM emerged as a financial analysis specialty in United States Government programs in the 1960s, but it has since become a significant branch of project management and cost engineering. Project management research investigating the contribution of EVM to project success suggests a moderately strong positive relationship. Implementations of EVM can be scaled to fit projects of all sizes and complexities.

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