Stephen Wise Bloghttps://integrationprofessionals.com/BlogEarned Value Management - turning on the headlightshttps://integrationprofessionals.com/Blog/earned-value-management-turning-on-the-headlightsToolsTue, 30 Jun 2009 01:07:00 GMTwhen I rely only on a project schedule of tasks, finish dates, and % complete, I will not know where the project is or where it is going.<h3><span style="text-decoration: underline;">Earned Value - Why do I need it?</span></h3> <p>To paraphrase the words of the Project Management Institute’s standard, when I rely <span style="text-decoration: underline;">only</span> on a project schedule of tasks, finish dates, and % complete, <strong>I will <span style="text-decoration: underline;">not</span> know where the project is or where it is going</strong>. I will simply know where the project was supposed to be and where it is supposed to be going.</p> <h4><span style="text-decoration: underline;">What is Earned Value?</span></h4> <p>Earned Value Management (EVM) is a technique that looks at the relationship between a) actual cost expended, and b) actual work completed, and compares this to c) original budget and work timeline. More formally, the three data points you must understand and memorize are: a)      Actual Cost (AC) – What amount of resources have been expended to complete the work at a given point in time. b)      Earned Value (EV) – Snapshot of work completed at a given point in time. c)       Planned Value (PV) – The Baseline – How far along the project work is supposed to be at any given point in the project schedule.</p> <h3><span style="text-decoration: underline;">How do I implement Earned Value? (My cheat sheet below)</span></h3> <h3>  <span style="text-decoration: underline;">Step 1 (Planning)</span></h3> <ol> <li>Create a Work Breakdown Structure.</li> <li>Ensure all tasks on the schedule are assigned.</li> <li>Estimate time to complete each task.</li> <li>Determine how you will determine that tasks are complete as the project progresses.</li> </ol> <p> </p> <h3><span style="text-decoration: underline;">Step 2 Periodic monitoring</span></h3> <ol> <li>Obtain cost and / or hours expended.</li> <li>Obtain status on task completion.</li> <li>Forecast Cost and Schedule performance.</li> </ol> <p>My usual workflow is to enter the planned and actual data into MS Project and then export the time-scaled data to an excel chart. An excel chart (example below)  isn’t </p> <p>required, but I highly recommend it as a support to your table of data – a picture is worth a thousand words.</p> <p>  <img alt="S-curve" class="aligncenter size-full wp-image-106" src="/Portals/0/Images/inprof/Blog/qq3.png?ver=2019-06-03-152912-213" style="width: 370px; height: 305px;" title="S-curve" />  </p> <h4><span style="text-decoration: underline;">Combine the data into actionable forecasts</span></h4> <p>By using Earned Value techniques, you use Project Management discipline to provide key feedback and forecasting to the project team and executives. See four sample </p> <p>questions and formulae below.</p> <p>  <img alt="EVM formula table" class="aligncenter size-full wp-image-105" src="/Portals/0/Images/inprof/Blog/evm-formula-table4.png?ver=2019-06-03-152911-997" style="width: 468px; height: 229px;" title="EVM formula table" /></p> <h3><span style="text-decoration: underline;">Limitation</span></h3> <p>Earned Value is not sensitive to the quality of the deliverables. You can be near the end of the project and forecast on budget and on schedule even if the deliverables are poor and the customer will not accept the final product. The expectation is that the PM is using other tools and techniques to manage and control quality.</p> <h4>Stephen Wise</h4> <h4><a href="http://www.integrationprofessionals.com/">http://www.IntegrationProfessionals.com/</a></h4> <h4><a href="http://www.integrationprofessionals.com/Twitter">http://www.IntegrationProfessionals.com/Twitter</a></h4>