before I explain hot to get and use data, and what is needed for EVM in MS PROJECT 2010 (which I will do in my next Post), I will explain what EVM is!
Wikipedia says: “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. Because EVM has the ability to combine measurements of :
- and cost,
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.”
Here are some Terms:
- Planned Value -> PV (BCWS, Budgeted Cost of Work Scheduled)
- Earned Value -> EV (BCWP, Budgeted Cost of Work Performed)
- Actual Cost -> AC (ACWP, Actual Cost of Work Performed)
- Budgeted at Completion –> BAC
- Estimate at Completion -> EAC = BAC / CPI or AC+(BAC-EV)
- Estimate to Complete -> ETC = EAC – AC
- Variance at Completion -> VAC = BAC – EAC
Here is the explanation of each Term:
Here is the Graphical sample of EVM:
Let me give you a simple example! Suppose that you have a Project with only one Task: Digging the tunnel. You should dig 1 meter per day (or one inch, who care ). So, Planed Value is green line in the picture below. You are at the end of the 5th day. And you want to measure your progress!
Suppose now, that you dug only 3 meters (see orange line in the picture below). So SV (Schedule Variance) is EV – PV = 3-5 = –2. So you are behind the schedule. Now suppose that you should spend $1.000 per meter. At the end of the fifth day you have already spent $7.000 (see purple line in the picture below). So CV (Cost Variance) is EV – AC = $3.000 – $7.000 = –$4.000. You are spending too much! Because you have dug 3 meters instead of 5 (as was planned), you should spent only 3 meters * $1.000 per meter = $3.000. But you have spent $7.000, so you have spent $4.000 more.
But what if you have dug 7 meters at the and of the fifth day, and spent only $500? Is it good situation? What a stupid question, hah? Who wouldn’t want to be ahead of the planned schedule and behind the planned costs! Hmmmm, well….
It is excellent situation if we are speaking about time and money. BUT! Your plan was BAD! Why? You have estimate that for 10 meters you will spend 10 days, and $10.000, but you spent only, for example 3 days and $500! (This will NEVER HAPPEN to your Project, don’t worry ). When you will ask your chief next time for the same type of Project (digging 10 meters of tunnel), for 10 days and $10.000, he/she will tell you: “ARE YOU KIDDING? You know that last time it took only 3 days and the costs were $500. That is what you can get!”
How to make EVM Calculation in MS PROJECT 2010? Read my next Post.