Earned Value Management is forthe management of “projects”

• A contract or a budget is a “project”• A project has specific scope of work• A project requires authorized budget• A project requires a master schedule

Earned Value is 3 dimensional

Planned Value1. What work has been authorized? (from PMS)2. What is the budget for the work authorized?

Earned Value3. What work has been accomplished? (from PMS)4. What was the budget for work accomplished?

Actual Costs5. What are the actual costs for the EV?

1) Scope the entire project before...

You must define 100% of the project scope,using a Work Breakdown Structure (WBS).

3) Integrate all project processes

You must decompose the project scopeinto manageable cells which integrates

scope + schedule + resources

4) Plan and schedule the project

Earned value management requires scheduling:1. A formal Project Master Schedule (PMS)2. Vertical traceability (PMS to all schedules)3. Horizontal relationships linked (CPM)

5) Identify the measurement metrics

You must define how you will convertPlanned Value into Earned Value

6) Plan and schedule the projectEarned value management requires scheduling:

1. A formal Project Master Schedule (PMS)2. Vertical traceability (PMS to all schedules)3. Horizontal relationships linked (CPM)

7) Identify the measurement metrics

You must define how you will convertPlanned Value into Earned Value

8) Form a project baseline

You must establish a time-phasedperformance measurement baselinemade up from CAPs, providing the basisfor measuring project performance.

9) Record project direct costs

You must inform the project managerswhat they have spent…to compare against

the Earned Value

---the trend is to weekly measurement…of hours---

10) Measure project performance

EVM requires 3 dimensional measurement:• Planned Value• Earned Value• Actual Costs• EV – PV = Schedule Variance (SV)• EV ÷ PV = Schedule Performance Index (SPI)• EV – AC = Cost Variance (CV)• EV ÷ AC = Cost Performance Index (CPI)

11) Periodic estimates at completion

You must periodically estimatea statistical “range” of final cost results,

based on earned value performance data

---which provides the “early warning”---

12) Manage all changes to the project

You must manage all changes to the project,either approving or rejecting each changeand incorporating the approved changes

into a revised project baseline.

The “rewards” from the use ofEarned Value Management

# 1 You join a select group of projectswhich are predicting their final resultsfrom the 15% 20% completion point...

...in time to make a difference.

# 2 You will employ a “single”management control system

to provide enterprise-wide data onall capital projects

---the CPI is the common metric on any project---

# 3 You will use an “integrated”management control system

to combine the project’s

technical + time + resources

# 4You will employ

“Management by Exception” (MBE)principles to monitor performance

against the approved baseline

---the “CPI” and “SPI” constitute the exceptions---

# 5 You will know your project’strue “cost efficiency”

the Cost Performance Index(e)based on actual performance

---the CPI never completely recovers!!!---

# 6 You will know the project’sSchedule Performance Index (SPI) to

isolate & quantify & manage the workscheduled...but not performed

# 7 You can useEarned Value Management datato monitor the remaining effort

within management’s expectations

Earned Value providesfundamental Project Management

You can practice goodproject management without EVM,

you cannot practice EVM effectivelywithout good project management”