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Earned Value Management (EVM)

5 minutes 5 Questions

EVM is a technique that helps to measure project performance by combining scope, cost, and schedule measurements. It helps in predicting future project performance based on trends established early in the project. It can be used to track the cost performance index (CPI) and calculate the estimate at completion (EAC). EVM provides a realistic view of the project's health and serves as an early warning tool.

Guide to Earned Value Management (EVM)

Earned Value Management (EVM) is a crucial component in Project Cost Management, particularly in the area of tracking and monitoring project performance. This technique offers a multi-dimensional view of project performance, integrating scope, cost, and time aspects.

Why is EVM Important?
EVM is important for offering a factual and predictive view of project performance:

  • Detecting issues early in a project.
  • Enabling better decision making and risk management.

Understanding EVM.
Three key elements form the basis of EVM:
  • Planned Value (PV)
  • Earned Value (EV)
  • Actual Cost (AC)
By comparing Planned Value against Earned Value, and comparing Earned Value against Actual Cost, managers can assess project performance and efficiency.

How to Answer Questions on EVM in an Exam?
Primarily you need to understand the formulae related to EVM:
  • Schedule Variance (SV) = EV - PV
  • Cost Variance (CV) = EV - AC
  • Schedule Performance Index (SPI) = EV/PV
  • Cost Performance Index (CPI) = EV/AC.
For instance, if a question asks about the cost efficiency, and gives you values for EV and AC, you need to use the CPI formula. SPI and CPI less than 1 indicate a negative variance, and vice versa. Additionally, include assumptions and interpretations along with calculated values to ensure comprehensive answers.

Exam Tips:
Follow these tips to increase your chances of success:
  • Understand EVM formulae and their application.
  • Always show your work in calculation-based questions.
  • Provide explanations for your answers.
  • Use the Exam’s case study to provide context to your answers.

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