Earned Value Management

Earned Value Management (EVM) is a methodology used in project management to measure project performance and progress in an objective manner. It integrates scope, schedule, and cost measurements to provide accurate forecasts of project performance issues.<br><br>EVM uses three key metrics: Planned Value (PV), which represents the budgeted cost for work scheduled; Earned Value (EV), the budgeted cost for work completed; and Actual Cost (AC), the actual cost incurred for work completed.<br><br>From these primary metrics, project managers calculate performance indices:<br>- Cost Performance Index (CPI) = EV/AC, showing cost efficiency<br>- Schedule Performance Index (SPI) = EV/PV, indicating schedule efficiency<br><br>When CPI or SPI equals 1.0, performance is on target. Values greater than 1.0 indicate better-than-planned performance, while values less than 1.0 signal underperformance.<br><br>EVM also helps forecast final project costs through the Estimate at Completion (EAC) formula, which can be calculated various ways depending on future cost performance assumptions.<br><br>Additional important metrics include:<br>- Cost Variance (CV) = EV - AC<br>- Schedule Variance (SV) = EV - PV<br>- Variance at Completion (VAC) = BAC - EAC<br>- To Complete Performance Index (TCPI)<br><br>For CAPM certification, understand that EVM requires:<br>1. A well-defined scope with Work Breakdown Structure<br>2. A realistic schedule<br>3. A detailed budget linked to the schedule<br>4. A system to collect actual costs<br><br>EVM provides early warning signs of performance problems, allowing project managers to take corrective action. It transforms subjective assessments into objective measurements, making it a powerful tool in the CAPM professional's arsenal for project control and reporting.

Earned Value Management (EVM) is a methodology used in project management to measure project performance and progress in an objective manner. It integrates scope, schedule, and cost measurements to p…

Concepts covered: Estimate at Completion (EAC), Actual Cost (AC), Cost Performance Index (CPI), Cost Variance (CV), Planned Value (PV), Schedule Variance (SV), Estimate to Complete (ETC), Earned Value (EV), Schedule Performance Index (SPI), To-Complete Performance Index (TCPI)