Earned Value Management (EVM)
(→Big idea) |
|||
| Line 11: | Line 11: | ||
== Big idea == | == Big idea == | ||
| + | Earned value management (EVM) is a method used throughout the entire project life cycle to manage projects, programs, and portfolios to visualize the current status. The use of (EVM) dates back to the 1960s when the United States Department of Defense implemented a similar system to control cost and schedule. It was first implemented as many projects had become more expensive and delivered later than anticipated. <ref name="BASICSEVM">Stephen P Warhoe (2004) The Basics of Earned Value Management. AACE International transactions. CS71–.</ref> EVM mainly consists of the three elements that often play a big role in project management; budget of cost, project schedule as well as scope of work. The main idea of EVM is to use these elements to develop a baseline which can be used and compared to the actual outcome of the project at a certain point. It is thereby important that these elements are established with care when the project is planned. The difference between the traditional cost management and earned value is the earned value measuerement which is used to measure the actual accomplishment, for example, after spending 50 percent of the budget, is 50 percent complete? <ref name="ABCEVM">Chen, M. T. (2008) ‘The ABCs of earned value application’, in AACE International Transactions. 2008 Morgantown: American Association of Cost Engineers. p. EV31.</ref> | ||
| − | + | EVM allows project managers to integrate these already organized components to forecast the end date and final cost of the project, which then can be used to visualize the project status. Visualization is often very powerful and within projects as it can be used to make sure that all stakeholders in a project have the same picture and make it easier to identify issues which allows the stakeholders, such as the project manager, to make efficient decisions based of objective data. <ref name="PMBOK"/><ref name="advancedEVM">(No date) Pmi.org Earned schedule value management. Available at: https://www.pmi.org/learning/library/advances-earned-schedule-value-management-6217 (Accessed: February 17, 2021).</ref><ref name="BASICSEVM"/> | |
| − | + | ||
| − | + | ||
| − | + | ||
Due to the characteristics of EVM it can be used in various areas within projects such as cost management, schedule management, scope management, risk management and integration management.<ref name="PMBOK"/> According to the Project management institute (PMI) EVM can be seen as a critical methodology when it comes to project planning, execution and control as these areas often are related to measuring, analyzing and forecasting. <ref name="PSEVM"/> | Due to the characteristics of EVM it can be used in various areas within projects such as cost management, schedule management, scope management, risk management and integration management.<ref name="PMBOK"/> According to the Project management institute (PMI) EVM can be seen as a critical methodology when it comes to project planning, execution and control as these areas often are related to measuring, analyzing and forecasting. <ref name="PSEVM"/> | ||
Revision as of 14:04, 17 February 2021
Contents |
cheatsheet
re-cite: [1]
Abstract
When managing projects, it is of greatest interest to make sure that the project delivers what has been agreed upon. In order to improve the odds to fulfill the expectations, performance measurement can be used. Performance measurement allows the project manager to closer monitor the project and easier decide when it is necessary to take actions, if the project is running out of line. Projects that not monitored properly run the risk of being late, overrun the budget and end up being out of scope, which often can lead to unsatisfied stakeholders. [1] Earned value management is a method used in project management to evaluate the performance of a project at any point to monitor whether the project is proceeding according to plan or not. This is done by comparing the expected outcome of the three constraints cost, time, and scope. In addition, earned value also evaluates what has been accomplished in the project so far.[2][3] The result of the performance measurement is a value which indicates how much the current state of the project varies from the expected progress with cost, time, and scope taken into account. This value can later be used to forecast the when the project will be finished and at what cost, if it proceeds at the current pace. [4]
This article aims to explain the purpose and concepts of earned value management and how it can be applied in order to improve projects. Further, the concept will be analysed where the advantages and disadvantages of the concept will be explained. Finally, the article will discuss the limitations of the concept, what it does and does not do.
Big idea
Earned value management (EVM) is a method used throughout the entire project life cycle to manage projects, programs, and portfolios to visualize the current status. The use of (EVM) dates back to the 1960s when the United States Department of Defense implemented a similar system to control cost and schedule. It was first implemented as many projects had become more expensive and delivered later than anticipated. [5] EVM mainly consists of the three elements that often play a big role in project management; budget of cost, project schedule as well as scope of work. The main idea of EVM is to use these elements to develop a baseline which can be used and compared to the actual outcome of the project at a certain point. It is thereby important that these elements are established with care when the project is planned. The difference between the traditional cost management and earned value is the earned value measuerement which is used to measure the actual accomplishment, for example, after spending 50 percent of the budget, is 50 percent complete? [6]
EVM allows project managers to integrate these already organized components to forecast the end date and final cost of the project, which then can be used to visualize the project status. Visualization is often very powerful and within projects as it can be used to make sure that all stakeholders in a project have the same picture and make it easier to identify issues which allows the stakeholders, such as the project manager, to make efficient decisions based of objective data. [1][7][5]
Due to the characteristics of EVM it can be used in various areas within projects such as cost management, schedule management, scope management, risk management and integration management.[1] According to the Project management institute (PMI) EVM can be seen as a critical methodology when it comes to project planning, execution and control as these areas often are related to measuring, analyzing and forecasting. [2]
Application
provide guidance on how to use the tool, concept or theory and when it is applicable
Limitations
Critically reflect on the tool/concept/theory and its application context. What can it do, what can it not do? Under what circumstances should it be used, and when not? How does it compare to the “status quo” of the standards – is it part of it, or does it extent them? Discuss your article in the context of key readings / resources provided in class. Substantiate your claims with literature
Annotated bibliography
Provide key references (3-10), where a reader can find additional information on the subject. The article MUST make appropriate references to the and reference material provided in class – either incorporating it as a source, or critically discussing aspects that are missing from it but covered by this article. Summarize and outline the relevance of each reference to the topic (around 100 words per reference). The bibliography is not counted in the suggested 3000 word target length of the article.
References
- ↑ 1.0 1.1 1.2 1.3 Project Management Institute (2017) A guide to the Project Management Body of Knowledge (PMBOK guide). 6th ed. Newton Square, PA: Project Management Institute.
- ↑ 2.0 2.1 Project Management Institute (2012) Practice standards for earned value management. 2nd ed. Newton Square, PA: Project Management Institute.
- ↑ Sparrow, H. (2002). Integrating scheduling and earned value management (EVM) metrics. Paper presented at Project Management Institute Annual Seminars & Symposium, San Antonio, TX. Newtown Square, PA: Project Management Institute.
- ↑ Levine, H. A. (2005) Project portfolio management: A practical guide to selecting projects, managing portfolios, and maximizing benefits. London, England: Jossey-Bass.
- ↑ 5.0 5.1 Stephen P Warhoe (2004) The Basics of Earned Value Management. AACE International transactions. CS71–.
- ↑ Chen, M. T. (2008) ‘The ABCs of earned value application’, in AACE International Transactions. 2008 Morgantown: American Association of Cost Engineers. p. EV31.
- ↑ (No date) Pmi.org Earned schedule value management. Available at: https://www.pmi.org/learning/library/advances-earned-schedule-value-management-6217 (Accessed: February 17, 2021).
