Managing Projects with Earned Value Management
Abstract
The management of technical projects has become a real challenge in an always more competitive market where effective project Planning and Control approaches need to comply with clients’ requirements. For successfully completing a project, this needs to both meet the technical objectives and be completed on schedule and within budget. This task involves comparing the actual situation with the planned one in terms of Scope, Time and Costs, which, together, form the Project Management Triangle. To guarantee that all project deliverables are achieved, it is very important that all three dimensions of project performance are monitored and controlled.
However, if any of these dimension is analyzed without taking into account the other two, problems may arise, since one would only have a partial overview of the project status. For instance, a project may be on budget whilst having accomplished less work than what was planned to be accomplished. On the other hand, a project may also be on budget while having accomplished more work than what was planned. In the first case the project would probably fall behind schedule, while in the second case it would be ahead of schedule. How can time measurements be related to costs? And how can managers have an objective overview of the current state of their projects? To answer these questions an effective project control system should be created, developed and applied to provide managers with timely and accurate information on deviations of costs and time measurements from the objectives established during the planning phase of the project.
This is where Earned Value Management (EVM) come into play by allowing for both schedule and cost analysis against the physical amount of work accomplished. Earned Value Management is a project management technique used for measuring, at any time, the progress and the integrated performance of a project in an objective way. It is an approach that effectively combines the scope of a project with time and costs parameters and allows alerting to deviations from budget and schedule baseline. In this way it can generate early warning signals to detect problems or to exploit new opportunities. In other words, EVM compares the planned amount of work with what has actually been accomplished to determine whether costs, schedule, and work accomplished are progressing as planned or they are deviating form cost and schedule baselines.
With this methodology it is possible not only to see how a project is performing, but to predict future performance as well. In fact, it is also able to estimate the project completion date and final cost and to provide accurate forecasts of performance problems, which can be a fundamental contribution when managing a project.
Today, Earned Value Management is considered one of the most powerful set of tools used in the management of complex projects in commercial, government or private environments. The purpose of the article is to provide the reader with a brief but effective guidance to the concept of EVM and to its application and implementation.
