Project Masters, Inc.

By April Wennerberg and Robert Ware

Probably the clearest statement of what “Earned Value” is comes from Quentin W. Fleming and Joel M. Hoppelman’s well-known book, Earned Value Project Management.

These authors state that:

“Earned Value is a technique used to accurately measure the project’s planned value of the defined work against earned value actually accomplished. This relationship indicates to the project manager precisely how much of the planned (scheduled) work has been accomplished as of a point of time. It tells whether the project is ahead of, right on, or behind the work it set out to do. It provides the project manager with a schedule performance efficiency factor for the planned work.”

Earned Value analysis can be used to improve project success by enabling the project manager to determine “problem spots” early in the project and take the appropriate corrective action. The three main areas that the project manager is expected to control – scope, time, and cost – can be managed using earned value. Cost and time objectives can be monitored by keeping an eye on the Cost Variance and the Schedule Variance.

The Cost Variance compares budget deviations while the Schedule Variance compares planned work versus the work actually completed. Schedule variance is expressed in terms of the dollars’ worth of work ahead or behind the Project Plan and must be analyzed in conjunction with other schedule information, such as Network Diagrams and Gantt charts. The resulting variances can be translated into dollar values, permitting quantification in monetary terms.

Earned Value Management is a project performance management tool that measures the progress of complex and changeable projects against a baseline. The four main steps involved in performing Earned Value Analysis are: Read more ».
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