Earned Value Management: Basic Concepts and Benefits

What is Earned Value Management – EVM? PM in Under 5

Benefits of earned value management

Project managers don’t have to make educated guesses about how a project is going or wait until the end to evaluate the results with EVM. EVM also offers benefits such as:

Although EVM has many benefits, you shouldn’t rely on this method to automatically resolve project problems. EVM ignores other significant factors like quality because it only considers cost and schedule. To measure and quantify this aspect and prevent delivering a subpar project to a client who is not satisfied, you might need a complementary tool.

Additionally, using EVM data alone won’t help you make decisions. You should take context into account when utilizing EVM to evaluate project performance and suggest the best course of action.

What is earned value management?

A method for monitoring project progress and evaluating project performance is earned value management. This system is made to make it easier for you to spot patterns so you can anticipate issues, think of solutions, and more effectively manage performance.

EVM basically assesses a project’s performance in relation to the benchmarks specified in your project scope management plan. By using your initial objectives as benchmarks, you can more precisely track your progress and make useful decisions.

For instance, determining that a project is ahead of schedule or over budget is helpful, but the project analysis and strategy will be more effective if you can evaluate earned value. Afterward, you can apply that knowledge to make wiser project management choices.

You must be familiar with these three terms in order to comprehend how earned value is applied:

Earned value management concepts

Here are some key ideas for comprehending earned value management and its application by category.

Values and costs

With the help of a few straightforward calculations, you can pursue EVM:


Variance is the term for potentially unforeseen actions or events that have an impact on the calculations and results of your project. You can evaluate variance after gathering the fundamental value and cost information. Use these calculations according to type of variance:

Performance indexes

Performance analysis, as determined by the type of performance index, is another important component to identify and take into account in your overall equation.

5 elements of earned value management

You require the following in order to make EVM effective for your business:

1. Project scope and organization

Use a work breakdown structure (WBS), which divides large deliverables into smaller modules, as your starting point. Create an organization breakdown structure (OBS) that outlines all the participants and stakeholders. Afterward, create a responsibility assignment matrix (RAM) that specifies who will carry out each task.

2. Planning, scheduling and budgeting

Define major and minor milestones and assign deadlines for each. then allot a suitable portion of the budget, reflecting the estimated labor and material costs, to each module.

3. Tracking actual costs

4. Analyzing and reporting

Plan to regularly report on PV, EV, and AC Include your analysis and a suitable course of action for stakeholders in your report.

5. Revisions and optimization

Establish rules for how and when to change the project baseline. For instance, you might decide to make revisions only if the project stakeholders agree to a change in scope rather than whenever a surprise delay occurs.


How do you calculate Earned Value Management?

With the help of earned value analysis (EVA), a project manager can gauge the amount of work that has actually been done on a project in addition to simply reviewing cost and schedule reports. EVA offers a technique that enables the project to be evaluated by the amount of progress made.

What are the top three earned value management?

A project’s EV can be determined by dividing the budget for the entire project by the project’s completion rate. For instance, if your project budget is $100,000 and you are 60% finished, your earned value is $60,000 at this point.

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