Philosophy of Earned Value Management (EVM)

What is EVM. Earned value management is a valuable technique that permits the project and program managers to effectively monitor schedule, cost, and technical project progress by the use of EVM formulas. The earned value management implementation is a highly professional function of project management. It ensures that schedule, cost, and technical features are strictly integrated. EVM has the distinctive capability to combine scope of schedule performance, cost performance, and technological operations in a sole integrated system. EVM provides an advance caution of performance issues, allowing for timely remedial measures.

Performance Forecast

All project activities should essentially earn some value, with the completion of project work. The earned value, attained by the completion of activities, is compared with the planned and actual costs to determine the performance of the project. The forthcoming trends of the performance can then be forecasted accurately. Physical progress is calculated in units of applicable currency, and then cost and schedule performance are evaluated in the similar units.

EVM Formulas, Earned Value Analysis, How to Understand?

The following are earned value analysis formulas. For EVM formulas description, read the article Definition of EVM formulas.

SV      =    EV – PV                        + ve good

CV      =   EV – AC                        + ve good

SPI     =   EV/PV                          greater than 1 is good

CPI     =     EV/AC                          greater than 1 is good

EAC    = AC + BAC – EV              budgeted, atypical, no variation in future

EAC    = BAC/CCPI                      no variation in BAC, same rate spending

EAC    =     AC + (BAC-EV)/CCPI       typical, same variation in future

TCPI =     (BAC – EV)/(BAC-AC)      must meet BAC

TCP I =     (BAC – EV)/(EAC-AC)      not meet BAC, CPI decreased

VAC  =      BAC - EAC

ETC    =      EAC – AC 

% Complete =      EV/BAC

EV     =     Total months completed / Total months project  x  Total cost

PV     =     Planned % complete      x        Project budget

EV     =     Actual % complete         x        Project budget

Conclusion

Implementation of EVM in difficult and large projects include several features, indicators, and forecasts that assists to keep track of the progress with relation to the plan, and assists in timely corrective and preventive actions. However, the main function of an EVM system is its capability to measure progress by the use of EV and EV. Earned value management (EVM) measures progress objectively. Several books are available to lea more about the application of EVM formulas, and what is EVM.

Also Read:

Definition of EVM formulas.

A Gantt chart is a project management tool that provides a visual representation of a project schedule. Here are some benefits and uses of a Gantt chart:

Project planning is simplified by Gantt charts, which separate tasks into smaller, easier-to-manage chunks and give each task a due date. This guarantees that the project will be finished on schedule and within the allotted spending limit.

What are the Uses of WBS

Allocation of resources:
Gantt charts help project managers allocate resources such as staff, equipment, and budget by clearly showing when each resource is needed.

Progress tracking: By using Gantt charts, project managers can monitor the advancement of each task, simplifying the detection of obstacles, delays, or situations that require additional resources.

The status and progress of a project can be communicated visually to team members, stakeholders, and clients using a Gantt chart. This enables all project participants to be informed of the status and change plans as necessary.

Gantt charts can be used to identify potential risks and make backup plans when managing risks. Project managers can take action to reduce risks and avert expensive delays by monitoring the progress of each task and spotting potential delays.

Time management: Gantt charts help project managers manage time effectively by showing the dependencies between tasks and highlighting critical paths. By doing this, we can ensure that the project is completed on time and within budget.

Gantt charts, in general, are useful project management tools because they provide a clear and visual depiction of the project plan, making it easier for anyone to plan projects, measure progress, assign resources, and communicate with stakeholders.

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Critical Path Method

A project management tool called the critical path method (CPM) aids in estimating the shortest time necessary to accomplish a project. This is accomplished by reviewing every job that goes into a project and identifying the "critical path," or the task sequence with the longest length.

The critical path is the sequence of tasks that must be finished by the project deadline in order for it to be finished on schedule. Using the critical path technique, project managers may spot potential schedule bottlenecks and adjust the activities, their order, and their dependencies as necessary to maintain the project on schedule.

The critical path method is a visual depiction of the project schedule that frequently takes the form of a network diagram and highlights the dependencies between jobs as well as the anticipated completion times for each one. Project managers can concentrate their efforts on making sure that the crucial tasks are finished on time and prevent delays that might affect the project's overall schedule by identifying the key path.

How Critical Path Is Determined

There are two ways to determine critical path:

1. Forward Pass: This method determines the earliest start and finish dates for each task in the project. It starts at the beginning of the project and works forward to calculate the earliest possible date that each task can begin and end.

2. Backward Pass: This method determines the latest start and finish dates for each task in the project. It starts at the end of the project and works backward to calculate the latest possible date that each task can begin and end without delaying the overall project completion date.

The critical path is identified and the project's timeline is guaranteed by combining the forward pass and backward pass procedures. Project managers can recognize potential scheduling issues, change the project schedule, and guarantee that crucial tasks are performed on time by combining the two techniques.

Two Types of Critical Paths

There are two types of critical paths:

The Longest Path: The shortest time required to complete a job is determined by the longest path. It is the sequence of tasks with the longest cumulative duration. The project completion date will be postponed if any of the tasks along this path take longer than they were predicted to.

The Shortest Path: This is the sequence of tasks with the shortest total duration, and represents the best-case scenario for project completion. It is useful for project managers to understand the shortest path because it can help identify opportunities for improving the project schedule by reducing the duration of critical tasks.

The two types of critical paths are determined using the forward pass and backward pass methods of the critical path method (CPM). Project managers use the critical path information to monitor and control the project schedule, making adjustments as necessary to keep the project on track.