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Earned Value
Employing the earned value concept allows the management team to monitor activity performance against a detailed time-phased plan. Exceptions to the plan provide a wealth of reliable information, primarily centred on cost and schedule efficiency rates.
Earned Value (EV) is the only project planning and control methodology that integrates project Cost performance; Schedule performance AND Technical performance into a single methodology from which objective measures of project
performance are readily available.
These measures include:
| Variance metrics and indices (cost and schedule) |
| Which helps confirm project performance to date; and |
| Provides guidance into areas for corrective action |
| Formula based predictors of future performance |
The Key Benefit of Earned Value
Comparing plan versus actual costs especially for IT projects is not adequate for accurately establishing, assessing, monitoring and predicting project performance. This financial accounting approach fails to consider the
technical achievement (physical progress) realised to date
Typically people implicitly equated the expended costs to progress achieved. This can be very dangerous for IT projects which are usually very people intensive and can often have deliverables which lack direct physical visibility
e.g. bespoke software development source code.
Source: Kym Henderson, PMI, 2002
This selection of papers explains how to use Earned Value to achieve improved project outcomes.
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