baseline of the Budgeted Cost of Work Scheduled. (See sections below on Earned ValueManagement Systems.)If the project is on schedule, the spend plan method provides the needed budget statusinformation. If the project shown were behind schedule, the project manager would no longer beable to understand project status from this graph. The budget picture would be worse than itlooks, but it would be impossible to quantify.When a project is sufficiently large or complex that it is unclear which project elements arecontributing to deviations from the budget plan, a more rigorous approach to cost and scheduletracking should be employed. This following method links cost and schedule performancetogether and presents them in a form that facilitates management analysis and presentation.
Earned Value Management System (EVMS):
Project cost and schedule performance measurements should really be managed as integratedelements and not as separate entities. If your budget spend plan shows you over spending andyour schedule shows milestones slipping, you can know you may be in trouble, but you will haveno way to make a quantitative assessment of how bad the trouble is. EVMS solves this problem by providing an accurate picture of spending and accomplishments related to a baseline plan.This enables you to quickly form conclusions about the project team's staffing levels andproductivity, as well as giving insight into areas of the WBS where the problems are occurring. Iwill never run a project without at least applying EVM principles if not having an informal orformal EVM tracking system in place.In the past, EVM has been called Cost/Schedule Control System (C/SCS) or, for the old-timers,7000.2 or C-Spec, after the DoD standards that originated the approach. Earned ValueManagement provides an integrated view of cost and schedule performance.
Unless you aretracking earned value, you really have no idea what is going on with your project
Understanding the Basics of EVM:EVM compares three pieces of information:
How much work you planned to have accomplished by now (in dollars or hours) calledthe
How much you have actually spent by now (in dollars or hours), called
The value, in terms of your baseline budget, of the work accomplished by now (in dollarsor hours), called the
!The first two pieces of data are compared to the Earned Value in terms of differences and ratios,to result in variances and performance indexes. That is the essence of EVM; the rest is details.
The Dreaded EVM "Formulas":
Thinking of EVM calculations in terms of remembering formulas, or for you Latin scholars -formulae, is a way to make things more complicated and obscure, although some may find it