In every reporting period you measure the actual earned value and actual cost accurately. You determine the estimate at completion EAC and then prepare your report for designing the corrective actions. In the whole process you must of course maintain your performance measurement baseline. It may sound boring if I say that I am going to give some formulas as well but I promise to keep it as short as possible.
Based on these components, EVM introduces some indicators which can be used for evaluating the overall project performance:. So EV is always the first element in the equation. Then when we talk about schedule, we are talking about what we planned.
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Also when we talk about cost, we should take care of actual cost. Tip2: You may combine the mentioned formulas and come up with new equations. Sometimes you need to do that. Tip3: Today there are many powerful software which do all the calculations for you.
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Now I have some sources for you to read more about the earned value management:. Please do not hesitate to leave your comments and questions under this topic. Good luck with implementing EVM! Go Back. Blog Search. Project Earned Value Management: Let's kick it off July 26, Earned value management?! In some cases, there have been reasonable applications of the checklists. But in other cases, the applications have been, shall we say, somewhat arbitrary and perhaps even dogmatic. The checklist questions were intended by the originators to be used as a guideline only, to be exercised with professional judgment.
However, it would seem that some practitioners had elevated their checklists and associated questions to a position on par with the original thirty-five criteria. Contractors do understand the importance of having to meet certain standards, but resisted many of the minor peripheral issues that were raised as absolute requirements. A sort of cultist society of USCSC professional practitioners emerged, which did not sit well with many most of the project managers in the private sector.
Project managers look for simple tools that will assist them in meeting their primary mission of completing their projects on time, within the authorized funds, while achievingall of the technical objectives. The Genesis and Evolution of Earned Value CISCSC was a success from a government perspective, because it permitted the oversight of contractor performance whenever the risks of cost growth rest squarely with the government.
Applications with the government have been consistent and have met the test of time, and the original thirty-five criteria remained consistent and unchanged. However, earned value as contained in the original USCSC was never accepted or adopted by private industry in the management of its internal projects. And there were valid reasons for this outright rejection.
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A new foreign language emerged. Perhaps the single most difficult aspect associated with CISCSC for project managers in the private sector was the need to accept the terminology associated with the formal doctrine. Did the earned value concept need to be this complicated? We think not. Perhaps one of the more interesting and unexplainable phenomena in the usage of terms for USCSC applications was in the deliberate avoidance of ever using the dreaded word "overrun.
But instead of calling an overrun an "overrun," such incomprehensible terms as "OTB," which stood for "over target baseline,""formal reprogramming,"or "variance at completion" were s u b stituted for the more unambiguous terms. Its objective:to make the criteria more compatible with the needs of private industry. They called the industry version the Earned Value Management System EVMS criteria, and it contained just thirty-two criteria, each of them rewritten in a simpler form.
Paul Kaminski, accepted verbatim the thirtytwo industry earned value criteria. The significance of these moves does not lie in the revised wording of the criteria, or in the minimal reduction in their number from thirty-five to thirty-two. Rather, the important change was in the attitude of all parties to the process. During , there was a sort of changing of the EVMS responsibility from that of a government mandate into ownership of EVM by private industry.
Private industry was adopting the EVM technique not because it was a government requirement, but because it represented a viable, best-practice tool, that project managers everywhere could use. Note:There are two appendices to this book that deal with the full EVM criteria. Appendix I contains the author's unofficial description of each of the thirty-two EVM criteria.
We have the opportunity to make earned value into a widely accepted tool for broadbased project management applications. But we must go back to the simple basics. Shown in Figure 3. It all started in the factories over a hundred years ago. The industrial engineers who conceived the concept used it as a simple management tool. We in private industry should now do likewise. We suggest a return to the original approach used by industrial engineers, but while incorporating the critical success results from applications of the formal USCSC and EVM.
Use a simple form of earned value to manage all projects within the private sector. Most of the data has been gathered by practitioners operating within the United States U.
Department of Defense DOD community. While the concept of earned value began with the industrial engineers in the factories at the turn of the last century, the actual collection of knowledge centered on its practical project applications has been done over the past three decades. There have been no substitutive changes in the earned value criteria for over thirty years. Therefore, the analysis of the findings and the conclusions reached can reasonably be considered to be valid empirical doctrine.
These accumulated findings have evolved into what is fast becoming an embryonic EVM science.
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In particular, performance management personnel within the Office of the Under Secretary of Defense for Acquisitions has been responsible for the scientific analyses of several hundred contract applications where the earned value criteria have been employed. It has formulated some rather sophisticated scientific conclusions based on the consistency, predictability, Earned Value Project Management and reliability of the earned value data.
Its findings should not be ignored by those managing projects in the private sector. Quite possibly, project managers in the private sector will discover another valuable tool for their use in the management of all projects.
It might be beneficial also to review some of these findings to see if they might apply to more universal applications to all projects The findings and knowledge that they have accumulated are truly impressive. Far too often the focus has been on the negative aspects of the CISCSC, frequently centering on the sometimes-overzealous government practitioners who have carried their demands on private sector contractors to the extreme. Nevertheless, the good aspects of earned value far outweigh the negative.
Earned value management
And the recent trend within the U. We would like now to focus on the body of knowledge that has been accumulated by individuals within the Pentagon and the individual branches of the military services. If it would even be possible, it would likely take months or possibly years to coordinatea collective position as to which are the more significant achievements resulting from the employment of earned value since the USCSC were first introduced nearly three decades ago.
Therefore, we have not attempted to reach any type of broad popular consensus. Rather, we have assembled our own listing of just ten items of what we feel have been the most important accomplishments resulting from the employment of earned value. These ten findings, to us, constitute the early beginnings of an earned value body of knowledge. The employment of a single management control system that will provide accurate, consistent, reliable, and timely data to management at all levels, allowing it to monitor the performance of all projects or production work within an enterprise.
The Earned Value Body of Knowledge. One of the primary benefits of employing earned value is that it allows for the use of a single management approach that can be applied to both projects and production work within any given organization. The relationship of what work was scheduled versus what work was accomplished provides an accurate indicator of whether or not one is meeting the time expectations of management.
Also, the relationship of what work was accomplished versus how much money was spent to accomplish the work provides an accurate reflection of the true cost performance. Far too often, companies will employ multiple management-control systems to monitor activities. One approach may be used to monitor the work on big projects, another for the smaller projects, and still another used to oversee the production work, and so forth.
Earned value data is somewhat analogous to measuring the temperature of the human body. If the human body temperature is higher or lower than the standard of Likewise, earned value data penetrating set parameters must be examined by-management. Earned value data is consistent for all projects and production work within the enterprise. By employing a single management system on all activities within an enterprise,the temptation to put a positive spin on negative results will be minimized. Sometimes in the past, companies have allowed their various managers to take different interpretations of the same actual results.
The project manager, executive management, functional management, chief financial officer, and others would interpret the same performance results to reinforce their own parochial positions. Often, one person's interpretation would not match another's interpretation of the same results. One set of books, reflecting accurate data, is possible when employing EVM.
A management approach that requires the integration of the technical scope of work with the time commitments and the authorized resources, thus allowing for the measurement of integrated performance throughout the life of a project or a production run. While most managementtheorists will be quick to express support for any approach that integrates the work to de done with the necessary time and resources, rarely in practice does such integration actually happen.
Typically, the contract administratorswill define a project in one way, the technical specialists in another, and the resource estimators will view the same requirements in still a different way. The scheduling community, not to be outdone, has always had its own unique perspective of what is important, which may be different from what others have determined. The result: any given project will often be implemented by the sum of various Earned Value Project Management parochial and conflicting interests.
Each function may well measure and report on its own performance in a manner that is in conflict with other functional tracking metrics. Whether or not we like it, most projects are defined and then performed in a nonintegrated manner.
The WBS provided an opportunity for all key functions on a given project to view the project in a like manner, to speak with a common project language for the first time. Collectively, all key functions would have the opportunity to define a given project in a like manner, which would then relate to other functional perspectives.
With use of a WBS, key functions would now be expected to decompose a project into progressively smaller units, down to the work-task level, at which point they would relate the technical work to be done, the estimated resources needed, and the time frame for each task. With use of the WBS, all critical functions would be expected to work within an integrated project plan. Performance could be measured at the lowest task level, allowing the project manager to ascertain how much work had been planned, how much work was accomplished, and how much money has been spent to accomplish the work.