The True Value of Earned Value Management in Project Management
The True Value of Earned Value Management in Project Management
Are you looking to see why increasing your understanding of earned value management is so valuable to project management? You are in the right place. EVM is a tool that gives project managers complete control over their projects by continuously tracking schedule and budget goals- ensuring they are on track with total schedule and budget goals. In this article, we will discuss:
●What EVM is
●The project management triangle
●The factors that influence projections
●PMP EVM
●EVM for Jira
●Aneto EVM
EVM is the tool that your company needs to assess and compare your goal project timelines and progressions to what your actual timelines and progressions are. EVM uses a series of formulas to calculate this.
Once you’ve utilized the formulas, you will be able to see and understand the progress that has been made, and what progress is still left to be made. By knowing the exact numbers that correlate to your project, you will know to make decisions that keep you on track with your budget and schedule.
There is no reason to take a shot in the dark and hope for the best. With EVM, you can feel confident that you are in complete control of your project budget and schedule.
What is Earned Value Management?
Earned Value Management (EVM) monitors current costs, values, and future projections to ensure that a project will be completed at the highest value, within the allotted budget and timeline designated for the project.
EVM tracks the correlation between budget and actual expenditures to allow companies to be in control of their finances throughout their expenditure.
The purpose of utilizing EVM is to ensure that the value of the project is equal to the budgeted amount of funds that have been designated to said project.
The Project Management Triangle
For EVM to accurately gauge the holistic standings of a company, three factors must constantly be taken into consideration. These three factors are known as the “Project Management Triangle”. They are:
1. Scope
- What is expected as a result of this company and project?
2. Time
-What are the timeline expectations for this project?
3, Costs
-Are there any budget constraints?
When all three of these factors are taken into consideration, it results in a high-quality company that can stay on track and produce quality results.
How are EVM projections made?
Projections are made off of the following factors
Schedule variance (SV):
The scheduled variance measures whether a project is behind or on track with the allotted schedule designated the project.
Cost variance (CV):
The cost variance measures whether the project spent below or above the allotted budget designated for the project.
Schedule performance index (SPI):
Sometimes referred to as “schedule efficiency”, the schedule performance index measures how much work has been completed in a project, in comparison to the originally approved budget of work for the time spent on the project so far.
Cost performance index (CPI):
Sometimes referred to as “cost efficiency”, the cost performance index measures financial effectiveness and efficiency for a project.
All of these measurements can be used to date the project for future progression in each respective category.
Calculating EMV
EMV is calculated using the following formulas:
●Schedule Variance (SV)= Earned Value (EV)- Planned Value
●Cost Variance (CV)= Earned Value (EV)- Actual Cost (AC)
●Scheduled Performance Index (SPI)= Earned Value (EV) / Planned Value (PV)
●Cost Performance Index (CPI) = Earned Value (EV) / Actual Cost (AC)
PMP EVM
The PMP (Project Management Professional) exam is a certification exam taken by Project Managers looking to advance in the PM world. The exam features 5 sections, including:
- Project initiation
- Planning
- Execution
- Monitoring
- Closing
As part of this exam, participants must demonstrate an understanding of EVM. Participants are expected to have memorized and know how to utilize the formulas listed above.
EVM for Jira and Aneto EVM
Jira is an issue-tracking product that is designed specifically for project managers. If you are a PM who is looking for a way to use EVM, using a specialized PM program will increase effectiveness and efficiency.
Let Aneto software for Jira cloud help you to effectively utilize EVM systems.
Use the Aneto Project Accounting System to
●Add resource rates
●Monitor and calculate costs and profits
●Track product trends to make accurate predictions to ensure you stay on budget
●Scale your company by using this system that allows you to manage multiple companies and projects all at once.
At the end of the day, to use EVM as a product manager is to take complete control over your projects. You get to control your costs, make adjustments, and be totally in charge of your project.
When you evaluate your project using Earned Value Management, you give your company the ability to know when and where to make adjustments in your plans to keep you on track to hit your goals and stay within budget. Give yourself control over your project by using this incredibly valuable tool.
