Earned value management (EVM) is a project management technique for measuring project performance and progress in an objective manner. EVM has the ability to combine measurements of scope, schedule, and cost in a single integrated system. Earned Value Management is notable for its ability to provide accurate forecasts of project performance problems. Early EVM research showed that the areas of planning and control are significantly impacted by its use; and similarly, using the methodology improves both scope definition as well as the analysis of overall project performance. More recent research studies have shown that the principles of EVM are positive predictors of project success. Interest and use of EVM have grown significantly in recent years.
Essential features of any EVM implementation include
- a project plan that identifies work to be accomplished,
- a valuation of planned work, called Planned Value (PV) or Budgeted Cost of Work Scheduled (BCWS), and
- pre-defined “earning rules” (also called metrics) to quantify the accomplishment of work, called Earned Value (EV) or Budgeted Cost of Work Performed (BCWP).
EVM implementations for large or complex projects include many more features, such as indicators and forecasts of cost performance (over budget or under budget) and schedule performance (behind schedule or ahead of schedule). However, the most basic requirement of an EVM system is that it quantifies progress using PV and EV.
Earned value management (EVM) is one of the most effective performance measurement and feedback tools for managing projects. EVM methodology incorporates project scope, schedule and costs, and is applicable across a range of knowledge areas and practice groups. Published in 2004, the Practice Standard For Earned Value Management expands on the EVM information in A Guide to the Project Management Body of Knowledge: (Pmbok Guide). The standard in detail describes the elements of EVM. It also offers examples of how EVM can fit any project size or situation.