Earned Value Management (EVM) is an important management tool born out of the U.S. government’s need to make sure projects are on time and within budget restraints. However, EVM proved to be such a successful management modality that it’s now used in non-government organizations and companies, big and small.
Essentially, EVM employs guidelines that provide extra information than usual on project tracking. It helps focus on important project construction and budget timelines as well as provide clear communications of the activities involved to improve project visibility and accountability.
The basic principle of EVM is that the value of the piece of work is equal to the amount of funds budgeted to complete it.
- Planned value: This is the approved budget for the work scheduled to be completed by a set date.
- Earned value: This is the approved budget for the work actually completed by the specified date.
- Actual costs: The costs actually incurred for the work completed by the specified date.
To describe a project’s schedule and cost performance with EVM, specific indicators are used including the following:
- Schedule variance (SV): This is a measure of the difference between the work that was actually done against the amount of work that was planned to be done. This clearly shows is the project is on schedule or not.
- Cost variance (CV): This is the measure of the difference between the amount that was budgeted for the work meant to be done and the amount that was actually spent for the work performed. Thus this shows if the project is on budget or not.
- Schedule performance index (SPI): This is the ratio between the budget that is approved for the work that is performed to the budget that is approved for the work that was planned in the first place. This is a relative measure of the project’s time efficiency.
- Cost performance index (CPI): This is the ration between the approved budgets for the work that is performed to the budget that was actually spent for the stipulated work. It is a relative measure of the cost efficiency of the project and can be used to estimate the cost of the remainder of the task.
It’s important to understand that EVM is more than a unique project management process or technique. It is an umbrella term for 32 guidelines in the EIA-748 Standard for Earned Value Management Systems (EVMS) that demonstrate a series of requirements that a contractor’s management system must meet to keep projects on schedule while avoiding costly overruns.
The five objectives of EVMS are to:
- Relate time phased budgets to specific contract tasks and/or statements of work.
- Provide the basis to capture work progress assessments against the baseline plan.
- Relate technical, schedule and cost performance.
- Provide valid, timely and auditable data/information for proactive project management analysisand action.
- Supply managers with a practical level of summarization for effective decision making.
Once the contractor’s EVM System is designed and implemented on a project, there are significant benefits to the contractor and to the customer. Contractor benefits include increased visibility and control to quickly and proactively respond to issues which makes it easier to meet project schedule, cost, analysis and technical objectives.
Customer benefits include confidence in the contractor’s ability to manage the project, identify problems early and provide objective, rather than subjective contract cost analysis and schedule status.
Earned Value Management Training
Tonex offers several classes in Earned Value Management Training:
–A 2-day Earned Value Management Training (EVM) course.
–A 2-day Earned Value Management Workshop.
–A 4-day Earned Value Management Training Bootcamp.
–A 2-day Fundamentals of Earned Value Management Training.
Earned Value Management (EVM) Training courses cover the theory, principals, techniques and applications of EVM. Participants become familiar with the challenges and methods engaged in setting up a baseline and attaining correct, timely and effective information to quantify project performance with EVM.
Students learn about topics such as:
- Breakdown structure
- Budgets
- Schedules
- Gantt charts
- Cost Variance (CV)
- Schedule variance (CV)
- Actual cost of work performed (ACWP)
- Budgeted cost for work performed (BCWP)
- Budgeted cost for work scheduled (BCWS)
- Budget at completion (BAC)
- Estimate at completion (EAC)
- Variance at completion (VAC)
Who Should Attend
Business leaders, functional managers, project managers, mid-level managers and project management professionals (PMPs).
Why Tonex?
–Personalization. Developers learn best when the course materials are relevant to them. That’s why for the past 30 years we have been customizing every learning solution we deliver to the backgrounds of the students, their roles, the project they are working on, as well as the development and production platforms they use.
–Relevancy. Other companies, with their off-the-shelf commodity training classes, are focused on what they offer — not what your team needs. Our learning solutions are focused on your people, project and productivity goals. When you work with Develop Intelligence, it’s all about you.
–Ratings tabulated from student feedback post-course evaluations show an amazing 98 percent satisfaction score.
–Reasonably priced classes taught by the best trainers is the reason all kinds of organizations from Fortune 500 companies to government’s most important agencies return for updates in courses and hands-on workshops
For more information, questions, comments, Contact us.