Earned Value Management Essay Example | Topics and Well Written Essays - 1000 words

Earned Value Management - Essay Example One of them is Earned Value Management (EVM). First, we shall attempt to understand the basics of EVM. EVM is one of the pivotal links in the chain of costs control (Stratton, 24). EVM is vitally important and useful because it is linked with other component of costs control such as – Earned Value Management is associated with every other tools and techniques. It helps in forecasting and preparing to-complete performance index. We get earned value data through performance reviews. We use earned value management to calculate variance analysis. Project management software helps us in obtaining earned value data. Until now it has been established that EVM helps in achieving a lot of clarity on the direction and efficiency of a project. Now we shall go into the whole process of deriving certain ratios that help us in achieving the above mentioned objective. The above data gives us three different values if the project is even slightly off-track in terms of cost and its schedule. After knowing the above values, the next step is to find out various ratios which shall help in the understanding of cost control. These ratios are – Positive Schedule Variance means that the project is behind on time and a –ve CV means that it is costing the company more. Similarly lesser than 1 value of SPI means that less amount of work is accomplished than planned (Song, 50). All these ratios assist in the forecasting for the project. For example, TCPI shows how efficient you have to be in the rest of the project in order to complete within budget. This is the real objective of EVM and it is has become widely popular. Until now the ratios have been derived but they have not been explained in sufficient detail. It is for this purpose that we shall take an example with very simple figures so that the whole concept is grasped properly. If we assume that the budget for out project is 10 million dollars and the