Project management does occupy a crucial spot and uses different processes or techniques that business should be aware of. Project managers and their teams generally use different tools to measure project progress and performance. Earned Value Management insights help mitigate risks that are otherwise related to operating projects.
About Earned value management (EVM)
It is generally used to identify variances, if any, in projects. This is by comparing planned work and already performed work. The key here besides other measuring project progress can be stated to be that it tends to combine three major elements. These elements are Budgeting, schedule or time, and scope, considered to be the major project-management triangle. Such elements are combined to create a single baseline.
The latter offers a comprehensive image of the overall health of the project. It is vital since understanding progress or scope against time, but without taking into consideration the costs is not likely to offer accurate performance measurement.
Any project may use EVM. It is used mainly in industries including education, government, defense, construction, professional services, aerospace, etc. One classic instance of why and where EVM is held valuable is the construction field.
Some construction projects coordinate interdependent parties in hundreds as well as moving pieces in thousands across long time periods. It also includes external forces that are outside the control of sub-contractors or contractors.
Such aspects may strongly influence on project costs and schedules. On the other hand, EVM allows companies to have an objective summary on tracking projects from value angle.
EVM vs. Planned value
Several elements and topics concerning earned value are considered to be crucial. Three ‘value’ pillars that you are likely to come across in EVM and Project management are earned value, actual cost and planned value.
Benefits derived from EVM
EVM’s detail and accuracy along with quantitative nature is what makes it valuable to enable early as well as mid-project forecasting. It is used by management teams to derive vital and early visibility concerning future and current cost-related project issues. Thus, it allows taking future, current decisions quickly thereby ensuring projects remain on track, are properly monitored and do not go out of control. Also it helps the project manager to develop proper Budgeting.
Besides this, EVM insights help mitigate risks that are otherwise related with operating projects. It includes budget and time overruns and scope creep. Accurate, well-established EVM can help avoid headaches that are otherwise noticed at the end of the projects.
However, the main benefits are quite similar to that of profit calculation over costs and revenue. It will be not of much use to check out revenue alone as it does not provide accurate indication of business success. Again focusing on costs alone will not help predict project success. Business decisions also become easier and more accurate.
To know your company’s present health condition, it is necessary to focus on profits. You need to have a better understanding whether your business inputs are generating profitable or greater outputs.
Equally important is the fact that with EVM, mangers, workers and the project itself is held accountable for overall performance. EVM manages to increase the stakes, requiring the project to be completed within a stipulated timeframe.
This necessitates all stakeholders to be honest concerning their performance. They need to come up with necessary adjustments to take proper Business decisions and ensure project success.
Earned value management can be termed to be a quantitative measure desired in objective metric. However, there are noticed problems with project status updates and tracking provided by leaders or managers. These are mostly biased or skewed. It is possible to overcome such biases with EVM. It also offers an unbiased gauge and objective on overall project performance.