In project management, earned value (EV) is a technique used to estimate the performance of a project in terms of a budget and the schedule of the project. This technique is normally used in order to get an estimate of resources which will have been used upon the completion of a project. Through earned value OH, project managers can get the estimate of the resources that will be used to complete the project.
In calculating this estimates, the work completed is usually compared to the estimates obtained at the start of the project. This is because if the progress of the project was to be reported on the basis of elapsed time, it would not provide a true measure of progress of a task. For instance, a 12-month project cannot be said to be 50% complete after 6 months. This is because elapsed time alone cannot indicate whether you are ahead or behind the schedule.
This technique presents a superior measure relating to the progress. When utilized, one gets the credit for the undertakings implemented upon project completion. Every piece of work is assigned some percentage so that the entire tasks add up to 100%. Upon the completion of every task, it is captured as the EV.
All the tasks are usually scheduled, budgeted and planned based on time and planned value increments that add to a baseline for performance measurement. The gained value gives the objective measurement to the tasks already accomplished in a project. The management generally can be able to evaluate the authentic completed tasks alongside the planned tasks. The difference between a planned and an earned task is termed as the schedule variance.
A project manager needs to agree on what the project covers, have a breakdown of the work, and allocate a budget for each work package. He or she will design a schedule showing the time needed to complete that task. The planned value is, however, used to measure the performance of the entire project. While the task progresses, it is often compared to the planned estimate to know what has already been achieved to what was planned.
It is also important to have the actual costs obtained for the particular project from the accounting system of the organization. This is because such cost is usually compared with the EV to indicate either an overrun or an underrun. Through this technique, a project manager is able to measure performance as well as predict future outcome.
Through the earned value technique, a project manager is also able to report progress of a task with greater confidence. As a result, the management is able to make decisions on cost and time allocation sooner.
Although past performance can be a good indicator of expected future performance, EV is the ideal tool to predict the outcome in terms of time and cost to the completion, as well as the expected final costs. If the technique is well implemented on a project, the customers gain confidence on the contractor due to his or her ability to manage the project well and providing objective reports rather than subjective reports.
In calculating this estimates, the work completed is usually compared to the estimates obtained at the start of the project. This is because if the progress of the project was to be reported on the basis of elapsed time, it would not provide a true measure of progress of a task. For instance, a 12-month project cannot be said to be 50% complete after 6 months. This is because elapsed time alone cannot indicate whether you are ahead or behind the schedule.
This technique presents a superior measure relating to the progress. When utilized, one gets the credit for the undertakings implemented upon project completion. Every piece of work is assigned some percentage so that the entire tasks add up to 100%. Upon the completion of every task, it is captured as the EV.
All the tasks are usually scheduled, budgeted and planned based on time and planned value increments that add to a baseline for performance measurement. The gained value gives the objective measurement to the tasks already accomplished in a project. The management generally can be able to evaluate the authentic completed tasks alongside the planned tasks. The difference between a planned and an earned task is termed as the schedule variance.
A project manager needs to agree on what the project covers, have a breakdown of the work, and allocate a budget for each work package. He or she will design a schedule showing the time needed to complete that task. The planned value is, however, used to measure the performance of the entire project. While the task progresses, it is often compared to the planned estimate to know what has already been achieved to what was planned.
It is also important to have the actual costs obtained for the particular project from the accounting system of the organization. This is because such cost is usually compared with the EV to indicate either an overrun or an underrun. Through this technique, a project manager is able to measure performance as well as predict future outcome.
Through the earned value technique, a project manager is also able to report progress of a task with greater confidence. As a result, the management is able to make decisions on cost and time allocation sooner.
Although past performance can be a good indicator of expected future performance, EV is the ideal tool to predict the outcome in terms of time and cost to the completion, as well as the expected final costs. If the technique is well implemented on a project, the customers gain confidence on the contractor due to his or her ability to manage the project well and providing objective reports rather than subjective reports.
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