Driver Trett Digest Issue 26 - Flipbook - Page 4
EARNED VALUE
Fernando Barragan Rajo and Balint Laszlo
Senior Consultants
Madrid and Munich, Driver Trett Mainland Europe
BETTER PERFORMANCE MANAGEMENT
FOR BETTER PROJECT OUTCOMES
WHAT IS EARNED VALUE?
WHAT IS IT USED FOR?
Earned Value Management (EVM) can be a dry subject
for some, however, the practicality and the benefits
it can provide for organisations make it worthy of
consideration.
As EVM integrates planning, cost control and the
definition of the project scope into a single tool,2 it is
used to forecast the final cost and project duration, and
hence can act as an early warning system to provide
opportunities to prevent and/or mitigate or overcome
delays and cost overruns. Another positive aspect of
EVM is that the data should provide points against
which to objectively measure the project status (in time
and cost).
EVM is a project controls process which, some say,
comprises best practice to objectively measure and
manage a project’s scope, plan, and cost performance
in a structured way.1
The basis of the method is to set up a performance
measurement baseline (PMB - the baseline programme
or schedule) which must include the defined scope
breakdown and associated assumptions, the activities
scheduled with the correct logical sequence and the
resources or costs/time associated with the schedule.
Then, one needs to keep track of the status of the
planned work, physical percentages achieved of the
different tasks, and the actual spend to date of the
project’s budget.
EVM reporting, when done correctly and
accurately, enables the user to see what has
been achieved of the planned work and what the
cost of it was.
1. Association for Project Management. (2013). Earned
Value Management Handbook. Princess Risborough: APM
Princess Risborough.
2. Candido, L. F., Heineck, L. F., & Neto, J. d. (2014). Critical
Analysis on Earned Value Management (EVM) technique in
building construction. Oslo, Norway: Proceedings IGLC-22.
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Also, it should show if this cost is greater or lower
than the planned budget (Cost Performance Index –
‘CPI’) and if the project is ahead or behind the planned
schedule (Schedule Performance Index – ‘SPI’).