Introduction to EVM
Earned Value Management (EVM) was developed in the 60s as a Financial Analysis Technique. It became popular in the next four decades as a Project Management Technique. Nevertheless, today it is also known as a Program Management Technique. EVM was adopted by the National Aeronautics and Space Administration of USA (NASA), the United States Department of Energy and the Department of Defense (DoD). In the last three decades has been widely adopted by managers and executives internationally. The ANSI/EIA-748-B-2007 has standardized the use of Earned Value Management Systems (EVMS) that have been adopted in many countries for their procurement programs.
EVM mainly covers the three most important knowledge areas of Project & Program Management: Scope Management, Cost Management and Time Management. EVM unifies those three areas in a common framework that allows mathematically representing the relationship between them. Even though EVM is weak in other areas of Project & Program Management like the Stakeholders Management, it can be used to dramatically improve the success rate in projects & programs when it is complemented with other techniques of Project & Program Management.
The Actual Cost vs. Planned Cost.
If the accumulated actual cost has been greater than the accumulated planned cost, is the project or program management going bad? The common answer is yes, but not necessarily. It depends on the actual progress of the project or program. The planned cost is related to a measure of progress. If the progress has been very high, an actual cost higher than the planned cost would be clearly justified. A high speed of project execution could have as a consequence a high cost, because the project would ends earlier, with a final cost lower than the planned budget. In ongoing operations, comparisons between actual cost and planned cost are more successful. In schedule based projects, the comparison between actual cost and planned cost would frequently be a mistake, if the progress variable is not included in the analysis.
Earned Value Analysis
Earned Value Management (EVM) is founded in the use of three variables: Planned Value (PV), Actual Cost (AC) and Earned Value (EV). The last variable is a good measure of progress. The Earned Value Analysis mainly compares Planned Value with Earned Value in order to know the speed of the project. It also compares Actual Cost with Earned Value in order to know if the project is on budget.
EVM Software called 'evmweb.com' is an online EVM system. It has an integrated change control. Using this EVM software allows one to measure project progress in an objective manner, combining measures of scope, schedule and cost in integrated EVM software. When properly applied, this software provides early warning of performance problems. It also helps to improve the definition of project scope, prevent scope creep, communicate objective progress to stakeholders, and maintain the project or program team focused on achieving progress.
Integrated Change Control
- Plan Change Control: The software allows you to maintain two versions of the project plan: one is called “base-line” and the other is called “changed version”. If you make changes to an item, you can choose to display the original version (baseline) or the changed version, using a switch of the software. Whenever you make a change to an entity, that change becomes part of a 'Changed Version'. A 'Changed Version' becomes 'Baseline' after approving the changes.
- Privileges Change Control: The software allows you to share the project plan with other users. You can define the privileges of each new user and control the changes of those privileges.
- State Change Control: The software allows you to register the progress and the actual cost of the project. The changes will become official only after your approval.
- WBS: A Work Breakdown Structure is a deliverable-oriented hierarchical decomposition of the work to be executed by the project team to accomplish the project objectives and create the required deliverables. In this software WBS is represented by a tree that organizes and defines the total scope of the project. Each descending level represents an increasingly detailed definition of the project work.
- Gantt: As you probably know, Gantt chart is a type of bar chart that illustrates a project schedule. In this software, terminal elements and summary elements comprise the work breakdown structure (WBS) of the project. This software allows you to maintain a Gantt chart for the plan and to see the progress over it.
- Measurement Methods: A Key Practice related with EVM is to select an appropriate measurement method according with the type of effort. It’s possible to assign different methods to different activities, depending on the nature of the work. There are discrete methods, apportioned methods and LOE (Level Of Effort) methods. Key attributes of work are: the duration and the tangibility of product. The software allows you to define an appropriate method to each activity.
- Cost Registering: The software allows you to register the actual cost of the project and associate that cost to an activity.
- Progress Registering: The software allows you to register the progress of each activity of the project according with the measurement method that you choose when creating the measurement plan.
- EVM Reports: In EVM Analysis the most important practice is to compare Planned Value with Earned Value in order to know the speed of the project. It also compares Actual Cost with Earned Value in order to know if the project is on budget. This software gives you the possibility of obtaining (pdf) EVM reports with the values of the variables and a graph of the time series.
- Multi-language: In this software, each user has the possibility of selecting Spanish or English to see the software. This option is saved as a preference of the user.
- Multi-user: The software allows you to share the project with your project team and you can work simultaneously with them. You can also define the privileges of each new user.
- WEB: To provide you with the fastest access time, reliability, and disaster recovery, we use a dedicated server at some of the most advanced datacenters in the USA located within the heart of the U.S.A - Texas. This way, you and your team, can access the project information from anywhere using Internet.
- Cloud Storage: The software provides cloud storage with a simple interface that can be used to store and retrieve any amount of data, at any time, from anywhere on the web. It gives any project access to the same highly scalable, reliable, secure, fast, inexpensive infrastructure to store and share its files.