EARNED VALUE BASELINE

Earned Value Baseline

Earned Value Baseline

Introduction

Earned Value Management (EVM) helps to measure the performance of project. This systematic management process based on the work performed and work planned and comparison of these two. To take decision for project EVM provides quantitative data. Earned Value Management was extended by Defence Department (DOD) to track its activities and programs. Earned Value Management (EVM) presents a perfect picture of spending plan and baseline plan which is the budgeted cost of project schedule. Earned Value Management gives an assimilated view of performance of cost and schedule. EVM is very beneficial in many activities such as reducing risk, better accountability, project forecasting, performance tracking and etc.

Earned Value Management System (EVMS)

Project cost and schedule performance measurements should really be managed as integrated elements and not as separate entities.  If your budget spend plan shows you over spending and your schedule shows milestones slipping, you can know you may be in trouble, but you will have no way to make a quantitative assessment of how bad the trouble is.  EVMS solves this problem by providing an accurate picture of spending and accomplishments related to a baseline plan.  This enables you to quickly form conclusions about the project team's staffing levels and productivity, as well as giving insight into areas of the WBS where the problems are occurring.  I will never run a project without at least applying EVM principles if not having an informal or formal EVM tracking system in place.

In the past, EVM has been called Cost/Schedule Control System (C/SCS) or, for the old-timers, 7000.2 or C-Spec, after the DoD standards that originated the approach. Earned Value Management provides an integrated view of cost and schedule performance

Understanding the Basics of EVM

EVM compares three pieces of information:

How much work you planned to have accomplished by now (in dollars or hours) called the Planned Value;

How much you have actually spent by now (in dollars or hours), called Actual Cost; and

The value, in terms of your baseline budget, of the work accomplished by now (in dollars or hours), called the Earned Value!

The first two pieces of data are compared to the Earned Value in terms of differences and ratios, to result in variances and performance indexes.  That is the essence of EVM; the rest is details.

Earned Value Implementation (Informal Approach)

To determine earned-value performance measurements for your project, you need to accomplish four steps:

Establish a performance measurement baseline in dollars (or hours) (this will determine the "budgeted cost of work scheduled" for the life of the project);

Determine "earned value" for work accomplished to date (earned value is the "budgeted cost of the work performed");

Relate earned value to the budgeted cost of work scheduled; and

Relate "actual cost of work performed" to earned value.

These four steps provide data to present a comprehensive picture of project cost and schedule performance.

Implementation of such a process can be scaled to fit projects of varied size and complexity. One should select the appropriate level of the WBS for data gathering and appropriate ...