Earned Value Management for IT Projects

Earned value management compares the budgeted value of completed work with the value planned and the cost incurred. IT project teams use the comparison to detect cost and schedule trouble and forecast likely outcomes from an approved baseline.

itEngineering leadership and delivery management

Earned Value Management for IT Projects

Earned value management, or EVM, is a project-control method that integrates scope, schedule, and cost in one measurement system. It answers three questions at a chosen status date: How much work was planned? How much budgeted work is complete? What did that completed work cost?

Those questions prevent a common reporting error. A project can spend less than planned because it is efficient, or because planned work has not happened. Comparing actual cost with the budget alone cannot distinguish those conditions. EVM adds an objective measure of completed scope.

The three-value model

Every EVM calculation begins with three cumulative values measured at the same status date:

Planned value (PV) is the time-phased budget for work scheduled by the status date.
Earned value (EV) is the approved budget assigned to work actually completed by that date.
Actual cost (AC) is the cost incurred for that completed work.

PV and EV are budget values, not revenue or business benefit. If a work package has a budget of $40,000 and is objectively 50 percent complete, it has earned $20,000 regardless of what the team spent. AC supplies the spending side of the comparison.

Earned Value Management for IT Projects

The three-value model

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