Earned-Value Charting as a Key Performance Indicator
Earned-Value charts look similar to burn-down charts, but they are actually quite different. They are a way to measure adherence to schedule, budget and project scope, all at the same time. Rather than burning down, an earned-value chart trends up as the project progresses. It measures value planned, value created, cost expended, and elapsed time, all in one chart. With three simple lines on a graph, you can tell virtually all of the KPIs mentioned on page 1.
See the picture to the left for an example of what an earned value chart looks like. As you can see, the blue line represents how much value the project is supposed to have created compared to the time elapsed. Value can either mean something like functionality built, or tasks complete, or even literal sales made. Whatever your project team decides to use as value, this chart will help graph it.
The green line represents how much value has actually been created, using the same metrics. If the green line is below the blue line, then you are behind schedule. If it is above, then you are ahead of schedule. It is very possible to flow back and forth from being behind to being ahead, and back again. The red line represents cost. If the cost is below the blue line, then you are under budget, if above, you have spent more than allotted to the budget.
When you put all four dimensions together, planned value created, actual value created, cost and time, you can get a very powerful and very simple view of how your project is doing.