Do you want to be able to realistically measure and control your projects? As a project manager, you need to be able to do this on a consistent basis. Earned Value Management offers you precisely that ability. Earned value management has been around since the late 1960s. It wasn’t until the mid-1990s, however, that this methodology really came to a forefront. Now, NASA uses earned value as a means of keeping projects on schedule and within budget.
But, what exactly is earned value management? Earned value allows you to measure the progress of a project objectively. With earned value, you can identify projects in as little as15 to 20 percent of the way into a project. You can figure out whether or not you are going to be on budget or on schedule within a ten percent deviation range. Earned value works especially well with large projects since it breaks them down in manageable chunks.
Earned value is divided between cost variance and schedule variance. The cost variance is how much do all tasks involved in a project, both done and undone, cost (the project’s earned value versus its actual cost). The schedule variance compares the cost of the work performed to the cost of the work scheduled. Your results from erned value analysis can be calculated in either time or monetary quantifiers.
When these figures are calculated, you will have a better picture of whether or not you are on schedule, on budget, or both. If not, don’t despair you have time. Remember earned value is calculated during the early phases of project management when it is easier to make adjustments to ensure project success. There are tools and software on the market that project managers can utilize to calculate and track the earned value of their projects.
Before you begin implementing earned value, you must initially have a stable budget in place. A good budget relies on a reliable project management methodology. This involves completely sketching out the project and distributing the work evenly.
The main advantage of earned value management is that you can anticipate when a delay may occur and prevent it. This allows you to consistently more projects on budget and on time more often. This "early-warning system" allows project managers to take action to prevent over-spending, and to stay on schedule. In other words, the sooner something can be done about the problem, the better.
Another advantage of earned value is that it forces employees and managers alike to accurately report their outcomes. While most people don’t like to look bad, this can be both a positive and negative reinforcer. If you put the outcomes on a timeline where everyone can see the results, those with positive performance will be encouraged to keep up the good work while those in the negative area will want to improve their scores.
Earned value allows you and your team to have statistical and objective information about your project’s status. It allows you to have an early warning system to identify and correct problems before the project is due. This will prove to your client that you have a reliable management methodology in place.