What is Earned Value Analysis?
Earned Value Analysis (EVA) is a project management technique that provides a systematic way to track project progress. By analyzing the value of work completed, EVA can help project managers identify potential problems early and prevent them from becoming major issues.
EVA is based on three key elements
- The project’s budget
- The project’s schedule
- The project’s scope
EVA can be used on any type of project, no matter the size or complexity. It is a popular technique in the construction and engineering industries, but it can be applied to any type of project.
How Does Earned Value Analysis Work?
EVA begins with the creation of a project baseline. The baseline is a detailed plan that outlines all of the work that needs to be done, the budget for each task, and the schedule for completing the work.
Once the baseline is established, the project manager can begin tracking progress. This is done by comparing the actual work completed to the work that was scheduled to be completed. The difference between these two values is the earned value.
For example, let’s say a project is scheduled to take 20 weeks. After 10 weeks, the project manager checks the progress and finds that only 50% of the work has been completed. This means that the earned value is only 50% of the total budget.
The earned value can be expressed as a percentage, as a monetary value, or as a ratio. It is up to the project manager to decide which format is best for the project.
Why Is Earned Value Analysis Important?
EVA is important because it provides a clear picture of how a project is progressing. It can be used to identify potential problems early and take corrective action to prevent them from becoming major issues.
EVA is also important because it allows project managers to track the project’s progress in relation to its budget. This information can be used to make informed decisions about how to allocate resources.
Finally, EVA is important because it can be used to improve communication between the project manager and the project team. By tracking the earned value, the project manager can provide the team with regular updates on the project’s progress and identify areas where the team is falling behind.
How to Use Earned Value Analysis
There are four steps to using EVA:
- Planning
- Tracking
- Analyzing
- Reporting
Let’s take a closer look at each of these steps.
Planning
The first step in using EVA is to create a project baseline. This is a detailed plan that outlines all of the work that needs to be done, the budget for each task, and the schedule for completing the work.
The project baseline is important because it provides a reference point for tracking the project’s progress. Without a baseline, it would be difficult to determine whether the project is on schedule and on budget.
Creating a project baseline can be a complex process, especially for large projects. However, there are a few tools that can help simplify the process, including project management software and earned value management software.
Tracking
Once the baseline is established, the project manager can begin tracking progress. This is done by comparing the actual work completed to the work that was scheduled to be completed. The difference between these two values is the earned value.
There are a few different ways to track the earned value. The most common method is to use a project management software. There are also earned value management software programs that can be used to track the earned value.
Analyzing
The third step in using EVA is to analyze the earned value. This can be done in a number of ways, but the most common method is to calculate the earned value ratio.
The earned value ratio is a simple formula that compares the earned value to the actual value. The earned value is the value of the work that has been completed. The actual value is the value of the work that was scheduled to be completed.
The earned value ratio is calculated by dividing the earned value by the actual value.
For example, let’s say a project is scheduled to take 20 weeks. After 10 weeks, the project manager checks the progress and finds that only 50% of the work has been completed. This means that the earned value is only 50% of the total budget.
The earned value ratio would be calculated as follows:
Earned Value Ratio = Earned Value / Actual Value
Earned Value Ratio = 50% / 100%
Earned Value Ratio = 0.5
A ratio of less than 1 indicates that the project is behind schedule. A ratio of 1 indicates that the project is on schedule. A ratio of more than 1 indicates that the project is ahead of schedule.
Reporting
The final step in using EVA is to report the results. This can be done in a number of ways, but the most common method is to create an earned value report.
The earned value report is a simple document that lists the earned value, the actual value, and the earned value ratio. It also includes a brief description of the project’s progress.
The earned value report is typically created on a monthly basis. However, it can be created more or less often, depending on the needs of the project.
Earned Value Analysis is a project management technique that provides a systematic way to track project progress. By analyzing the value of work completed, EVA can help project managers identify potential problems early and prevent them from becoming major issues.
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