Earned Value Management (EVM)

What is Earned Value Management (EVM)?

EVM is also known as Earned Value Management is defined as an approach to incorporating any type of program. It provides all levels of management with early visibility into cost and time-related problems that could incur in the project handling.

EVM helps you to provide the foundation to assess work progress against a baseline plan, time, and cost performance. Moreover, it will have the data for proactive management action to be taken, thereby giving the managers a summary of effective decision-making.

The basic principle of earned value management is that the value of the piece of work is equal to the number of funds in the budget to complete it.

• Planned value: The approved budget for work scheduled to be completed by a set date.
• Earned value: The approved budget for work actually completed by the specified date.
• Actual cost: The cost that is actually incurred for the complete work by the due date.

Also, See: Budgeted Cost of Work Performed (BCWP)