Earned Value Management Guidelines

Association for Project Management (APM)

• Publisher: Association for Project Management (APM)
• Year: 2014
• Print ISBN: 9781903494264
• eBook ISBN: 9781903494295
• Topic: Business
• Subtopic: Project Management
• Index: Business

Earned value management is a project control process, based on a structured approach to planning, cost collection and performance measurement. Written by the APM Earned Value Management Specific Interest Group, this is a work of reference for project professionals. This second edition remains reciprocal with ANSI/EIA-748-B Earned Value Management Systems standard.

1

Introduction

Earned value management is a project control process based on a structured approach to planning, cost collection and performance measurement. It facilitates the integration of project scope, time and cost objectives and the establishment of a baseline plan for performance measurement (Association for Project Management, 2006).

The establishment of a performance measurement baseline (PMB) is essential to conducting successful EVM and consists of:

•defined scope and assumptions;

•activities scheduled in logical sequence;

•resources/costs (labour and materials).

We need to know:

•what the plan is;

•what the project has achieved;

•what has been spent to date.

Earned value helps us manage by:

•providing data to enable objective measurement of project status;

•providing a basis for estimating final cost;

•predicting when the project will be complete;

•supporting the effective management of resources;

•providing a means of managing and controlling change.

Informed and effective decision making is enabled by knowing:

•what has been achieved of the plan;

•what it has cost to achieve the planned work;

•if the work achieved is costing more or less than was planned;

•if the project is ahead of or behind the planned schedule.

Good planning leads to good project execution and good management information. Poor planning can lead to poor execution and poor EVM information. The plan must be maintained in accordance with authorised project changes. EVM will accurately show deviations from the plan, but it may not be immediately evident that a flawed plan is being tracked.

2

Applicability

Earned Value Management: APM Guidelines can be applied to projects of varying size, scope and duration to ensure that the EVM process is operated in a consistent manner across all implementing teams. Each implementing project should take into account:

•project specific requirements;

•customer requirements;

•lessons learnt from previous projects;

•IT toolset requirements;

•impact on resources and infrastructure.

Project managers should ensure that progress and performance measurements are realistic and are in accordance with this guide.

3

Basic requirements for an earned value system

This document is a guide to the process for implementing and running an earned value management system. The following list describes the fundamental steps of the process that should be undertaken:

•define the scope (section 5.1.1);

•use a work breakdown structure (WBS) to define the work (section 5.1.2.2);

•establish organisational responsibility for work accomplishment in an organisation breakdown structure (OBS) (section 5.1.2.3);

•ensure management subsystems support each other, the WBS and the OBS (section 5.1.2.4);

•distribute the budget into the WBS (section 5.2.4);

•schedule all authorised work using a logic-linked method (section 5.2.2);

•identify a method of measuring achievement (section 5.2.5);

•spread the budget over time consistent with the schedule for the work (section 5.2.6);

•baseline the plan (section 5.2.6);

•record direct and indirect costs (section 5.3.1);

•collect and analyse performance data at the control account level on a periodic basis (section 5.4.2);

•produce forecasts for remaining work (section 5.4.3);

•incorporate all authorised changes in a timely and controlled manner (section 5.5).

4

What is earned value management?

4.1 EARNED VALUE MANAGEMENT PRINCIPLES

EVM is about establishing and managing goals throughout the life of a project. It comprises the following:

•definition and authorisation of the contract scope of work;

•development of a ‘baseline’...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Contents
• Figures and tables
• Foreword
• Preface
• 1 Introduction
• 2 Applicability
• 3 Basic requirements for an earned value system
• 4 What is earned value management?
• 5 Process discussion
• 6 System review
• Bibliography
• Appendix A – Earned value management guidelines
• Appendix B – Terminology and glossary
• Appendix C – Abbreviations and acronyms
• Appendix D – Earned value equations
• index
• Back Cover