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Earned Value Management

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What is Earned Value Management (EVM)?

Earned Value Management (EVM) is a project management technique that integrates scope, cost, and schedule measures to assess project performance and progress objectively. It provides a comprehensive snapshot of project health, allowing managers to make informed decisions and predict future performance.

In the realm of Professional Service Automation (PSA), EVM becomes a crucial tool to ensure projects are on track and within budget.

Why is EVM Important?

EVM offers several benefits:

1. Objective Performance Assessment: Unlike subjective measures, EVM provides a quantifiable measure of project performance.

2. Forecasting: EVM can predict future project performance based on current data.

3. Resource Optimization: By understanding project health, managers can allocate resources more effectively, a crucial aspect in resource management.

4. Stakeholder Communication: EVM metrics can be used to communicate project status to stakeholders transparently.

Earned Value Management

Why Earned Value Management is so important?

Calculating EVM

The primary EVM metrics are:

  • Planned Value (PV): The value of work planned to be completed by a specific time.
  • Earned Value (EV): The value of work actually completed by a specific time.
  • Actual Cost (AC): The actual costs incurred for the work completed by a specific time.

Using these, we can derive performance metrics:

Cost Performance Index (CPI): EV/AC. A CPI less than 1 indicates cost overrun.

Schedule Performance Index (SPI): EV/PV. An SPI less than 1 indicates a schedule delay.


Let’s say a project has a PV of $100,000 for the first month. By month-end, only work worth $80,000 (EV) is completed, costing $90,000 (AC).

CPI = 80,000/90,000 = 0.89 (indicating cost overrun)

SPI = 80,000/100,000 = 0.8 (indicating a delay)

EVM vs Other Project Management Metrics

While EVM provides a comprehensive view, other metrics like Gantt charts offer visual representations of project timelines. Metrics like MRR (Monthly Recurring Revenue) focus on financial aspects, while EVM gives a holistic project view. It’s essential to understand the differences to select the right tool for the right job.

For businesses, tools like ticket management software can be integrated with EVM metrics to ensure projects are on track and customer issues are addressed in line with project goals.

Metric Description EVM Other Project Management Metrics
Definition Measures project performance by comparing planned work vs. actual work and costs. Yes Yes
Focus Primarily focuses on cost and schedule performance. Yes Yes
Integration with PSA Can be integrated with PSA software for real-time tracking and reporting. Yes Yes
Cost and Schedule Variance Calculates variances to assess project health. Yes Yes (e.g., Variance Analysis)

Using EVM in Projects

EVM can be integrated into various project stages:

1. Planning: Set baselines for scope, cost, and schedule.

2. Execution: Monitor EV against PV and AC.

3. Review: Use CPI and SPI to assess performance and make adjustments.

Ready to Optimize EVM?

KEBS, a leading PSA software, offers tools that seamlessly integrate with EVM principles. From financial management to deal management, KEBS ensures that every aspect of your project aligns with EVM metrics for optimal performance.

KEBS resource management tools ensure that resources are allocated efficiently, keeping EV metrics in check. With KEBS, you can ensure that your project’s AC aligns with your EV, ensuring cost overruns are minimized. Using KEBS project management software, track your project’s PV, EV, and AC in real-time.

KEBS Project Management

Ready to optimize your project’s performance with EVM? Contact KEBS today or request a demo to see how KEBS can transform your project management approach.

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