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Earned Value Management (EVM) is a project management tool for measuring project performance and progress in an objective manner. The Office of the Assistant Secretary of DoD explains that EVM is “Earned Value Management is an essential Program Manager and Technical Lead tool for supporting proactive decision making” (Kranz, 2014, pg. 1). PMBOK describes EVM as “a management methodology for integrating scope, schedule, and resources, and for objectively measuring project performance and progress. Performance is measured by determining the budgeted cost of work performed (i.e., earned value) and comparing it to the actual cost of work performed” (PMBOK, 2008, pg. 433).
There are 3 elements for EVM: Planned Value (PV), Actual Cost (AC), and Earned Value (EV). PV is the total costs of the work schedule. AC is the total cost that was taken to complete the work. EV is the value performed by a status, measured in costs. Earned Value is the value earned for the past working being completed. For an example after 30 days of working on a $1000 dollar budget and the schedule showed that 40% of the work has been completed then $400 of the total budget should be spent. Anything less then the total budget would show that the project is under running and anything over $400 shows that the project is overrunning. This is important for the project lead so he is able to determine at any point past or present the financial health of the project. If the project becomes too large and he begins seeing a large over budget project then he needs to either go back to the customer and request more money or time to get the project back on budget.
This paper will analyze how EVM will be used for completing the basement project. In this example the project lead is Daniel
References: Allex, Daniel S (2014). Interview. Kranz, Gordon M (2014). Earned Value Management (EVM) Divison. Office of Assistant Secretary of DOD. http://www.acq.osd.mil/evm/ . Project Management Institute (2008). A Guide to the project management body of knowledge (PMBOK Guide). (4th ed.). Newtown Square, PA: PMI.