EVM (Earned Value Management)

Earned Value Management is a Project Management Technique to measure the Project Performance:

Earned Value is a project management technique for estimating how a project is doing in terms of its budget and schedule. The Earned Value is a periodic, consistent, and objective measurement of work performed in terms of the estimated deliverables planned for that work. The purpose of earned value is to obtain an estimate for the resources that will have been used at completion.

Earned Value Management (EVM) is a project control and management work process based on a structured approach to planning, cost collection and project performance measurement that links resource planning to cost and schedule requirements. All work is budgeted and scheduled in time increments incorporating a baseline for cost and schedule measurement. It has the ability to combine measurements of the project management triangle (Scope, Schedule, and Costs). The Earned Value Management is a single integrated system, and also able to provide accurate forecasts of project performance problems, which is an important contribution for project management.

Earned Value Management System (EVMS) is an integrated management system that integrates the work scope, schedule, and cost parameters of a program in a manner that provides objective performance measurement data. It measures progress objectively with earned value metrics; accumulates direct costs; allows for analysis of deviations from plans; facilitates forecasting the achievement of milestones and contract events; provides supporting data for forecasting of estimated costs; and fosters discipline in incorporating changes to the baseline in a timely manner.

Earned Value Management Measures;

PV = BAC * % of Planned Work
EV = BAC * % of Actual Work

CPI (Cost Performance Index): = EV / AC (if CPI > 1 means the Project is under budget)
SPI (Schedule Performance Index): = EV/ PV (if SPI < 1 means the Project is behind schedule)

EAC = BAC / CPI = AC + ETC = AC + ((BAC – EV) / CPI) (note 1, expected similar trend of remaining works) or AC + (BAC – EV) (note 2, expected different trend of remaining works, original plan)
ETC = EAC – AC = (BAC / CPI) – (EV / CPI) = (BAC – EV) / CPI

BCWS / PV: the amount of work to be performed as per the schedule
BCWP / EV: the amount on the actual work performed)
ACWP / AC: the sum of all cost actually accrued for a work

PV (Planed Value): planned complete work at the time of analysis
EV (Earned Value): values accomplished at the time of analysis
BAC (Budget at Completion): total Project Cost
EAC (Estimate at Completion)
ETC (Estimate to Completion)
AC (Actual Cost) – actually spent cost at the time of analysis

Budgeted Cost for Work Scheduled (BCWS)
Budgeted Cost for Work Performed (BCWP)
Actual Cost of Work Performed (ACWP)

CV (Cost Variance) = EV – AC (positive means under budget)
SV (Schedule Variance) = EV – PV (positive means ahead of schedule)
VAC (Variance at Completion) = BAC - EAC

References

Earned Value Management (EVM): Introduced 8 EVM Tutorials