Earned Value Management

All projects undertaken by GTE will use EVM at some level to assess project performance and progress. EVM is a project management methodology that combines scope, schedule, and resource measurements to do this.

For a simple crash course on EVM, see this here.

Fundamental to EVM is the establishment of a performance measurement baseline [Baseline]. The cost and schedule baselines for achieving the baseline scope, are formalised in the approved Baseline Project Schedule. Once established, this can only change to reflect cost and schedule impacts arising from changes in the scope of work. This inherently involves explicit acknowledgement and agreement by the client.

In accordance with the PMP, in the process of project control and, EVM credits budgetary earned value [EV] to physical work progress. This earned value is compared to planned value [PV] data from the Baseline and actual cost [AC] data from the cost tracking system at various control accounts on the project WBS.

Planned value describes where the project work is supposed to be at any point in the schedule. Earned value provides the indication on progress in budgetary terms, and actual costs show what level of resources have been expended to get there.

Each of planned and earned value, and actual cost are often reduced to numeric values at various levels of control account, for a reporting (“data”) date however each can be plotted as curves (“S-Curves”) over time to provide a more visual representation of project performance.

To determine earned value, progress measurements are required for the components of the overall work, whether this be at activity level or some higher summary level. This percentage of total progress is multiplied by the budget for the component work to determine “earn”. The methods used by GTE for determining progress for activities are covered in Section X.

The three values (PV, EV, and AC) can be compared at any data date to produce several useful metrics. The following core metrics are used at GTE to manage projects:

Metric	Abbr..	Formula	Purpose
Schedule Variance	SV	= EV - PV	Are we ahead or behind schedule?
Schedule Variance %	SV%	= SV / PV
Cost Variance	CV	= EV - AC	How are our costs tracking?
Cost Variance %	CV%	= CV / PV
Schedule Performance Index	SPI	= EV / PV	How efficiently are we using time?
Cost Performance Index	CPI	= EV / AC	How efficiently are we using our resources?
To-Complete Performance Index	TCPI	= (BAC - EV) / (BAC - AC)	How efficiently do we need to use our remaining resources?