Earned value management principles and applications

Project Management and Earned Value Management

Effectively managing complex projects requires an intricate balance of computational skills, prescient preparation, and a keen sense of adaptability when contingencies inevitably occur. The interplay between a project's scope, time, and cost is ever evolving, and this unpredictability presents project managers with an unending stream of data points and ratios through which success or failure can ultimately be determined. One of the most valuable concepts to emerge within the field of modern project management is known as earned value management (EVM), and this formula represents "a project performance measurement technique that integrates scope, time, and cost data" (Schwalbe, 2011). By applying the precise analytical power of EVM to one's specific work breakdown structure (WBS), a project manager can easily begin to decipher the flood of data every major project generates to accurately assess that project's efficiency and effectiveness. The benefits of using EVM practices are manifold, because this technique allows project managers to measure their project's current progress against a predetermined baseline, or "the original project plan plus approved changes" (Schwalbe, 2011). Earned value management "involves calculating three values for each activity or summary activity from a projects WBS & #8230; planned value (budget), actual cost, and earned value" (Schwalbe, 2011), and this flexibility affords project managers with the invaluable ability to apply crucial variances and indexes while generating highly accurate estimates and forecasts. By transforming the wealth of data generated by EVM into immersive charts and graphs, project managers are capable of comprehending the pace and production of their project's in a multitude of beneficial ways, from the estimate at completion (EAC) to the schedule performance index (SPI).

The practices advocated by proponents of EVM can streamline a project from every dimension, because "given a cost performance baseline, project managers and their teams can determine how well the project is meeting scope, time, and cost goals by entering actual information and then comparing it to the baseline" (Schwalbe, 2011). Rather than remaining reliant on original forecasts and project plans, which while devised in good faith have likely been rendered obsolete by unexpected contingencies, project managers equipped with EVM practices can ensure that their predictive analysis is founded on only the most current available data. A general consensus has emerged within the project management research community which holds that "earned value management is an important technique because, when used effectively, it helps top management and project managers evaluate progress and make sound management decisions" (Schwalbe, 2011). Aspiring project managers seeking to secure steady employment, as well as working project managers hoping to improve their performance and refine their processes, are well served to study the theoretical foundations of EVM, because this tool is quickly becoming standardized for Fortune 500 corporations, governmental agencies, and other large organizations tasked with shepherding complex projects. Even those managers working on less demanding projects stand to benefit from applying EVM within the professional setting, because "to make earned value management simpler to use, organizations can modify the level of detail and still reap the benefits of the technique" (Schwalbe, 2011). When the totality of evidence is objectively considered, it becomes quite clear that developing a firm comprehension of EVM techniques has become an essential skill for project managers throughout the commercial, governmental, and public realms.