When you are new to project management, terminology can be tricky. Here we look at Earned Value and give a basic overview of its meaning.
As a project management beginner, there are so many words and methods around to learn it can be overwhelming. One great thing you can do to make it easier, is to get a brief understanding of everything new you hear, so you start to get a basic understanding of the jargon you’re no doubt trying to get your head around all the time. Earned Value in project management is a common term you will hear which sounds highly mathematical and complicated, but it is actually really simple.
It is a complex trend analysis, but to simplify what it does, it is basically a really accurate way to see if a project is staying on track. So the best way to see how the project is going to perform is to see how it is performing now using trend data so you can see how much chance there is of the project overrunning. The best way to do this is with the Earned Value approach/ method.
As you would learn on any of the basic project management courses, using Earned Value you observe the project plan, taking into account what work that has been done and how valuable that work is in order to see that the project is staying on track. The Earned Value will show you that completion in relation to the budget and timelines so you can see how much of the resources have been used, to see if that matches what should have been used.
So you can define it in many different ways, but it all comes down to the same thing. The amount of work that has actually been completed, that you can see physical evidence of, is measured to check the project is on track and if it isn’t, how far off track has it gone.
Some people can confused Earned Value with comparing the costs to date and general budget, but they are completely different because Earned Value relates to the whole project, not just the money, and it enables predictions of overruns and possible overspends.
When using Earned Value the project manager must first commit to the project scope and do thorough project planning to take into account schedule, planned, value, budgeting, variance plan etc.
Once the project has completed to a certain stage, the PM can then use Earned Value as a clear, objective method of measuring the performance and looking ahead at the future of the project based on what has happened so far. It is a great tool because the PM can move forward confidently knowing they are able to adapt the project to ‘change its fate’ because of this way to essentially look into the future of the project.
Want To Know More?
Earned Value is an amazing tool for project managers to have, and beginners will do well to understand how it works and use it to influence project outcomes. Project management training courses are an excellent way to get a detailed knowledge of methods like Earned Value. They can often be completed online, which means you do them in your own time and at your own pace.