Earned Value is a technique that clearly shows whether you're getting Value For Money. It is a major component of Best Practice in Project Management. It is mandated in USA and Australia and is being used more and more in the United Kingdom. The technique essentially identifies the value of the useful work done at any given point in time, in all areas and at all levels within the project. By comparison with the original plan, Earned Value can be used to identify other parameters such as time to completion, cost to completion and expected final costs. It also enables project managers to identify those areas of the project that are proceeding well, those that are in trouble and enables percentage progress and performance indices to be calculated.
Earned Value can be used in almost any project situation and in almost any project environment. It may be used on large projects, medium sized projects, tiny projects (in cut-down form), complex and simple projects and in any market sector. Some people, of course, know all about earned value, they have used it for years - but perhaps not as effectively as they could have?
Good project management will produce good Earned Value Data. Poor project management will produce poor Earned Value Data. Skillful interpretation and application of Earned Value information will make a major contribution towards ensuring project success.
What does Earned Value do for you?
It provides simple but powerful answers to many questions such as:
* How much is it really costing us to earn each unit of forecast value?
* How much is going to cost by the finish?
* When is it going to finish?
* Where are we now? Exactly!
* Where are our problem areas?
* How does this compare with other projects?
It will not however guarantee a successful project. Only people can do that.
The Problems Associated with Earned Value
Historically, Earned Value was developed for and used on massive projects, particularly in Defense. This has created the perception that it is hugely complicated. Common criticisms are that it is only good for large defense projects, far too complicated for us, far too costly for us. A common problem with small or non- project oriented organizations is that they do not have internal mechanisms that can collect effort and costs to individual projects or parts of projects. Other problems may be associated with the culture of the organization - not used to reporting meaningful progress information.