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47-523: (Redirected from EVMs ) EVM may refer to: Earned value management in project management Electronic voting machine EnviroMission , an Australian energy company Error vector magnitude , measure of radio transmission/reception Estonian Open Air Museum (Estonian: Eesti Vabaõhumuuseum ) Ethereum Virtual Machine , a blockchain computer architecture Ethnoveterinary medicine Environmental science , academic field Topics referred to by

94-457: A l % C o m p l e t e {\textstyle {\begin{aligned}\mathrm {EV} &=\sum _{\mathrm {Start} }^{\mathrm {Current} }\mathrm {PV(Completed)} \quad \mathrm {or} \quad \mathrm {EV} =\mathrm {budget\,at\,Completion\,(BAC)} \times \mathrm {Actual\%\,Complete} \end{aligned}}} EV is calculated by multiplying %complete of each task (completed or in progress) by its planned value Figure 2 shows

141-406: A Public Works Magazine article by David Burstein, a project manager with a national engineering firm. In the late 1980s and early 1990s, EVM emerged more widely as a project management methodology to be understood and used by managers and executives, not just EVM specialists. Many industrialized nations also began to utilize EVM in their own procurement programs. An overview of EVM was included in

188-489: A WBS hierarchy (or the items in a list) are called work packages. Work packages are then often devolved further in the project schedule into tasks or activities. The second step is to assign a value, called planned value (PV), to each work package. For large projects, PV is almost always an allocation of the total project budget, and may be in units of currency (e.g. dollar, euro or naira) or in labor hours, or both. However, in very simple projects, each activity may be assigned

235-486: A business will: Financial analysts often assess the following elements of a firm: Both 2 and 3 are based on the company's balance sheet , which indicates the financial condition of a business as of a given point in time. Financial analysts often compare financial ratios (of solvency , profitability , growth, etc.): Comparing financial ratios is merely one way of conducting financial analysis. Financial analysts can also use percentage analysis which involves reducing

282-478: A common and reasonable occurrence in many very small or simple projects. Any project can benefit from using EV alone as a real-time score of progress. One useful result of this very simple approach (without schedule models and actual cost accumulation) is to compare EV curves of similar projects, as illustrated in Figure 5 . In this example, the progress of three residential construction projects are compared by aligning

329-635: A sector in which its importance continues to rise (e.g. recent new DFARS rules ), in part because EVM can also surface in and help substantiate contract disputes. Essential features of any EVM implementation include: EVM implementations for large or complex projects include many more features, such as indicators and forecasts of cost performance (over budget or under budget) and schedule performance (behind schedule or ahead of schedule). Large projects usually need to use quantitative forecasts associated with earned value management. Although deliverables in these large projects can use adaptive development methods,

376-465: A series of figures as a percentage of some base amount. For example, a group of items can be expressed as a percentage of net income. When proportionate changes in the same figure over a given time period expressed as a percentage is known as horizontal analysis. Vertical or common-size analysis reduces all items on a statement to a "common size" as a percentage of some base value which assists in comparability with other companies of different sizes. As

423-463: A true understanding of cost performance and schedule performance relies first on measuring technical performance objectively. This is the foundational principle of EVM. The foundational principle of EVM, mentioned above, does not depend on the size or complexity of the project. However, the implementations of EVM can vary significantly depending on the circumstances. In many cases, organizations establish an all-or-nothing threshold; projects above

470-419: A weighted "point value" which might not be a budget number. Assigning weighted values and achieving consensus on all PV quantities yields an important benefit of EVM, because it exposes misunderstandings and miscommunications about the scope of the project, and resolving these differences should always occur as early as possible. Some terminal elements can not be known (planned) in great detail in advance, and that

517-467: Is an important aspect of project management. Early EVM research showed that the areas of planning and control are significantly impacted by its use; and similarly, using the methodology improves both scope definition as well as the analysis of overall project performance . More recent research studies have shown that the principles of EVM are positive predictors of project success. The popularity of EVM has grown in recent years beyond government contracting,

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564-463: Is different from Wikidata All article disambiguation pages All disambiguation pages Earned value management Earned value management is a project management technique for measuring project performance and progress. It has the ability to combine measurements of the project management triangle : scope , time, and costs. In a single integrated system , EVM is able to provide accurate forecasts of project performance problems, which

611-419: Is expected, because they can be further refined at a later time. The third step is to define "earning rules" for each work package. The simplest method is to apply just one earning rule, such as the 0/100 rule, to all activities. Using the 0/100 rule, no credit is earned for an element of work until it is finished. A related rule is called the 50/50 rule, which means 50% credit is earned when an element of work

658-708: Is favorable (under budget). CPI that is less than 1 means that the cost of completing the work is higher than planned (bad). Financial analysis Financial analysis (also known as financial statement analysis , accounting analysis , or analysis of finance ) refers to an assessment of the viability, stability, and profitability of a business , sub-business or project . It is performed by professionals who prepare reports using ratios and other techniques, that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions. Financial analysis may determine if

705-565: Is good (under budget). According to the PMBOK (7th edition) by the Project Management Institute (PMI), Cost performance index is a "measure of the cost efficiency of budgeted resources expressed at the ratio of earned value to actual cost." C P I = E V A C {\displaystyle {\begin{aligned}CPI={EV \over AC}\end{aligned}}} CPI greater than 1

752-493: Is helpful to see an example of project tracking that does not include earned value performance management. Consider a project that has been planned in detail, including a time-phased spend plan for all elements of work. Figure 1 shows the cumulative budget (cost) for this project as a function of time (the blue line, labeled PV). It also shows the cumulative actual cost of the project (red line, labeled AC) through week 8. To those unfamiliar with EVM, it might appear that this project

799-674: Is made. The Value of Work Done (VOWD) is mainly used in Oil & Gas and is similar to the Actual Cost in EVM. E V = ∑ S t a r t C u r r e n t P V ( C o m p l e t e d ) o r E V = b u d g e t a t C o m p l e t i o n ( B A C ) × A c t u

846-732: Is significantly over budget and behind schedule. A method is needed to measure technical performance objectively and quantitatively, and that is what EVM accomplishes. Progress can be measured using a measurement sheet and employing various techniques including milestones, weighted steps, value of work done, physical percent complete, earned value, Level of Effort, earn as planned, and more. Progress can be tracked based on any measure – cost, hours, quantities, schedule, directly input percent complete, and more. Progress can be assessed using fundamental earned value calculations and variance analysis (Planned Cost, Actual Cost, and Earned Value); these calculations can determine where project performance currently

893-521: Is started, and the remaining 50% is earned upon completion. Other fixed earning rules such as a 25/75 rule or 20/80 rule are gaining favor, because they assign more weight to finishing work than for starting it, but they also motivate the project team to identify when an element of work is started, which can improve awareness of work-in-progress. These simple earning rules work well for small or simple projects because generally, each activity tends to be fairly short in duration. These initial three steps define

940-654: Is the ANSI/EIA-748A standard, published in May 1998 and reaffirmed in August 2002. The standard defines 32 criteria for full-featured EVM system compliance. As of the year 2007, a draft of ANSI/EIA-748B, a revision to the original is available from ANSI. Other countries have established similar standards. In addition to using BCWS and BCWP, implementations often use the term actual cost of work performed (ACWP) instead of AC. Additional acronyms and formulas include: According to

987-491: Is the intersection of the project WBS and the organizational breakdown structure (OBS). Control accounts are assigned to Control Account Managers (CAMs). Large projects require more elaborate processes for controlling baseline revisions, more thorough integration with subcontractor EVM systems, and more elaborate management of procured materials. In the United States, the primary standard for full-featured EVM systems

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1034-469: Is to define the work. This is typically done in a hierarchical arrangement called a work breakdown structure (WBS), although the simplest projects may use a simple list of tasks. In either case, it is important that the WBS or list be comprehensive. It is also important that the elements be mutually exclusive , so that work is easily categorized into one and only one element of work. The most detailed elements of

1081-488: Is using the estimated project baseline's cost and schedule information. Consider the same project, except this time the project plan includes pre-defined methods of quantifying the accomplishment of work. At the end of each week, the project manager identifies every detailed element of work that has been completed, and sums the EV for each of these completed elements. Earned value may be accumulated monthly, weekly, or as progress

1128-449: Is when cost data are available) only detracts from a primary benefit of using EVM, which is to create a technical performance scoreboard for the project team. In a lightweight implementation such as described here, the project manager has not accumulated cost nor defined a detailed project schedule network (i.e. using a critical path or critical chain methodology). While such omissions are inappropriate for managing large projects, they are

1175-598: The DoD established a criterion-based approach, using a set of 35 criteria, called the Cost/Schedule Control Systems Criteria (C/SCSC). In the 1970s and early 1980s, a subculture of C/SCSC analysis grew, but the technique was often ignored or even actively resisted by project managers in both government and industry. C/SCSC was often considered a financial control tool that could be delegated to analytical specialists. In 1989, EVM leadership

1222-452: The PMBOK (7th edition) by the Project Management Institute (PMI), Budget at Completion (BAC) is the "sum of all budgets established for the work to be performed." It is the total planned value (PV or BCWS) at the end of the project. If a project has a management reserve (MR), it is typically not included in the BAC, and respectively, in the performance measurement baseline. According to

1269-485: The PMBOK (7th edition) by the Project Management Institute (PMI), Cost variance (CV) is a "The amount of budget deficit or surplus at a given point in time, expressed as the difference between the earned value and the actual cost." Cost variance compares the estimated cost of a deliverable with the actual cost. C V = E V − A C {\displaystyle {\begin{aligned}CV=EV-AC\end{aligned}}} CV greater than 0

1316-492: The Project Management Institute (PMI)'s first Project Management Body of Knowledge (PMBOK) Guide in 1987 and was expanded in subsequent editions. In the most recent edition of the PMBOK guide, EVM is listed among the general tools and techniques for processes to control project costs. The construction industry was an early commercial adopter of EVM. Closer integration of EVM with the practice of project management accelerated in

1363-689: The Sarbanes–Oxley Act of 2002. In Australia, EVM has been codified as the standards AS 4817-2003 and AS 4817–2006. The EVM concept took root in the United States Department of Defense in the 1960s. The original concept was called the Program Evaluation and Review Technique , but it was considered overly burdensome and not very adaptable by contractors whom were mandated to use it, and many variations of it began to proliferate among various procurement programs. In 1967,

1410-636: The 1990s. In 1999, the Performance Management Association merged with the PMI to become its first college, the College of Performance Management (CPM). The United States Office of Management and Budget began to mandate the use of EVM across all government agencies, and, for the first time, for certain internally managed projects (not just for contractors). EVM also received greater attention by publicly traded companies in response to

1457-468: The EV curve (in green) along with the PV curve from Figure 1. The chart indicates that technical performance (i.e. progress) started more rapidly than planned, but slowed significantly and fell behind schedule at week 7 and 8. This chart illustrates the schedule performance aspect of EVM. It is complementary to critical path or critical chain schedule management. Figure 3 shows the same EV curve (green) with

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1504-548: The acquisition reform movement, but became strongly associated with the acquisition reform movement itself. Most notably, from 1995 to 1998, ownership of EVM criteria (reduced to 32) was transferred to industry by adoption of ANSI EIA 748-A standard. The use of EVM has expanded beyond the U.S. Department of Defense. It was adopted by the National Aeronautics and Space Administration , the United States Department of Energy and other technology-related agencies. It

1551-535: The actual cost data from Figure 1 (in red). It can be seen that the project was actually under budget, relative to the amount of work accomplished, since the start of the project. This is a much better conclusion than might be derived from Figure 1. Figure 4 shows all three curves together – which is a typical EVM line chart. The best way to read these three-line charts is to identify the EV curve first, then compare it to PV (for schedule performance) and AC (for cost performance). It can be seen from this illustration that

1598-441: The contribution of EVM to project success suggests a moderately strong positive relationship. Implementations of EVM can be scaled to fit projects of all sizes and complexities. The genesis of EVM occurred in industrial manufacturing at the turn of the 20th century, based largely on the principle of "earned time" popularized by Frank and Lillian Gilbreth . In 1979, EVM was introduced to the architecture and engineering industry in

1645-434: The current critical path ahead of schedule, which is in fact the only way for a project to get ahead of schedule. In addition to managing technical and schedule performance, large and complex projects require cost performance to be monitored and reviewed at regular intervals. To measure cost performance, planned value (BCWS) and earned value (BCWP) must be in the same currency units as actual costs. In large implementations,

1692-450: The distorting aspect of float would be eliminated. There would be no benefit to performing a non-critical activity with many floats until it is due in proper sequence. Also, an activity would not generate a negative schedule variance until it had used up its float. Under this method, one way of gaming the schedule metrics would be eliminated. The only way of generating a positive schedule variance (or SPI over 1.0) would be by completing work on

1739-414: The first six months. If now, six months after the start of the project, a project manager reports that he has spent 50% of the budget, one may presume that the project is perfectly on plan. However, in reality the provided information is not sufficient to come to such a conclusion. The project can spend 50% of the budget, whilst finishing only 25% of the work, which would mean the project is not doing well; or

1786-410: The forecasting metrics found in earned value management are mostly used in projects using the predictive approach. However, the most basic requirement of an EVM system is that it quantifies progress using PV and EV. Project A has been approved for a duration of one year and with a budget. It was also planned that the project spends 50% of the approved budget and expects 50% of the work to be complete in

1833-481: The minimal amount of planning for simplified EVM. The final step is to execute the project according to the plan and measure progress. When activities are started or finished, EV is accumulated according to the earning rule. This is typically done at regular intervals (e.g. weekly or monthly), but there is no reason why EV cannot be accumulated in near real-time, when work elements are started/completed. In fact, waiting to update EV only once per month (simply because that

1880-440: The planned value curve is commonly called a Performance Measurement Baseline (PMB) and may be arranged in control accounts, summary-level planning packages, planning packages and work packages. In large projects, establishing control accounts is the primary method of delegating responsibility and authority to various parts of the performing organization. Control accounts are cells of a responsibility assignment (RACI) matrix , which

1927-548: The potential to dwarf the impact of performing small budget critical path activities. This can lead to gaming the SV and Schedule Performance Index (SPI) metrics by ignoring critical path activities in favor of big-budget activities that may have more float. This can sometimes even lead to performing activities out-of-sequence just to improve the schedule tracking metrics, which can cause major problems with quality. A simple two-step process has been suggested to fix this: In this way,

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1974-559: The project can spend 50% of the budget, whilst completing 75% of the work, which would mean that project is doing better than planned. EVM is meant to address such and similar issues. EVM emerged as a financial analysis specialty in United States government programs in the 1960s, with the government requiring contractors to implement an EVM system (EVMS). It has since become a significant branch of project management and cost engineering . Project management research investigating

2021-451: The same term [REDACTED] This disambiguation page lists articles associated with the title EVM . If an internal link led you here, you may wish to change the link to point directly to the intended article. Retrieved from " https://en.wikipedia.org/w/index.php?title=EVM&oldid=1211413607 " Category : Disambiguation pages Hidden categories: Articles containing Estonian-language text Short description

2068-411: The starting dates. If these three home construction projects were measured with the same PV valuations, the relative schedule performance of the projects can be easily compared. The actual critical path is ultimately the determining factor of every project's duration. Because earned value schedule metrics take no account of critical path data, big budget activities that are not on the critical path have

2115-629: The threshold require a full-featured (complex) EVM system and projects below the threshold are exempted. Another approach that is gaining favor is to scale EVM implementation according to the project at hand and skill level of the project team. There are many more small and simple projects than there are large and complex ones, yet historically only the largest and most complex have enjoyed the benefits of EVM. Still, lightweight implementations of EVM are achievable by any person who has basic spreadsheet skills. In fact, spreadsheet implementations are an excellent way to learn basic EVM skills. The first step

2162-594: Was elevated to the Undersecretary of Defense for Acquisition , thus making EVM an element of program management and procurement. In 1991, Secretary of Defense Dick Cheney canceled the Navy A-12 Avenger II Program because of performance problems detected by EVM. This demonstrated that EVM mattered to secretary-level leadership. In the 1990s, many U.S. Government regulations were eliminated or streamlined. However, EVM not only survived

2209-410: Was over budget through week 4 and then under budget from week 6 through week 8. However, what is missing from this chart is any understanding of how much work has been accomplished during the project. If the project was actually completed at week 8, then the project would actually be well under budget and well ahead of schedule. If, on the other hand, the project is only 10% complete at week 8, the project

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