Earned value management (EVM) compares the work you planned, the work you have done and what it has cost. Together these three numbers show whether a project is ahead or behind, and over or under budget.
The three numbers
- Planned value: the budgeted cost of the work scheduled to date.
- Earned value: the budgeted cost of the work actually completed.
- Actual cost: what the completed work really cost.
From these come two simple indicators: the schedule performance index (earned value divided by planned value) and the cost performance index (earned value divided by actual cost). Below 1.0 means behind or over budget.
Why it helps
EVM turns progress into a leading indicator. Instead of finding out about an overrun at the end, you see the trend early enough to act.