Earned Value Analysis (EVA) is a project management tool that compares the estimated cost of the work that has been done to the real cost of the work that has been done. This shows how far along a project is. Earned Value Management is another name for the EVA method. (EVM).
EVA uses three key measurements: Planned Value (PV), Actual Cost (AC), and Earned Value (EV). (EV). PV is the cost that was expected for the job that was supposed to be done up to a certain point in time. AC is the amount of money that has been spent on that work up to that point. EV is the value of the work that has already been done up to that point.
Here is the method for figuring out these numbers:
PV = Planned percent done times the total budget
AC = The actual cost of the work done
EV = Earned % Completed x Total Budget
For example, if a project has a total price of $100,000 and is 40% done at a certain time, the PV for the project would be $40,000 (40% x $100,000). If the work done up to that point really cost $35,000, the AC would also be $35,000. If the work done up to that point was worth $45,000 (45% of $100,000), the EV would also be $45,000.
EVA lets project managers keep track of how the project is going, find possible problems, and fix them. The project manager can tell if the project is on track, behind plan, or over budget by comparing the PV, AC, and EV. If the PV is higher than the EV, the project is behind schedule. If the AC is bigger than the EV, the project is going to cost more than planned.
EVA can also be used to figure out other project management measures, such as the Cost Performance Index (CPI) and the Schedule Performance Index (SPI), which measure how well costs and schedules are managed. EVA gives you a complete way to keep track of a project’s progress and find problems before they get out of hand.
