Earned Value Management
Earned Value Management is a smart project management tool that lets you know at a glance where your project stands. You can compare the plan, the reality and the completion status of the project.
These values are compared continuously over time, so you can see not only the current status of the project, but also trends. So you can assess whether you can complete the project on time and for the planned amount of money at a certain point in time.
You can see the value achieved analysis graph for each project, the curves on it are created automatically based on the completion of the project plan and during the project implementation.
EVM can be used for any project, and is an indispensable tool for projects with longer timelines, given its ability to track trends.
Contents
Why use Earned Value Managementt?
Which types of projects make use of EVM?
How to work with EVM
Curve display in the EVM graph
What can we read from the EVM chart?
Comparison of Earned Value and Actual Cost curves
Comparison of Earned Value and Planned Value curves
Further comparison
Display of reported hours
EVM permissions
EVM and other Navigo tools
Eearned Value Management (EVM) is a smart tool that allows you to compare what you’ve already done on a project and how much it cost you with what you were scheduled to have done in a specific amount of time. Because you can see this comparison on a timeline, for longer-term projects, you can see trends of where the project is going as it is being implemented. That way, you can detect problems early and take action.
The Earned Value Management chart can be found on the overview of each project. The curves get formed automatically when the project is planned and implemented.
Why use Eearned Value Management?
- You have an instant comparison of plan, reality and project completion status.
- You are comparing the project in terms of a trend, not just the sum of the values.
- The EVM chart is created automatically, you don’t have to fill in anything complicated.
- The use of the analysis of earned values facilitates the control of the project budget and deadlines.
- The EVM chart can be displayed in money or as a percentage.
You can see the analysis of the earned value in Navigo as a graph that is displayed on the project overview. During the planning and execution of the project, three curves are automatically created in this chart to show the plan, reality and achieved value of the project.
Which types of projects make use of EVM?
The EVM chart is created automatically in Navigo when you fill in the project plan and execute it, so it is always available to you. You will use it especially for longer-term projects where you need to monitor trends. You can track the development of long-term projects by month, while for shorter-term projects you can set the chart to be plotted by week.
How to work with EVM
Once you have filled in the budget, project scope, start and end dates in the project plan, these parameters are automatically transferred to the horizontal and vertical axis of the graph in the project plan. On the horizontal axis, you will see the project’s time scope and its planned start and end. The vertical axis shows the money, the projected cost of the project and its estimated cost. The space between these two lines indicates your profit.
Here are the colored boxes in which the curves in your chart can move. Ideally, they should be kept within the green space, which means you’re both on time and on budget. Delaying the deadline will put your achieved value and actual cost curves in the red box with the clock. If they go into the orange box you reduce your profit, in the upper red box you go into financial loss. The worst-case scenario is when both deadline and budget overruns occur simultaneously; a red box with a skull indicates a project failure. In the chart of Earned Value Manageement directly in Navigo, the fields are not colored, this is an illustrative example.
Curve display in the EVM graph
The individual curves in the EVM chart are created automatically based on how you plan and execute the project. You do not need to fill in anything here. The curves use the information you normally enter into Navigo when planning and executing a project. Each curve is generated from its own information sources and does not depend on the other two curves, which guarantees the accuracy of the resulting image that you will use for comparing individual values.
Planned Value curve
This curve starts to form during project planning. It is created by entering information about subcontracts, work types and allocations into the project plan. All of this makes the cost curve grow and you can see what the whole cost plan is.
The shape of the planned value curve is plotted based on the date in the project plan when entering allocations and subcontracts, but for the work type plan the curve is spread evenly between the marked start and end of the project.
It may be that you do not have a planned end for a project. Then the work type schedule is plotted as a steep curve in the first time period of the graph. If you do not mark a date for a subcontract or allocation, the curve will be spread evenly on the graph from the beginning to the end of the project.
The Projected Value curve can be hidden if required, for use when you want to compare actual costs with the achieved value.
Actual Costs curve
The curve labeled Actual Costs will begin to form as your employees continuously fill out timesheets, based on invoices received and cash register entries. The curve therefore rises depending on the amount of money spent.
Because in the case of subcontracting – unlike work carried out by employees – it is not possible to have full control over the continuity of work, the curve tends to make “jumps” due to subcontracting, which can make it difficult to evaluate the overall project implementation. For this reason, in a basic EVM setup, you can choose to follow the development of the project without subcontracting and focus only on internal work. You can then monitor the completion status only by your own work.
Earned Value curve
This curve shows how much work you have done on a project at any given time. It is calculated from the project completion status that you enter in the project plan. This value can never be greater than 100 % and therefore the achieved value calculated from it can never exceed the cost plan. Project completion status is expressed as a percentage. It is advisable to enter it regularly, once a month for longer-term projects and once a week for short-term projects.
What can we read from the EVM chart?
Evaluating the progress of a project based on the EVM chart is very simple and gives you a lot of information. Here we will present a basic comparison, but you will see that you can intuitively deduce the current situation and trends of the project from the graph.
Comparison of Earned Value and Actual Cost curves
The comparison of the actual project cost and the earned value is one of the most important indicators of project development.
The earned value curve should optimally be at or above the actual cost curve. When the earned value curve rises slowly, the project is delayed. If the actual cost curve exceeds the planned or achieved value, the project goes into loss.
Comparison of Earned Value and Planned Value curves
The earned value curve should have moved similarly to the projected value curve. If the earned value curve is high above the planned value, it means that you were too pessimistic when planning the project. The consequence of this may be that your employees get the job done faster and you risk not having work for them at the moment.
If the earned value curve falls below the planned value, it means that you have underestimated the project during planning and that the project has higher completion requirements.
Further comparison
There is a number of other possibilities of what can be learned from a comparison of the individual curves. For example, you can make sure that the actual cost curve does not exceed the planned value curve, ideally it should remain slightly below it. Then you can be sure that the project costs incurred are lower or similar to what you planned. If the actual cost curve is above the planned value curve, then the project costs are overrun. But it is also a warning sign if the actual cost curve is well below the planned value, usually indicating problems with project management.
Display of reported hours
Optionally, you can view the number of hours worked by employees in the chart. On the right side of the chart, the vertical axis of hours appears and you can see the reported hours in the columns.
EVM permissions
With EVM, you can set permissions on who can see the chart depending on how open your company is. Authorized people then see the status of the project expressed as a percentage, which helps them to get an idea of the project’s cost status. Financial information remains hidden.
To adjust these settings, click on the gear at the top right, System Settings and Information Sharing.
EVM and other Navigo tools
The EVM chart can be found for each project and WBS element, and can be used alone to track project status or in conjunction with gauges and Gantt charts. This puts you in complete control of your projects.