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Earned Value Analysis – Earned Value Management

Earned Value Management is a smart tool for project management thanks to which you can find out how is your project standing with a single look. You can compare the plan, reality and the project completion status.

These values are being compared continuously and that is the reason why we can see not only the actual state of the project but also the trends. So you can evaluate if the project can be finished in time for the given amount of money.
EVM chart can be seen at every single project, values in it are being formed automatically based on the filled in project’s plan.

You can use EVM at any project’s realization with the option of monitoring trends which is invaluable tool at the projects with longer time horizon.

EVM chart can be found on every project’s overview. Graph curves will start to create automatically at planning and realization stages of the project.

Contents

Why should you be using the Earned Value Analysis?

  • You have immediate comparison of the plan, reality and project’s completion status.
  • You are comparing the project from the viewpoint of the trend not only the summary of values.
  • EVM chart is created automatically, there is no need to fill any complicated forms.
  • Using the EVM analysis makes it easier to control the budget and deadlines of the project.
  • EVM chart can be displayed in monetary value or percentage.

Earned Value Management (EVM), or Earned Value Analysis is a smart tool which will allow you to compare what has been done on the project and how much did it cost with what was planned to be done in the given time-frame. Because of the fact that comparison can be seen on timeline, at more long term projects you can watch trends to see where is your project headed. Thanks to that you are able to reveal the problems in time and you can intervene.

Earned Value Analysis can be seen in Navigo as a chart which is being displayed on the project’s overview. Throughout the planning and during the realization of the project three curves will be created in this chart, which display the plan, reality and earned value of the project.

In the chart you can see the curves which will be created automatically from the data filled in to the Navigo during the planing and management of the project.

At which projects will you use EVM?

EVM chart is created automatically when you fill in the data at the project’s planning and realization in Navigo, so it is always at your disposal. You will use it mainly at the long term projects where it is necessary you need to watch the trends. Progress of the long term projects can be monitored in months, at the short term projects it can be set to redraw the chart based on weeks.

How to work with EVM

As soon as you fill in the budget, time-frame, start and finish in the project’s plan, these parameters will automatically transfer to X and Y axis of the chart in project’s plan. You will see the time-frame and the planned start and finish of the project on the horizontal axis. On the vertical axis, we can see finances, planned price of the project and its predicted costs. The space between these two lines represents your profit.

Graph curves should ideally be somewhere in the field which is coloured green for illustration.

Here are the coloured fields in which the graph curves can be displayed. It is ideal to stay in green which signalizes that you are on schedule and also did not overstep your budget. By missing a deadline the graph curves of earned value and real costs will get into the red zone with clocks. If it tilts into the orange field, you decrease your profit, you can see the financial losses in the upper red field. Worst case scenario is the situation where you miss the deadline and overspend at the same time. Red field with a skull means a real failure of the project. In the EVM chart right in Navigo the fields are not coloured, it is only for better understanding.

Display of graph curves in EVM chart

Individual EVM graph curves are being created automatically based on how you plan and realize the project. There is no need to fill in anything here. Curves source of information are the data you insert into Navigo on a regular basis while planning and realizing the project. Every curve is made from its own informational sources and is not dependent on the other two curves which ensures the precise final image which will serve you for comparison of individual values.

Planned value curve

This curve appears as soon as on projects’ planning. It is being created based on the fact that we enter the information about the subcontracts, types of work and allocations into the project. Through all these actions this curve grows and you can see the whole plan of costs.
Shape of the planned value curve is in the case of entering allocations and subcontracts being formed base don their data in the projects’ plan. At the plan of types of work the curve is being spread evenly between the marked begining and finish of the project.
A situation can occur, where you do not have its finish planned. Then the plan of types of work will take the shape of steep curve in the first temporal segment of the chart. If you do not mark the date of subcontract or allocation, curve will spread evenly from the begining to the finish of the project.

Planned value curve can be hidden if needed, you will use this at the moment when you will want to compare mostly the real costs with the earned value.

Real costs curve

Curve named Real costs will begin to form thanks to the continuous filling of reports of work by your employees, based on received invoices and by filling in the items of register. So the curve grows based on the amount of issued finances.

Because in the case of subcontracts – to the contrary from the works performed by employees – it is not entirely possible to control the continuity of work, the curve, thanks to the subcontracts, has a tendency to do “jumps” which can make evaluation of the project more difficult. For this reason, at the basic EVM settings, you are able to decide to monitor the progress of the project without the subcontracts and you can focus on the internal work only. You watch the project completion status just through your own work.

Earned value curve

This curve displays how much of the projects’ work is already done at given time. It is being calculated from project completion status which is being filled in the plan of the project. This value can never be more than 100% and that is why the value calculated from it can never exceed the plan of costs. Project completion status is displayed in percentage. It is wise to enter it regularly, at long-term projects once a month, at short-term ones once a week.

What can we learn from the EVM chart?

Evaluation of the project based on the EVM chart is very easy and can provide numerous sets of valuable information. Here, we will introduce the basic comparison, nonetheless you will see for yourself that current situation and trends can be deducted from the chart completely intuitively.

Comparison of earned value and real costs graph curves

Comparison of real costs of the project and earned value is one of the best indicators of the progress of the project.

Earned value is moving together with the real costs curve, project is progressing correctly.

Earned value curve should optimally move together with the curve for the real costs or above it. When the earned value curve is rising slowly, project is being delayed. If the real costs curve will exceed the planned or earned value, project is entering a loss.

Real costs curve is above the earned value, project is in troubles.
Earned value curve is above the real costs, your profit will be higher.

Comparison of earned value and planned value graph curves

Earned value curve should move similarly as the curve for planned value. If the curve for earned value moves high above the planned value, it means that you have been too pessimistic during the planing stage. Result of this can be that your employees finished the work faster and there is a risk of not having any work for them.

If the curve of earned value will get below the planned value, it means that you underestimated the project during the planning and the realization requires more effort to finish.

Other comparisons

There is plenty of information which can be read from these graph curves. For example you can monitor the curve of real costs so it does not exceed the curve of planned value, ideally it should stay slightly below it. Then you have the certainty that all the expended costs of the project are lower or similar as you have planned. If the real costs curve is above the planned value, the costs of project are exceeded. If the curve of real costs is deeply below the planned value, it usually signals problems with the projects’ management and it is also a warning signal.

Display of reported hours

You can display the amount of hours reported by employees if you wish to. On the first page of the chart you will notice the diagonal axis, reported hours can then be seen in columns.

On the right side of the chart you can display the amount of hours, reported hours will display as gray columns.

EVM authorization

At the EVM you can set authorizations for who can see the chart based on the openness of your company. Project completion status is then seen by the right people in percentage which will help them to imagine the status of costs of the project. Financial information remain hidden.

This setting can be edited after the click on the gear at the upper right, system settings and sharing information.

EVM and other Navigo tools

EVM chart can be found at every project or element of WBS, you can use it independently for monitoring the project completion status or together with the thermometer diagrams and Gantt chart. Thanks to that you will have all your projects entirely under control.