An earned value management template is a project management methodology that is used to measure project performance and progress. The progress of a project is measured with respect to cost. It has the capability to include the management triangle i.e. scope, time, and cost. In addition, it delivers exact estimates of project performance problems in one integrated frame. So, this single integrated frame is an important addition to project management.
Above all, it assists the project managers to determine the problems early on as well as forecast the cost of a project. You may also like Risk Management Plan Template.
How does earned value management work?
Working of earned value management based on three concepts such as;
- Planned value
- Earned value
- Actual value.
The main benefit of it is that it enables you to compare progress and performance.
Generally, planned value is the budgeted cost for the work assigned. This value depends on the scope of the work in consideration and also the point where you are at in the whole schedule. The formula to calculate the PV value is given as;
PV= (total project cost) * (%of planned work)
In earned value management, earned value is the value of the work actually complete. The formula to calculate earned value is given as;
EV= (total project cost) * (% of actual work)
There are three conditions in earned value;
- If the planned value and earned value are equal i.e. PV=EV, then the project is on schedule.
- If a planned value is greater than the earned value i.e. PV>EV, then the project is behind the schedule.
- If a planned value is less than the earned value i.e. PV<EV, then the project value is ahead of schedule.
The actual cost is the total cost actually expended at a particular time in the schedule. Hence, there is no formula to calculate it as it is the actual cost of the task.
Furthermore, there are two more calculations that are variance analysis and performance indexes. You should also check the Project Management Timeline Template.
PV, EV, and AC are basics to variance calculations. Variance analysis can be identified via schedule and cost variance.
- Schedule variance: SV is given as;
SV = EV – PV
However, positive SV shows you are ahead of schedule and negative SV shows you are behind the schedule. And, zero indicates you are exactly on schedule.
- Cost Variance: CV is given as;
CV = EV – AC
So, a positive CV shows you are under budget, a negative CV shows you are over budget, and zero means you are exactly on budget.
Here are two parameters that are schedule and cost performance index.
- Schedule performance index: SPI is given as;
Hence, if SPI<1 the activity is behind the schedule, SPI>1 ahead of schedule, and SPI=1 on the schedule.
- Cost performance index: CPI is given as;
CPI = EV/AC
If CPI>1 the project is under budget and CPI<1 the project is over budget. You may also see Stock Maintain Template.
Earned Value Management Template
Earned Value Analysis Template Excel
What are the fundamentals of Earned value management?
There are 5 fundamentals of earned value management such as;
- Organization and scope of the project
- Strategy, scheduling, and budgeting
- Actual costs accounting
- Inspecting and reporting on project performance
- Revision and facts maintenance
In conclusion, the earned value management template is the best technique for project forecasting in mature organizations. It facilitates communication and can upgrade confidence in the contractor’s ability to handle a project.