Take Control of Your Project with Earned Value Analysis

Summary:So how is your project going? This is a question Project Managers are frequently asked by management and the customer.  One technique often used by Project Managers is to plot on one graph the plan spend curve and the actual cost expenditures curve as shown in Figure 1 below.  The curve looks good, but what can you tell about the health of this project based on this graph?  Is the project team accomplishing the planned work and doing it for less money? Or is the team behind schedule?  The point is this curve does not provide sufficient information to communicate how the project is going! 

Figure 1: What can you tell about the health of this project based on the cost curve?

This article will discuss how to use earned value analysis to report project performance. Earned value (EV) analysis is the most effective method for measuring project performance. It provides an objective measure of work performed in terms of the budget planned for that work.

What we’re going to do in this article is to first explain how to efficiently set-up your project plan so performance reporting can easily be done. Next we’ll explain techniques to measure project progress, which is determining how much work was accomplished.  After that, we’ll walk you through the terminology and simple calculations used for earned value analysis.  We’ll finish by providing some tips on effectively using EV analysis and showing an actual project example.

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Subject Matter Expert: Joseph A. Lukas, PMP®, PE, CCE
Joe Lukas is Vice-President of PMCentersUSA, and leads a team of instructors and consultants in delivering project management and business analysis training and consulting to clients across the country.  Joe has been involved in project management for over 30 years and has worked in engineering, manufacturing, construction, project controls, estimating and contracting, and has been a Program and Project Manager supporting world-wide programs. His project management experience spans information systems, product development, capital construction and manufacturing projects. He is a registered Professional Engineer, Project Management Professional and Certified Cost Engineer.