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Introduction to Earned Value Management - EVM Project Planning

June 10, 2008 | Author: admin | Filed under: Cost Management, Project Management Definitions

Introduction to Earned Value Management - EVM Project Planning (#5 in the series Introduction to Earned Value Management)
By Global Knowledge

EVM is all about planning. EVM starts with your existing project plan and then breaks it down into tasks that have individually planned expectations of scope, budget, and time frame. These are then used to build a resource-loaded schedule that relates expenditures to work and time.

Rewards (payments and continued funding of a project) are related to a cumulative measure of performance based on how well tasks are being completed as compared with planned performance. When those expectations are not met, this is a signal for management to investigate.

The Performance Measurement Baseline (PMB) documents expectations for the project based on a schedule that relates the work (scope) and resources (money) to a specific date range. With a PMB, it is possible to compare actual performance to what was planned for specific points in time. The difference between actual and planned performance is then used to forecast probable completion costs and schedule.

While the structure and style will vary according to your organization’s preferences, there are three key components of a PMB:

  • WBS (Work Breakdown Structure): Either a WBS or an equivalent analysis of all project work.
  • Resource-loaded schedule: This is typically a Gantt chart indicating when tasks are to be completed and their associated budget, with milestone markers illustrating control points.
  • Budget graph: Summarizes the timing and magnitude of expenses. At the beginning of a project, the only line on the graph is PV (planned value). As the project progresses, AC (actual cost) and EV (earned value) are included.

This information was drawn from Global Knowledge’s Earned Value Management course.

This article was originally published in Global Knowledge’s Business Brief e-newsletter. Global Knowledge delivers comprehensive hands-on project management, business process, and professional skills training. Visit our online Knowledge Center at www.globalknowledge.com/business for free white papers, webinars, and more.

© Copyright 2008, Global Knowledge. All rights reserved.

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