What is the Earned Value Definition?

Simply put, the earned value is a way you have to see whether your project is on track both in terms of time and budget, considering what you have done so far.

According to the earned value theory, the best indicator of the future performance is the current performance. So, by using trend data, you’ll be able to easily forecast both the time and costs of the project in an early stage.


As you can see, the earned value can be a very important factor to consider when you’re managing a project. And this is how the earned value management process appeared.

The earned value management concept is much more than simply a technique or a process. It combines a series of guidelines that you need to meet. Here are the earned value management goals:

– it needs to relate the budget to each tasks that needs to be made;

– it needs to analyze whether the work progress is going for or against the initial plan;

– it needs to relate the cost, schedule, and technical performance;

– it needs to provide with auditable information or data, in a timely and valid way, so that the project manager can take action when needed;

– it needs to give managers the right information in a concise way for effective decision making.

When a company decides to us the earned value management analysis, this brings advantages not only to the company itself as well as to the customers. In the company side, the project manager will have much more control over the project which will allow him to be more proactive. This will make sure that the deadlines are always met, in terms of project schedule, analysis, cost, and technical objectives. In what regards to the customers, their benefits are also extensive. Since the project manager will be more in control of everything that is happening during the project implementation, customers will benefit from getting products with quality, on-time, and on budget.

What About the Earned Valued Management Guidelines?

These guidelines are divided into 5 different sections:

#1: Organization

This first section concerns with the organization of the work. You, as the project manager, will need to determine the work breakdown structure (WBS). This means that you’ll need to establish each task in detail and in what concerns to each product that you will deliver. Another important factor that needs to be mentioned is the person responsible for the work effort (schedule, budget, and scope), who is the CAM (Control Manager Account).

The organization of the work allows that all the processes – planning, budgeting, scheduling, cost accumulation, and work authorization -, are fully integrated and working perfectly.

#2: Planning, Scheduling, and Budgeting

The earned value analysis needs to have into consideration the planning, scheduling, and budgeting for each task. All the three factors depend on and are related to each other. For example, the project roadmap that makes sure it meets the objectives is the integrated master schedule. This schedule needs to take into account the budget for work as it has been established. This is made on a monthly basis for each task.

However, most projects begin with a certain level of uncertainty. So, the project manager usually has a management reserve (MR), a portion of the project that is kept aside in case any problem arises.

In order to control all the costs, the budgets of any project should always be logged. Even those tasks that are occasionally contracted should always be registered.

#3: Accounting

In what concerns to this section, the guidelines are very clear. The project manager needs to capture the actual costs that are spent for each project work effort. The main ideas to retain are that there needs to be time to schedule the material and resources a project may need.

#4: Analysis And Management Reports

This is where you actually enter in the earned value analysis. You’ll need to take into consideration all the schedules and costs variances, and document the causes and impacts they had on the project. It is also important to clarify any corrective action that has taken place as well as determining a new estimate in relation to either the time or budget.

The CAM can pick the data collected on these reports and try to see the causes of a specific variance, determine its impact on the future work effort, as well as make the necessary correction steps.

One of the things project managers tend to use very frequently is the earned value analysis indices, by comparing the past performance and the future performance to complete the project.

#5: Revisions And Data Maintenance

In this last section, your main focus is control. There are multiple control guidelines that will tell you how important it is to have the perfect timing when making any changes. This timing refers not only in what concerns to customers as well as in what concerns to the internal project analysis and replanning of the project that needs to be made.

When you don’t have control over a project, there won’t be any earned value analysis or any earned value calculations that are going to help you. The lack of control can simply doom a project. So, it’s important that you have a budget baseline and that you establish and maintain a schedule to make sure that you can follow up on the work done for each reporting period.

An earned value management system brings benefits not only for the company but for the customers as well. With all the earned value calculations and analysis, you’ll see the benefits of using the earned value management system directly on your company:

– you’ll see a planning process improvement;

– you’ll have a much clear definition of the work scope;

– you’ll know exactly who’s in charge for what;

– you’ll notice, in advance, if there are any problems inside your company;

– you’ll be able to have a more proactive management because you’ll know in advance if some problem is happening;

– you’ll have a much better insight into the schedules and costs of each project;

– you’ll notice a better connection and communication between the different teams of your company;

– you’ll finally realize each project accountability and visibility.

So, now that you saw all the advantages of adopting an earned value  management system in your company, you want to get certification.

One of the best earned value management certifications you can get is the EVMP Earned Value Management Professional Certification for Project Directors, Project Managers, CAMs, EVMPs & PMPs. This kind of certification is used by Project Managers, Program Managers, Senior Managers, Senior Project Managers, Project Executives, Project Directors, CAMs, engineers, IT professionals, among many others.

The goal of the certification is to help you develop and/or improve your project management skills and ability to control the projects that you are involved with. At the same time, you’ll be taught on how to deal with the risk management, scheduling, quality management.  project budgeting, cost management, project finance, and the earned value management best practices and how to analyze and apply the guidelines.

In order to get your EVMP certification, you’ll need to complete the 5-days course (40 hours total) about the most diverse factors regarding the earned value management system. At the end, you’ll need to pass the exam that has 200 questions and you’ll have 4 hours to complete.

Despite the fact that the Earned Value Management certification can be quite expensive – $3,400, this can be truly a great asset for your company as well as for your career. This kind of knowledge allows you to have everything in control as well as it allows you to know, in advance, when something is happening. This, on the other hand, will let you have a more proactive management, giving you time to focus on the most important things about your business. If you still have any doubts regarding the effectiveness of using the earned value management system in your company, you can learn more about project management first.

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