What is Earned Value Management and is it important that I understand it to be a project manager?

Question

What is Earned Value Management and is it important that I understand it to be a project manager?

What do the metrics SPI, CPI, CV and SV mean?

Answer 1

To answer, yes it is extremely important to understand what EVM (Earned Value Management) is and how it functions as a management system. In reality, many people in the Project Management Industry do perform some kind of system where they manage their cost, scope and schedule (or time) (remember for PMP those three make up the project management triangle). Look at EVM as the more advanced version of project management system. EVM has much more restriction when performing to the metrics including the calculations, rebaselining and more.

In fact, if you are into reading more about EVM and how to set it up etc. I recommend that you take a moment to skim or deeply read the DoD EVM Guide that you can find via a Google Search.

SPI (Schedule Performance Index) and SV (Schedule Variance) are the metrics that are utilized to explain how a project is performing in terms of schedule (remember the PM Triangle - Scope, Cost and Schedule).

CPI (Cost Performance Index) and CV (Cost Variance) are the metrics that are utilized to explain how a project is performing in terms of cost (Refer back to the PM Triangle).

These four metrics look at two of the three sides of the triangle (so get really comfy with the PM Triangle especially if you are thinking to pursue the PMI PMP Certification) which will give project managers the ability to analyze what is happening to the project and then proceed to implement techniques of mitigation to get the project back on track or to host the conversations with the client for a rebaseline of the project.

If you are interested in having more of a discussion, please feel free to reach out to me to set up a session here on Wyzant. Hope this information is useful, and I look forward to hearing from you in the future.

Answer 2

This requires a more detailed breakdown hence the video.

MY DEFINITION: A way of measuring project performance using 3 metrics (work planned within a time frame (PV), work accomplished in that time-frame (EV) and actual cost spent on that work within the time-frame (AC)

WIKIPEDIA DEFINITION: Earned value management (EVM), earned value project management, or earned value performance management (EVPM) is a project management technique for measuring project performance and progress in an objective manner.

PMI DEFINITION: Earned value analysis compares the performance measurement baseline to the actual schedule and cost performance. EVM integrates the scope baseline with the cost baseline and schedule baseline to form the performance measurement baseline.