Earned value management also known as EVM assists organizations on how to weigh how well a project is doing. This ensures that crucial details are considered by the firm. Earned value management system generally offers advantages like combination of work, cost and schedules together with any danger indicators. This helps determine the total cost incurred in a project.
The first benefit of EVM system is to ensure that the authorized task and other related resources are usually integrated through a work breakdown structure that is product oriented. As a result, the organization is able to coordinate and organize the contributions of every area of the project to ensure the schedule, the work, and the cost are well-integrated.
The other advantage is that the systems help in managing and reporting information or data across the different systems through an efficient and effective way. On the other hand, these systems allows more time to do analysis. Also, EVMS assists in managing through exception, which is important in helping the management to focus on the critical areas. As a result, overload of information is prevented, and the risk of overlooking other things is also avoided.
The third advantage is that it helps in decision making. This is because studies can be carried out on projects handled in past years. Nevertheless, this is only applicable to those firms that have records on projects handled over the years and hence the past projects are looked into and lessons learnt on the successful ones and even the failed projects which then helps future decision making.
At the same time, it becomes possible to calculate the cost and the schedule variance after the work has just reached a 10% completion on any area of the project. Because of this, the performance of the project and its productivity can be detected in the earlier stages of the project. When the cost performance index or CPI is calculated and found to be above 1, it shows the project is performing well against the budget.
On the other hand, the EVM systems help in calculating the SPI or the schedule performance index, which is normally obtained when earned value is divided by the planned value. This schedule performance index assists in identifying the schedule problems more so when used with the critical path information. Because schedule problems are resolved by more spending, a bad SPI indicates future cost problems.
On the other hand, schedule problems are solved by additional spending hence a poor SPI indicates future cost problems. Basically, the goals of the EVM is to integrate budgets to contract work and statements of work. These systems also provides a method of assessing work done in accordance to the plan.
On the other hand, the EVMS helps to relate the cost, the schedule, and the technical performance. Also, the system offer a timely, auditable, and valid information for an active project management action and analysis. The managers also get a level of practical summarization to make the decisions effectively. Due to the many benefits of EVMS it becomes clearly evident that there is so much value in using these systems.
The first benefit of EVM system is to ensure that the authorized task and other related resources are usually integrated through a work breakdown structure that is product oriented. As a result, the organization is able to coordinate and organize the contributions of every area of the project to ensure the schedule, the work, and the cost are well-integrated.
The other advantage is that the systems help in managing and reporting information or data across the different systems through an efficient and effective way. On the other hand, these systems allows more time to do analysis. Also, EVMS assists in managing through exception, which is important in helping the management to focus on the critical areas. As a result, overload of information is prevented, and the risk of overlooking other things is also avoided.
The third advantage is that it helps in decision making. This is because studies can be carried out on projects handled in past years. Nevertheless, this is only applicable to those firms that have records on projects handled over the years and hence the past projects are looked into and lessons learnt on the successful ones and even the failed projects which then helps future decision making.
At the same time, it becomes possible to calculate the cost and the schedule variance after the work has just reached a 10% completion on any area of the project. Because of this, the performance of the project and its productivity can be detected in the earlier stages of the project. When the cost performance index or CPI is calculated and found to be above 1, it shows the project is performing well against the budget.
On the other hand, the EVM systems help in calculating the SPI or the schedule performance index, which is normally obtained when earned value is divided by the planned value. This schedule performance index assists in identifying the schedule problems more so when used with the critical path information. Because schedule problems are resolved by more spending, a bad SPI indicates future cost problems.
On the other hand, schedule problems are solved by additional spending hence a poor SPI indicates future cost problems. Basically, the goals of the EVM is to integrate budgets to contract work and statements of work. These systems also provides a method of assessing work done in accordance to the plan.
On the other hand, the EVMS helps to relate the cost, the schedule, and the technical performance. Also, the system offer a timely, auditable, and valid information for an active project management action and analysis. The managers also get a level of practical summarization to make the decisions effectively. Due to the many benefits of EVMS it becomes clearly evident that there is so much value in using these systems.
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