By understanding these EVM concepts, you have not only positioned yourself to gain more insight into the status of your projects, but you are also now better equipped to take quick action.
percent completeThe progress of an activity or other element of the project structure plan. Expressed a as a percentage, the calculation is Earned Value divided by Budget.
In addition to tracking this information, as a Project Manager, you should always be communicating with your project team to understand the progress of specific tasks, as this will give you a better idea of how far along a project is. When talking to your team, it’s important to collect the status of specific metrics to help you determine the health of a project and drive its performance.
varianceA calculation of Earned Revenue minus Actual Effort. This calculates if the amount earned is greater or less than the effort expended to complete a task.
To get started, you’ll want to take a look at percent complete. You will use this as a means of calculating an updated earned value (also known as revenue) position of your project.
Once you have this value, you can then analyze current project performance from a financial perspective. There are two calculations you need to analyze this: project variance and being over, or under, budget.
To assess variance, you’ll need to determine the difference between the project’s revenue position and the project’s effort position. Depending on what your result is for variance, you will be either over, on, or under budget. To be over budget means you have a negative variance, to be on budget means you have no variance, and to be under budget means you have a positive variance – these last two scenarios are what you want for your projects!
You can also analyze the current project performance from a scheduling perspective by looking at the difference between a project’s revenue position and its planned revenue position at the same point in time. In this case, you can either be ahead, on, or behind schedule. To be ahead of schedule means your project’s revenue position is greater than its corresponding planned revenue position, and vice versa if your project is behind schedule.
Beyond these ways to assess the current position of your project, you can leverage budget, effort, and revenue to forecast where your project is headed.
Effort at CompletionThe estimated value of work expended to complete a task or project.
To do this, you’ll need to calculate Effort at Completion (EAC) and Variance at Completion (VAC). The former is the amount of money you think you will spend by the end of a project, while the latter is how this compares to the project budget.
Variance at CompletionThe difference between Planned Revenue and Effort at Completion forecasts where a project will end up in comparison to its overall budget.
It’s important to consider both in tandem – having your EAC is only one piece of the picture, but by comparing it to your budget via VAC, you now have a complete look ahead into where your project is headed.
As a Project Manager, you should be measuring and analyzing every one of these measurements. Each allows you to assess and improve on the three parts of the Project Management Triangle – which is the whole point. Meeting these expectations and keeping these values in check means you can deliver more high-quality projects with more successful outcomes.