Answers the Question
Is the project progressing as planned?
Calculator for Earned Value
What Is the Earned Value?
Earned value management may have fallen out of favor, but it's a powerful tool for understanding how a project's actual progression compares to that which was predicted as the beginning of a project.
Why Is it Important?
- It's important to know when a project deviates from expectations, because deviations are often indicated a misunderstanding of either the project scope, the team's capabilities, or the necessary budget.
Formula(s) to Calculate Earned Value
- SCHEDULE PERFORMANCE INDEX = EARNED VALUE / PLANNED VALUE
- COST PERFORMANCE INDEX = EARNED VALUE / ACTUAL COST
- SCHEDULE VARIANCE = EARNED VALUE - PLANNED VALUE
- COST VARIANCE = EARNED VALUE - ACTUAL COST
- Assuming that original estimations were based on informed estimations. Many projects are given mere guesses as inputs.
- Many teams will be incentivized to take on the least risky portions of a project first, but such actions will cause calculations for the project to appear overly optimistic.