2015-09-27T15:25:47Z

Nannats:

Mette: Very nice topic choice that fits the requirements for this type of article. Look forward to reading more about this tool.

Review 3, s150621

• This article is written with good language

• The use of links to other articles, as for example WBS, is nice

• Your references look good 
- '''Tanks :-)'''

• The article enumerates many terms, and when reading through it can be a little bit too much of this. A suggestion is to have some more explanatory text in between? 
- '''There are many terms, but I think it is more confusing if the terms are disturbed by a lot of text in between.'''

• The figures are effective, but could give even better understanding with more explanation. For example, the figures can be used in the text for better explanation? The source of the figures should also be added 
- '''I have now tried to use the figures more actively in the text and added both some more text for the figures and added the sources of the figures.'''

• The example is nice, but could advantageously be more comprehensive. For me, I think it would be better if the whole example was described together in the end. This way, the reader gets to see the whole picture. An alternative is to have an extra example before you start the discussion? 
- '''I see your point, but I think it would be more confusing.'''

• The comparison with Tradition Cost Management in the end is good, and also the paragraph with Limitations. As your article is a bit short, I think you advantageously can extend the discussion. 
- '''I have tried to add some extra to the "limitations" part.'''

'''S113815, Review 1. [1967 words]'''

Dear Nannats.
After reviewing your article, I have following comments:
First of all, I think the article is consistently well-written and explains a tool which is very useful in the field of project management. There structure of the article seems to follow the guidelines from the assignment. There is a red thread throughout the article and the examples is easy to understand.
I have made some comments and tried to make some suggestions to make the article even better, they are as followed: 
Dear S113815. 
Thanks for your great feedback on my article and thanks for being so profound :-) You have made some good points, and I have tried to incorporate some of your ideas. I have answered/commented on your points: 

'''Summery Part:'''
* I think the summery is very well. It explains the tool in short and precise way.
* “Earned Value is based on an integrated management approach that provides the best indicator of true cost performance, available with no other project management technique.” It is a serious statement – are you sure of that? Are there no other techniques that can provide the same indicators?
- '''I think you are right. I have now re-formulated this statement.'''

'''Introduction Part:'''
* “… today EVM has become an essential part of every project tracking.” Is it an essential part of every project tracking? Or should it be? I think you need to back this statement up with a reference.
- '''Well-spotted. I have re-formulated this statement.'''
* You could maybe inset a figure of the project management triangle?
- ''' That is an excellent idea :-) I have now inserted a figure with the project management triangle.'''

'''The EVM Method part'''
* Nice link to the WBS article.
- ''' Thanks!'''
* Planned value (PV): I think that value should be with a capital V.
- '''Yes. Corrected now'''
* Maybe a explanation of why the PV (almost) looks like the letter S? Or what makes the curve form in this way.
- '''I have tried to explain it now.'''
* Nice example – easy to follow.
- '''Thanks'''
* The figure below the EV calculations does not have a Figure number and a figure text.
- '''I have added figure number and more figure text to all the figures'''
* I think a figure in the “Performance Indices” would be good. Maybe with colours – red for underperforming projects and green for over-performing projects?
- '''I have now added a figure in the "Performance Indicies", which illustrates the example.'''
* I would like an example and a figure in the “Forecasting” part. I feel like it is not as well described as the other parts.
* The three sub-headlines under forecast (Variances are typical, Variances are typical, Variances will be present in the future) are all starting with 1. Is that the intention or a format question?
- '''Oh, that was a format mistake. Well spotted :) '''

'''EVM vs. Traditional Cost Management Part''':
* Again, a well structured paragraph.
* No specific comments to that part.

'''Limitations Part:'''
* In think that this part might be a little short..
* Would it be possible to add the quality part into the EVM?
- '''I have tried to add some extra to the "limitations" part.'''

'''References Part:'''
* I think this part looks nice. You might consider adding a bit more information (publisher etc.).

'''General to the article'''
* Either use Capital letters for the first letter in the key words (e.g. Earned Value Management in stead of earned value management. It differs throughout the article)
- '''Yes. That is now corrected through the article.'''
* It guess your figures are cut from some other literature? If so, remember to make a reference in the figure text.
- '''Yes. You are right. Now added.'''
* The format of the article is simple and clean – I like that!
- '''Great, thanks :-)'''
* As you still have 1000 words to use, you might consider a longer “Limitations”-part. Or maybe an extra example to strengthen your theory.
- '''I have added extra text through the article.'''

'''''All in all a very nice article – and good work. :)'''''

s140046 Review 2

# Fine introduction and background section
# Great with internal link and suitable description of WBS
# The total budget in table without number or title is $100.000. It should be $60.000. It seems to be double both with the actual calculations and with the table. You can consider to skip the table?
# Very good and specific sections on Performance measurements and indices with clear examples.
# The figures perfectly underline the calculations. You can consider to add more descriptive figure texts to the figures.
# You can eventually elaborate a bit on Estimate to completion (ETC)
# Typo: for example The Critical Path Method (CPM), it could provide invaluable into the true schedule status of the project. Should (probably) be… info to the true…?
# Clear points in the limitations section.
# In general a well structured and precise article. The content has been cut to the bone but contains all relevant description and examples. Very nice reading.
# References according to Wiki-standards.

Talk:Earned Value Management

2015-09-27T14:55:56Z

Nannats:

Mette: Very nice topic choice that fits the requirements for this type of article. Look forward to reading more about this tool.

Review 3, s150621

• This article is written with good language

• The use of links to other articles, as for example WBS, is nice

• Your references look good
- '''Tanks :-)'''

• The article enumerates many terms, and when reading through it can be a little bit too much of this. A suggestion is to have some more explanatory text in between? 
- '''There are many terms, but I think it is more confusing if the terms are disturbed by a lot of text in between.'''

• The figures are effective, but could give even better understanding with more explanation. For example, the figures can be used in the text for better explanation? The source of the figures should also be added 
- '''I have now tried to use the figures more actively in the text and added both some more text for the figures and added the sources of the figures.'''

• The example is nice, but could advantageously be more comprehensive. For me, I think it would be better if the whole example was described together in the end. This way, the reader gets to see the whole picture. An alternative is to have an extra example before you start the discussion? 
- '''I see your point, but I think it would be more confusing.'''

• The comparison with Tradition Cost Management in the end is good, and also the paragraph with Limitations. As your article is a bit short, I think you advantageously can extend the discussion. 
- '''I have tried to add some extra to the "limitations" part.'''

'''S113815, Review 1. [1967 words]'''

Dear Nannats.
After reviewing your article, I have following comments:
First of all, I think the article is consistently well-written and explains a tool which is very useful in the field of project management. There structure of the article seems to follow the guidelines from the assignment. There is a red thread throughout the article and the examples is easy to understand.
I have made some comments and tried to make some suggestions to make the article even better, they are as followed:

'''Summery Part:'''
* I think the summery is very well. It explains the tool in short and precise way.
* “Earned Value is based on an integrated management approach that provides the best indicator of true cost performance, available with no other project management technique.” It is a serious statement – are you sure of that? Are there no other techniques that can provide the same indicators?
- '''I think you are right. I have now re-formulated this statement.'''

'''Introduction Part:'''
* “… today EVM has become an essential part of every project tracking.” Is it an essential part of every project tracking? Or should it be? I think you need to back this statement up with a reference.
- '''Well-spotted. I have re-formulated this statement.'''
* You could maybe inset a figure of the project management triangle?
- ''' That is an excellent idea :-) I have now inserted a figure with the project management triangle.'''

'''The EVM Method part'''
* Nice link to the WBS article.
- ''' Thanks!'''
* Planned value (PV): I think that value should be with a capital V.
- '''Yes. Corrected now'''
* Maybe a explanation of why the PV (almost) looks like the letter S? Or what makes the curve form in this way.
- '''I have tried to explain it now.'''
* Nice example – easy to follow.
- '''Thanks'''
* The figure below the EV calculations does not have a Figure number and a figure text.
- '''I have added figure number and more figure text to all the figures'''
* I think a figure in the “Performance Indices” would be good. Maybe with colours – red for underperforming projects and green for over-performing projects?
- '''I have now added a figure in the "Performance Indicies", which illustrates the example.'''
* I would like an example and a figure in the “Forecasting” part. I feel like it is not as well described as the other parts.
* The three sub-headlines under forecast (Variances are typical, Variances are typical, Variances will be present in the future) are all starting with 1. Is that the intention or a format question?
- '''Oh, that was a format mistake. Well spotted :) '''

'''EVM vs. Traditional Cost Management Part''':
* Again, a well structured paragraph.
* No specific comments to that part.

'''Limitations Part:'''
* In think that this part might be a little short..
* Would it be possible to add the quality part into the EVM?

'''References Part:'''
* I think this part looks nice. You might consider adding a bit more information (publisher etc.).

'''General to the article'''
* Either use Capital letters for the first letter in the key words (e.g. Earned Value Management in stead of earned value management. It differs throughout the article)
- '''Yes. That is now corrected through the article.'''
* It guess your figures are cut from some other literature? If so, remember to make a reference in the figure text.
- '''Yes. You are right. Now added.'''
* The format of the article is simple and clean – I like that!
- '''Great, thanks :-)'''
* As you still have 1000 words to use, you might consider a longer “Limitations”-part. Or maybe an extra example to strengthen your theory.

'''''All in all a very nice article – and good work. :)'''''

s140046 Review 2

# Fine introduction and background section
# Great with internal link and suitable description of WBS
# The total budget in table without number or title is $100.000. It should be $60.000. It seems to be double both with the actual calculations and with the table. You can consider to skip the table?
# Very good and specific sections on Performance measurements and indices with clear examples.
# The figures perfectly underline the calculations. You can consider to add more descriptive figure texts to the figures.
# You can eventually elaborate a bit on Estimate to completion (ETC)
# Typo: for example The Critical Path Method (CPM), it could provide invaluable into the true schedule status of the project. Should (probably) be… info to the true…?
# Clear points in the limitations section.
# In general a well structured and precise article. The content has been cut to the bone but contains all relevant description and examples. Very nice reading.
# References according to Wiki-standards.

Talk:Earned Value Management

2015-09-26T11:14:10Z

Nannats:

Talk:Earned Value Management

2015-09-26T11:13:40Z

Nannats:

Earned Value Management

2015-09-26T10:56:53Z

Nannats: /* Limitations */

Earned Value Management (EVM) is a method for measuring a project’s performance. Earned Value Management is a complex task of controlling and adjusting the baseline project schedule during execution, taking into account project scope, timed delivery and total project budget. <ref name="Measuring">Measuring Time: Improving Project Performance Using Earned Value Management (2009), '''Vanhoucke, M.''' ''(A book about how to improve project performance using Earned Value Management. Provides both case studies and simulation studies, and how to scheduling projects with a software.)''</ref>.
The method is useful during execution of a project because it tells us where we are going with schedule and costs, indicating any variance to plan.

Earned Value is based on an integrated management approach that provides one of the best indicator of true cost performance, available with no other project management technique. Earned Value requires that the project’s scope be fully defined, and that a bottom-up baseline plan be put in place to integrate the defined scope with the authorized resources in a specified frame. <ref name="Fleming" />

==Introduction==
[[File:TriangleMan.png|thumb|250px|Figure 1. The project triangle: Scope, Time and Cost.]]
An important part of successful project management is to have accurate and reliable information and the current performance is the best indicator of future performance. By using trend data, it is therefore possible to forecast cost and schedule overruns early in the project.

===Background===
The Earned Value Management method was introduced in the 1960s as a financial analysis specialty in United States Government programs, but has since been a significant branch of project management. In the late 1980s and early 1990s, it was no longer used by EVM specialists only. The EVM was emerged as a project management methodology to be understood and used by managers and executives also, and today EVM has become an essential part of project tracking in many projects.

The method can be used to measure the real progress of a project, and combines the measurements of the project management triangle: scope, time and cost. Thereby the EVM method provides early indications of expected project results based on project performance and highlights the possible need for corrective action. These indications become available to management as early as 20 percent into the project <ref name="Fleming">Earned Value Project Management (2005), '''Fleming, Q. and Koppelman, J.''', ''(A leading book within Earned Value Project Management. A lot of background for The Earned Value Managament method and how it has envolved through time.)'' </ref>.

==The EVM Method==

First of all, to implement the Earned Value method it requires that a [[Work Breakdown Structure (WBS)]] must be built by decomposing all the work to done in work packages. These work packages are the smallest groupings of work tasks which are necessary for the level of control needed. Material, labor and other resources are allocated to each work package, and a schedule of all the work packages are set up. <ref name="Measuring">EARNED VALUE MANAGEMENT (2002), ''Ferguson, J. and Kissler, K.H.''</ref>.

With the EVM method we can measure the expected total project time and cost and calculate the deviation between the current performance and the planned performance. The method uses some basic EVM metrics, which will be introduced.

===The Metrics===
[[File:PVEVAC.jpg|right|thumb|450px|Figure 2. BAC and the three EVM parameters. The project is delayed but under budget. <ref name="Dum"> http://media.wiley.com/Lux/23/246523.image0.jpg</ref>]]
EVM uses three key parameters to measure project performance <ref name="Frank">Earned Value Project Management Method and Extensions (2003), '''Anbari, F.''' ''(The paper shows the major aspects of Earned Value Management method and presents a lot of tools graphical. Some extensions on how to use the method even further.)'' </ref>.:

* '''Planned Value (PV)''' or Budgeted Cost of Work Scheduled (BCWS)
: This is the time-phased budget baseline. It is the approved budget for accomplishing the activity or work related to the schedule. PV can be viewed as the value to be earned as a function of project work accomplishments up to a given point in time. The total PV is equal to the '''Budget at Completion (BAC)'''. This is the total budget baseline for the activity or work package. It is the highest value of PV and the last point on the cumulative PV curve. The graph of cumulative PV is often referred to as the S-curve, because it (almost) looks like the letter S. The reason for this 'S' shape is that it is flatter at the beginning and at the end, and steeper in the middle, which is typical of most projects.

* '''Actual Cost (AC)''' or Actual Cost of Work Performed (ACWP)
: This is the cumulative actual cost spent to a given point in time to accomplish an activity or work (and to earn the related value).

* '''Earned Value (EV)''' or Budgeted Cost of Work Performed (BCWP)
: This is the cumulative Earned Value for the work completed up to a point in time. It represents the amount budgeted for performing the work that was accomplished by a given point in time. The EV equals the total budget at completion (BAC) multiplied by the percentage activity (or project) completion (PC) at the particular point in time <math> (=BAC \times PC) </math>

[[File:Scenarios.png|left|thumb|400px|Figure 3. The four different possible time/cost scenarios. <ref name="Measuring" />]] 
In Figure 2 the three key parameters are shown together with the Budget of Completion (BAC). From this figure it is seen that the Earned Value (EV) is below Budget of Completion (BAC), which means that the project is delayed. Moreover, the figure shows that Actual Cost (AC) is below both BAC and EV. This means that the project is under budget. 

There exist four different possible time/cost scenarios, which can be seen on Figure 3. 
Scenario 1: The project is ''late'' and ''over'' budget. 
Scenario 2: The project is ''late'' but ''under'' budget. 
Scenario 3: The project is ''early'', but ''over'' budget. 
Scenario 4: The project is ''early'' and ''under'' budget.

 

====Example====
A project has a total budget at completion (BAC) of $100.000. Then a [[Work Breakdown Structure (WBS)]] can be used to break down the different activities. A work package 1.1 has a budget of $20.000 and is 100% complete as of the status date. Thereby, the Earned Value for this work package is: 
<math>
\begin{align}
EV = $20.000 \times 1.00 = $20.000
\end{align}
</math>

Work Package 1.2 has a budget of $40.000 and is 50% complete, and the Earned Value is: 
<math>
\begin{align}
EV = $40.000 \times 0.5 = $20.000
\end{align}
</math>

The Earned Value for the entire project is: 
<math>
\begin{align}
EV = $20.000 + $20.000 = $40.000
\end{align}
</math>

[[File:BudgetExample.png|center|600px|]] 

The Planned Value as of the status date is PV = $50.000, but the Actual Cost is AC = $60.000 and the Earned Value is EV = $40.000. This means that the project is over budget and delayed. This example can be seen on Figure 4. 

[[File:PVACEV.PNG|center|frame|Figure 4. Illustration of the example. The project is over budget and delayed. <ref name="Frank" /> ]]

===Performance Measurements===
By comparing the three key parameters, PV, AC and EV, it is possible to determine the cost performance and schedule performance. The variances are based on cumulative data (also called inception-to-date data and project-to-date data).

====Variances====
[[File:SVCV.PNG|400px|right|thumb|Figure 5. The same example as Figure 4, but also illustrating the SV and CV. <ref name="Frank" />]]
* The '''Cost Variance (CV)''' is the difference between the Earned Value (EV) and the Actual Cost (AC), i.e. a measure of budgetary conformance of actual cost of work performed. In other word, CV indicates how much over or under budget the project is. 
: <math>
\begin{align}
CV = EV - AC
\end{align}
</math>

* The '''Schedule Variance (SV)''' is the difference between the Earned Value (EV) and the Planned Value (PV), i.e. a measure of the conformance of actual progress to the schedule. So in other words, SV indicates how much ahead or behind schedule a project is running. 
: <math>
\begin{align}
SV = EV - PV
\end{align}
</math>

====Example====
If we go back to the example mentioned above, we can calculate the cost variance and the schedule variance. 

: <math>
\begin{align}
CV = EV - AC = $40.000 - $60.000 = -$20.000
\end{align}
</math>

: <math>
\begin{align}
SV = EV - PV = $40.000 - $50.000 = -$10.000
\end{align}
</math> 

The CV and SV for this example are shown in Figure 5.

===Performance Indices===
The performance indices are ratios, which say something about the efficiency. 

* The '''Cost Performance Index (CPI)''' is the ratio of Earned Value (EV) to the Actual Cost (AC), i.e. a measure of budgetary conformance of Actual Cost of work performed. 
: <math>
\begin{align}
CPI = {EV\over AC}
\end{align}
</math>

* The '''Schedule Performance Index (SPI)''' is the ratio of Earned Value (EV) to the Planned Value (PV), i.e. a measure of the conformance of actual progress to the schedule. The SPI provides information about schedule performance of the project. It is the efficiency of the time utilized on the project. 
: <math>
\begin{align}
SPI = {EV\over PV}
\end{align}
</math>

* The product of the Cost Performance Index (CPI) and the Schedule Performance Index (SPI) is called the cost-schedule index, or the '''Critical Ratio (CR)'''. This ratio is an indicator of the overall project health, and it informs you of how much you are getting out of each dollar spent on the project. 
: <math>
\begin{align}
CR = {CPI \times SPI}
\end{align}
</math>

A ratio equal 1.0 indicates that performance is efficient and on target. A ratio greater than 1.0 indicates excellent, highly efficient performance. A ratio less than 1.0 indicates poor, inefficient performance. 
[[File:CPISPI.PNG|350px|right|thumb|Figure 6. Illustrating the example with the CPI and SPI. They are bother less than 1.0. <ref name="Frank" />]]

====Example====
If we need to find the cost performance index (CPI) and the schedule performance index (SPI) for the above project, we can calculate it by: 
: <math>
\begin{align}
CPI = {EV\over AC} = {$40.000 \over $60.000} = 0.67
\end{align}
</math>

: <math>
\begin{align}
SPI = {EV\over PV} = {$40.000 \over $50.000} = 0.80
\end{align}
</math>

From theses indices we see that both the CPI and SPI are less than 1.0, which indicates that we are a little behind schedule and a lot over budget, which is illustrated on Figure 6. 

===Forecasting===
It is said that bad news known at the 20% point in a project’s life cycle gives an opportunity to take corrective actions. <ref name="Fleming" /> Therefore, project managers are primarily concerned with decisions affecting the future, as forecasting and predictions are very important aspects of project management. The EVM is designed to keep an eye of the project performance and to give management an important “early warning” signal to take corrective actions in the future. EVM is especially useful in forecasting the total project cost and time to completion, based on the actual performance up to a given point in the project. 

The formula for predicting a project’s final cost, i.e. how much money it will take to complete a given project, is given by the '''Estimated Cost at Completion (EAC)'''. EACs may differ based on the assumptions made about future performance, and therefore there different variations of EAC exists.

: 1. '''Variances are typical '''
: The method is used when the variances at the current stage (or until now) are typical, for example due to some unforeseen conditions which are likely to happen at the beginning of a project, but are not expected to occur in the future. 
: <math>
\begin{align}
EAC &= AC + (BAC - EV) \\
&= BAC - CV \\
\end{align}
</math>

: 2. '''Past estimating assumptions are not valid'''
: This method is used when past estimating assumptions are not valid and new estimates are applied to the project. This could for example be if you are behind schedule or over budget. 
: <math>
\begin{align}
EAC &= AC + {BAC - EV \over CPI \times SPI}\\
&= AC + ETC \\
\end{align}
</math>
: Where ETC is the Estimate to Complete.

: 3. '''Variances will be present in the future'''
: Here we assume that the future variances and performance will be the same as the past variances and performance, i.e. the CPI will remain the same for the rest of the project. 
: <math>
\begin{align}
EAC &= AC + {BAC - EV \over CPI} \\
&= {BAC \over CV} \\
\end{align}
</math>

==EVM vs. Traditional Cost Management==
[[File:Traditional.jpg|400px|right|thumb|Figure 7. Traditional Project Cost Management vs. EVM. <ref name="Fleming" />]]
There is a fundamental distinction between using a traditional cost control approach and the Earned Value management. In traditional project cost management the plan-versus-actual cost comparison gives no way to ascertain how much of the physical work that has been accomplished. Such displays merely represent the relationship of what was planned to be spent versus the funds actually spent.<ref name="Fleming" />

If we take a look at another example and look at the cost performance on top of Figure 4, it indicates great results against the original spending plan, where the planned funds are equal to the actual costs. This is only useful as a reflection of whether a project has stayed within the funds authorized by management, i.e. funding performance. This does not reflect the actual cost performance.<ref name="Fleming" />

In contrast, Earned Value Management displays three dimensions of data: the Planned Value of the physical work authorized, the Earned Value of the physical work accomplished and the Actual Costs incurred to accomplish the Earned Value. Thus, under an earned value approach, the two critical variances may be ascertained. The schedule variance, SV, shows that the project is experiencing a negative schedule variance of $100.000 from its planned work. This shows that the project management team is clearly behind the planned schedule. When used together with other scheduling techniques, for example [[The Critical Path Method (CPM)]], it could provide invaluable into the true schedule status of the project.
The other variance, namely the cost variance, CV, we see that the project has a cost overrun of $100.000 for the work performed to date. Experiences has shown that such cost overruns tend to get worse over time, and it is therefore of critical importance to the project. <ref name="Fleming" />

==Limitations==
Even though the EVM method is very useful, it has some limitations too. Earned Value as a technique is effective in the management of projects, but has very limited utility in the management of continuous business operations. <ref name="Fleming" /> Therefore it should only be used on projects – preferable on small and simple projects, as large projects has many components which have to be accounted for which can derail in the details.
Another crucial aspect is that the EVM method does only consider time and cost, but not the quality. Quality is such an important part of any project, that it necessary to have some kind of quality control. Without that, it means that a project can be on budget and time, but still be a very bad product.
Overall, it is also important to remember that the EVM does not tell the whole story, and therefore is the method not attended to be used as a stand-alone tool. <ref name="web1">How Earned Value Management is Limited (2013), http://www.brighthubpm.com/monitoring-projects/10056-how-earned-value-management-is-limited/ ''(Short about the limitations on the Earned Value Managment method.)''</ref> Moreover, the Earned Value Management method requires that the project scope, schedule and budget is well-defined. The Earned Value Management method may be a waste of time, if the proejct's goals and outcomes are vague and if the [[Work Breakdown Structure (WBS)]] is incomplete.

==References==
<references />

Earned Value Management

2015-09-26T10:56:22Z

Nannats: /* Limitations */

Earned Value Management (EVM) is a method for measuring a project’s performance. Earned Value Management is a complex task of controlling and adjusting the baseline project schedule during execution, taking into account project scope, timed delivery and total project budget. <ref name="Measuring">Measuring Time: Improving Project Performance Using Earned Value Management (2009), '''Vanhoucke, M.''' ''(A book about how to improve project performance using Earned Value Management. Provides both case studies and simulation studies, and how to scheduling projects with a software.)''</ref>.
The method is useful during execution of a project because it tells us where we are going with schedule and costs, indicating any variance to plan.

Earned Value is based on an integrated management approach that provides one of the best indicator of true cost performance, available with no other project management technique. Earned Value requires that the project’s scope be fully defined, and that a bottom-up baseline plan be put in place to integrate the defined scope with the authorized resources in a specified frame. <ref name="Fleming" />

==Introduction==
[[File:TriangleMan.png|thumb|250px|Figure 1. The project triangle: Scope, Time and Cost.]]
An important part of successful project management is to have accurate and reliable information and the current performance is the best indicator of future performance. By using trend data, it is therefore possible to forecast cost and schedule overruns early in the project.

===Background===
The Earned Value Management method was introduced in the 1960s as a financial analysis specialty in United States Government programs, but has since been a significant branch of project management. In the late 1980s and early 1990s, it was no longer used by EVM specialists only. The EVM was emerged as a project management methodology to be understood and used by managers and executives also, and today EVM has become an essential part of project tracking in many projects.

The method can be used to measure the real progress of a project, and combines the measurements of the project management triangle: scope, time and cost. Thereby the EVM method provides early indications of expected project results based on project performance and highlights the possible need for corrective action. These indications become available to management as early as 20 percent into the project <ref name="Fleming">Earned Value Project Management (2005), '''Fleming, Q. and Koppelman, J.''', ''(A leading book within Earned Value Project Management. A lot of background for The Earned Value Managament method and how it has envolved through time.)'' </ref>.

==The EVM Method==

First of all, to implement the Earned Value method it requires that a [[Work Breakdown Structure (WBS)]] must be built by decomposing all the work to done in work packages. These work packages are the smallest groupings of work tasks which are necessary for the level of control needed. Material, labor and other resources are allocated to each work package, and a schedule of all the work packages are set up. <ref name="Measuring">EARNED VALUE MANAGEMENT (2002), ''Ferguson, J. and Kissler, K.H.''</ref>.

With the EVM method we can measure the expected total project time and cost and calculate the deviation between the current performance and the planned performance. The method uses some basic EVM metrics, which will be introduced.

===The Metrics===
[[File:PVEVAC.jpg|right|thumb|450px|Figure 2. BAC and the three EVM parameters. The project is delayed but under budget. <ref name="Dum"> http://media.wiley.com/Lux/23/246523.image0.jpg</ref>]]
EVM uses three key parameters to measure project performance <ref name="Frank">Earned Value Project Management Method and Extensions (2003), '''Anbari, F.''' ''(The paper shows the major aspects of Earned Value Management method and presents a lot of tools graphical. Some extensions on how to use the method even further.)'' </ref>.:

* '''Planned Value (PV)''' or Budgeted Cost of Work Scheduled (BCWS)
: This is the time-phased budget baseline. It is the approved budget for accomplishing the activity or work related to the schedule. PV can be viewed as the value to be earned as a function of project work accomplishments up to a given point in time. The total PV is equal to the '''Budget at Completion (BAC)'''. This is the total budget baseline for the activity or work package. It is the highest value of PV and the last point on the cumulative PV curve. The graph of cumulative PV is often referred to as the S-curve, because it (almost) looks like the letter S. The reason for this 'S' shape is that it is flatter at the beginning and at the end, and steeper in the middle, which is typical of most projects.

* '''Actual Cost (AC)''' or Actual Cost of Work Performed (ACWP)
: This is the cumulative actual cost spent to a given point in time to accomplish an activity or work (and to earn the related value).

* '''Earned Value (EV)''' or Budgeted Cost of Work Performed (BCWP)
: This is the cumulative Earned Value for the work completed up to a point in time. It represents the amount budgeted for performing the work that was accomplished by a given point in time. The EV equals the total budget at completion (BAC) multiplied by the percentage activity (or project) completion (PC) at the particular point in time <math> (=BAC \times PC) </math>

[[File:Scenarios.png|left|thumb|400px|Figure 3. The four different possible time/cost scenarios. <ref name="Measuring" />]] 
In Figure 2 the three key parameters are shown together with the Budget of Completion (BAC). From this figure it is seen that the Earned Value (EV) is below Budget of Completion (BAC), which means that the project is delayed. Moreover, the figure shows that Actual Cost (AC) is below both BAC and EV. This means that the project is under budget. 

There exist four different possible time/cost scenarios, which can be seen on Figure 3. 
Scenario 1: The project is ''late'' and ''over'' budget. 
Scenario 2: The project is ''late'' but ''under'' budget. 
Scenario 3: The project is ''early'', but ''over'' budget. 
Scenario 4: The project is ''early'' and ''under'' budget.

 

====Example====
A project has a total budget at completion (BAC) of $100.000. Then a [[Work Breakdown Structure (WBS)]] can be used to break down the different activities. A work package 1.1 has a budget of $20.000 and is 100% complete as of the status date. Thereby, the Earned Value for this work package is: 
<math>
\begin{align}
EV = $20.000 \times 1.00 = $20.000
\end{align}
</math>

Work Package 1.2 has a budget of $40.000 and is 50% complete, and the Earned Value is: 
<math>
\begin{align}
EV = $40.000 \times 0.5 = $20.000
\end{align}
</math>

The Earned Value for the entire project is: 
<math>
\begin{align}
EV = $20.000 + $20.000 = $40.000
\end{align}
</math>

[[File:BudgetExample.png|center|600px|]] 

The Planned Value as of the status date is PV = $50.000, but the Actual Cost is AC = $60.000 and the Earned Value is EV = $40.000. This means that the project is over budget and delayed. This example can be seen on Figure 4. 

[[File:PVACEV.PNG|center|frame|Figure 4. Illustration of the example. The project is over budget and delayed. <ref name="Frank" /> ]]

===Performance Measurements===
By comparing the three key parameters, PV, AC and EV, it is possible to determine the cost performance and schedule performance. The variances are based on cumulative data (also called inception-to-date data and project-to-date data).

====Variances====
[[File:SVCV.PNG|400px|right|thumb|Figure 5. The same example as Figure 4, but also illustrating the SV and CV. <ref name="Frank" />]]
* The '''Cost Variance (CV)''' is the difference between the Earned Value (EV) and the Actual Cost (AC), i.e. a measure of budgetary conformance of actual cost of work performed. In other word, CV indicates how much over or under budget the project is. 
: <math>
\begin{align}
CV = EV - AC
\end{align}
</math>

* The '''Schedule Variance (SV)''' is the difference between the Earned Value (EV) and the Planned Value (PV), i.e. a measure of the conformance of actual progress to the schedule. So in other words, SV indicates how much ahead or behind schedule a project is running. 
: <math>
\begin{align}
SV = EV - PV
\end{align}
</math>

====Example====
If we go back to the example mentioned above, we can calculate the cost variance and the schedule variance. 

: <math>
\begin{align}
CV = EV - AC = $40.000 - $60.000 = -$20.000
\end{align}
</math>

: <math>
\begin{align}
SV = EV - PV = $40.000 - $50.000 = -$10.000
\end{align}
</math> 

The CV and SV for this example are shown in Figure 5.

===Performance Indices===
The performance indices are ratios, which say something about the efficiency. 

* The '''Cost Performance Index (CPI)''' is the ratio of Earned Value (EV) to the Actual Cost (AC), i.e. a measure of budgetary conformance of Actual Cost of work performed. 
: <math>
\begin{align}
CPI = {EV\over AC}
\end{align}
</math>

* The '''Schedule Performance Index (SPI)''' is the ratio of Earned Value (EV) to the Planned Value (PV), i.e. a measure of the conformance of actual progress to the schedule. The SPI provides information about schedule performance of the project. It is the efficiency of the time utilized on the project. 
: <math>
\begin{align}
SPI = {EV\over PV}
\end{align}
</math>

* The product of the Cost Performance Index (CPI) and the Schedule Performance Index (SPI) is called the cost-schedule index, or the '''Critical Ratio (CR)'''. This ratio is an indicator of the overall project health, and it informs you of how much you are getting out of each dollar spent on the project. 
: <math>
\begin{align}
CR = {CPI \times SPI}
\end{align}
</math>

A ratio equal 1.0 indicates that performance is efficient and on target. A ratio greater than 1.0 indicates excellent, highly efficient performance. A ratio less than 1.0 indicates poor, inefficient performance. 
[[File:CPISPI.PNG|350px|right|thumb|Figure 6. Illustrating the example with the CPI and SPI. They are bother less than 1.0. <ref name="Frank" />]]

====Example====
If we need to find the cost performance index (CPI) and the schedule performance index (SPI) for the above project, we can calculate it by: 
: <math>
\begin{align}
CPI = {EV\over AC} = {$40.000 \over $60.000} = 0.67
\end{align}
</math>

: <math>
\begin{align}
SPI = {EV\over PV} = {$40.000 \over $50.000} = 0.80
\end{align}
</math>

From theses indices we see that both the CPI and SPI are less than 1.0, which indicates that we are a little behind schedule and a lot over budget, which is illustrated on Figure 6. 

===Forecasting===
It is said that bad news known at the 20% point in a project’s life cycle gives an opportunity to take corrective actions. <ref name="Fleming" /> Therefore, project managers are primarily concerned with decisions affecting the future, as forecasting and predictions are very important aspects of project management. The EVM is designed to keep an eye of the project performance and to give management an important “early warning” signal to take corrective actions in the future. EVM is especially useful in forecasting the total project cost and time to completion, based on the actual performance up to a given point in the project. 

The formula for predicting a project’s final cost, i.e. how much money it will take to complete a given project, is given by the '''Estimated Cost at Completion (EAC)'''. EACs may differ based on the assumptions made about future performance, and therefore there different variations of EAC exists.

: 1. '''Variances are typical '''
: The method is used when the variances at the current stage (or until now) are typical, for example due to some unforeseen conditions which are likely to happen at the beginning of a project, but are not expected to occur in the future. 
: <math>
\begin{align}
EAC &= AC + (BAC - EV) \\
&= BAC - CV \\
\end{align}
</math>

: 2. '''Past estimating assumptions are not valid'''
: This method is used when past estimating assumptions are not valid and new estimates are applied to the project. This could for example be if you are behind schedule or over budget. 
: <math>
\begin{align}
EAC &= AC + {BAC - EV \over CPI \times SPI}\\
&= AC + ETC \\
\end{align}
</math>
: Where ETC is the Estimate to Complete.

: 3. '''Variances will be present in the future'''
: Here we assume that the future variances and performance will be the same as the past variances and performance, i.e. the CPI will remain the same for the rest of the project. 
: <math>
\begin{align}
EAC &= AC + {BAC - EV \over CPI} \\
&= {BAC \over CV} \\
\end{align}
</math>

==EVM vs. Traditional Cost Management==
[[File:Traditional.jpg|400px|right|thumb|Figure 7. Traditional Project Cost Management vs. EVM. <ref name="Fleming" />]]
There is a fundamental distinction between using a traditional cost control approach and the Earned Value management. In traditional project cost management the plan-versus-actual cost comparison gives no way to ascertain how much of the physical work that has been accomplished. Such displays merely represent the relationship of what was planned to be spent versus the funds actually spent.<ref name="Fleming" />

If we take a look at another example and look at the cost performance on top of Figure 4, it indicates great results against the original spending plan, where the planned funds are equal to the actual costs. This is only useful as a reflection of whether a project has stayed within the funds authorized by management, i.e. funding performance. This does not reflect the actual cost performance.<ref name="Fleming" />

In contrast, Earned Value Management displays three dimensions of data: the Planned Value of the physical work authorized, the Earned Value of the physical work accomplished and the Actual Costs incurred to accomplish the Earned Value. Thus, under an earned value approach, the two critical variances may be ascertained. The schedule variance, SV, shows that the project is experiencing a negative schedule variance of $100.000 from its planned work. This shows that the project management team is clearly behind the planned schedule. When used together with other scheduling techniques, for example [[The Critical Path Method (CPM)]], it could provide invaluable into the true schedule status of the project.
The other variance, namely the cost variance, CV, we see that the project has a cost overrun of $100.000 for the work performed to date. Experiences has shown that such cost overruns tend to get worse over time, and it is therefore of critical importance to the project. <ref name="Fleming" />

==Limitations==
Even though the EVM method is very useful, it has some limitations too. Earned Value as a technique is effective in the management of projects, but has very limited utility in the management of continuous business operations. <ref name="Fleming" /> Therefore it should only be used on projects – preferable on small and simple projects, as large projects has many components which have to be accounted for which can derail in the details.
Another crucial aspect is that the EVM method does only consider time and cost, but not the quality. Quality is such an important part of any project, that it necessary to have some kind of quality control. Without that, it means that a project can be on budget and time, but still be a very bad product.
Overall, it is also important to remember that the EVM does not tell the whole story, and therefore is the method not attended to be used as a stand-alone tool. <ref name="web1">How Earned Value Management is Limited (2013), http://www.brighthubpm.com/monitoring-projects/10056-how-earned-value-management-is-limited/ ''(Short about the limitations on the Earned Value Managment method.)''</ref> Moreover, the Earned Value Management method requires that the project scope, schedule and budget is well-defined. The Earned Value Management method may be a waste of time, if the proejct's goals and outcomes are vague and if the Work Breakdown Structure (WBS) is incomplete.

==References==
<references />

File:CPISPI.PNG

2015-09-26T07:10:19Z

Nannats:

2015-09-26T06:37:20Z

Nannats: /* The Metrics */

Earned Value Management (EVM) is a method for measuring a project’s performance. Earned Value Management is a complex task of controlling and adjusting the baseline project schedule during execution, taking into account project scope, timed delivery and total project budget. <ref name="Measuring">Measuring Time: Improving Project Performance Using Earned Value Management (2009), '''Vanhoucke, M.''' ''(A book about how to improve project performance using Earned Value Management. Provides both case studies and simulation studies, and how to scheduling projects with a software.)''</ref>.
The method is useful during execution of a project because it tells us where we are going with schedule and costs, indicating any variance to plan.

Earned Value is based on an integrated management approach that provides one of the best indicator of true cost performance, available with no other project management technique. Earned Value requires that the project’s scope be fully defined, and that a bottom-up baseline plan be put in place to integrate the defined scope with the authorized resources in a specified frame. <ref name="Fleming" />

==Introduction==
[[File:TriangleMan.png|thumb|250px|Figure 1. The project triangle: Scope, Time and Cost.]]
An important part of successful project management is to have accurate and reliable information and the current performance is the best indicator of future performance. By using trend data, it is therefore possible to forecast cost and schedule overruns early in the project.

===Background===
The Earned Value Management method was introduced in the 1960s as a financial analysis specialty in United States Government programs, but has since been a significant branch of project management. In the late 1980s and early 1990s, it was no longer used by EVM specialists only. The EVM was emerged as a project management methodology to be understood and used by managers and executives also, and today EVM has become an essential part of project tracking in many projects.

The method can be used to measure the real progress of a project, and combines the measurements of the project management triangle: scope, time and cost. Thereby the EVM method provides early indications of expected project results based on project performance and highlights the possible need for corrective action. These indications become available to management as early as 20 percent into the project <ref name="Fleming">Earned Value Project Management (2005), '''Fleming, Q. and Koppelman, J.''', ''(A leading book within Earned Value Project Management. A lot of background for The Earned Value Managament method and how it has envolved through time.)'' </ref>.

==The EVM Method==

First of all, to implement the Earned Value method it requires that a [[Work Breakdown Structure (WBS)]] must be built by decomposing all the work to done in work packages. These work packages are the smallest groupings of work tasks which are necessary for the level of control needed. Material, labor and other resources are allocated to each work package, and a schedule of all the work packages are set up. <ref name="Measuring">EARNED VALUE MANAGEMENT (2002), ''Ferguson, J. and Kissler, K.H.''</ref>.

With the EVM method we can measure the expected total project time and cost and calculate the deviation between the current performance and the planned performance. The method uses some basic EVM metrics, which will be introduced.

===The Metrics===
[[File:PVEVAC.jpg|right|thumb|450px|Figure 2. BAC and the three EVM parameters. The project is delayed but under budget. <ref name="Dum"> http://media.wiley.com/Lux/23/246523.image0.jpg</ref>]]
EVM uses three key parameters to measure project performance <ref name="Frank">Earned Value Project Management Method and Extensions (2003), '''Anbari, F.''' ''(The paper shows the major aspects of Earned Value Management method and presents a lot of tools graphical. Some extensions on how to use the method even further.)'' </ref>.:

* '''Planned Value (PV)''' or Budgeted Cost of Work Scheduled (BCWS)
: This is the time-phased budget baseline. It is the approved budget for accomplishing the activity or work related to the schedule. PV can be viewed as the value to be earned as a function of project work accomplishments up to a given point in time. The total PV is equal to the '''Budget at Completion (BAC)'''. This is the total budget baseline for the activity or work package. It is the highest value of PV and the last point on the cumulative PV curve. The graph of cumulative PV is often referred to as the S-curve, because it (almost) looks like the letter S.

* '''Actual Cost (AC)''' or Actual Cost of Work Performed (ACWP)
: This is the cumulative actual cost spent to a given point in time to accomplish an activity or work (and to earn the related value).

* '''Earned Value (EV)''' or Budgeted Cost of Work Performed (BCWP)
: This is the cumulative Earned Value for the work completed up to a point in time. It represents the amount budgeted for performing the work that was accomplished by a given point in time. The EV equals the total budget at completion (BAC) multiplied by the percentage activity (or project) completion (PC) at the particular point in time <math> (=BAC \times PC) </math>

[[File:Scenarios.png|left|thumb|400px|Figure 3. The four different possible time/cost scenarios. <ref name="Measuring" />]] 
In Figure 2 the three key parameters are shown together with the Budget of Completion (BAC). From this figure it is seen that the Earned Value (EV) is below Budget of Completion (BAC), which means that the project is delayed. Moreover, the figure shows that Actual Cost (AC) is below both BAC and EV. This means that the project is under budget. 

There exist four different possible time/cost scenarios, which can be seen on Figure 3. 
Scenario 1: The project is ''late'' and ''over'' budget. 
Scenario 2: The project is ''late'' but ''under'' budget. 
Scenario 3: The project is ''early'', but ''over'' budget. 
Scenario 4: The project is ''early'' and ''under'' budget.

 

====Example====
A project has a total budget at completion (BAC) of $100.000. Then a [[Work Breakdown Structure (WBS)]] can be used to break down the different activities. A work package 1.1 has a budget of $20.000 and is 100% complete as of the status date. Thereby, the Earned Value for this work package is: 
<math>
\begin{align}
EV = $20.000 \times 1.00 = $20.000
\end{align}
</math>

Work Package 1.2 has a budget of $40.000 and is 50% complete, and the Earned Value is: 
<math>
\begin{align}
EV = $40.000 \times 0.5 = $20.000
\end{align}
</math>

The Earned Value for the entire project is: 
<math>
\begin{align}
EV = $20.000 + $20.000 = $40.000
\end{align}
</math>

[[File:BudgetExample.png|center|600px|]] 

The planned value as of the status date is PV = $50.000, but the actual cost is AC = $60.000 and the earned value is EV = $40.000. This means that the project is over budget and delayed. This example can be seen on Figure 4. 

[[File:PVACEV.PNG|center|frame|Figure 4. Illustration of the example. The project is over budget and delayed. <ref name="Frank" /> ]]

===Performance Measurements===
By comparing the three key parameters, PV, AC and EV, it is possible to determine the cost performance and schedule performance. The variances are based on cumulative data (also called inception-to-date data and project-to-date data).

====Variances====
[[File:SVCV.PNG|400px|right|thumb|Figure 5. The same example as Figure 4, but also illustrating the SV and CV. <ref name="Frank" />]]
* The '''Cost Variance (CV)''' is the difference between the earned value (EV) and the actual cost (AC), i.e. a measure of budgetary conformance of actual cost of work performed. In other word, CV indicates how much over or under budget the project is. 
: <math>
\begin{align}
CV = EV - AC
\end{align}
</math>

* The '''Schedule Variance (SV)''' is the difference between the earned value (EV) and the planned value (PV), i.e. a measure of the conformance of actual progress to the schedule. So in other words, SV indicates how much ahead or behind schedule a project is running. 
: <math>
\begin{align}
SV = EV - PV
\end{align}
</math>

====Example====
If we go back to the example mentioned above, we can calculate the cost variance and the schedule variance. 

: <math>
\begin{align}
CV = EV - AC = $40.000 - $60.000 = -$20.000
\end{align}
</math>

: <math>
\begin{align}
SV = EV - PV = $40.000 - $50.000 = -$10.000
\end{align}
</math> 

The CV and SV for this example are shown in Figure 5.

===Performance Indices===
The performance indices are ratios, which say something about the efficiency. 

* The '''Cost Performance Index (CPI)''' is the ratio of Earned Value (EV) to the Actual Cost (AC), i.e. a measure of budgetary conformance of Actual Cost of work performed. 
: <math>
\begin{align}
CPI = {EV\over AC}
\end{align}
</math>

* The '''Schedule Performance Index (SPI)''' is the ratio of Earned Value (EV) to the Planned Value (PV), i.e. a measure of the conformance of actual progress to the schedule. The SPI provides information about schedule performance of the project. It is the efficiency of the time utilized on the project. 
: <math>
\begin{align}
SPI = {EV\over PV}
\end{align}
</math>

* The product of the Cost Performance Index (CPI) and the Schedule Performance Index (SPI) is called the cost-schedule index, or the '''Critical Ratio (CR)'''. This ratio is an indicator of the overall project health, and it informs you of how much you are getting out of each dollar spent on the project. 
: <math>
\begin{align}
CR = {CPI \times SPI}
\end{align}
</math>

A ratio equal 1.0 indicates that performance is efficient and on target. A ratio greater than 1.0 indicates excellent, highly efficient performance. A ratio less than 1.0 indicates poor, inefficient performance. 

====Example====
If we need to find the cost performance index (CPI) and the schedule performance index (SPI) for the above project, we can calculate it by: 
: <math>
\begin{align}
CPI = {EV\over AC} = {$40.000 \over $60.000} = 0.67
\end{align}
</math>

: <math>
\begin{align}
SPI = {EV\over PV} = {$40.000 \over $50.000} = 0.80
\end{align}
</math>

From theses indices we see that both the CPI and SPI are less than 1.0, which indicates that we are a little behind schedule and a lot over budget.

===Forecasting===
It is said that bad news known at the 20% point in a project’s life cycle gives an opportunity to take corrective actions. <ref name="Fleming" /> Therefore, project managers are primarily concerned with decisions affecting the future, as forecasting and predictions are very important aspects of project management. The EVM is designed to keep an eye of the project performance and to give management an important “early warning” signal to take corrective actions in the future. EVM is especially useful in forecasting the total project cost and time to completion, based on the actual performance up to a given point in the project. 

The formula for predicting a project’s final cost, i.e. how much money it will take to complete a given project, is given by the '''Estimated Cost at Completion (EAC)'''. EACs may differ based on the assumptions made about future performance, and therefore there different variations of EAC exists.

# '''Variances are typical '''
: The method is used when the variances at the current stage (or until now) are typical, for example due to some unforeseen conditions which are likely to happen at the beginning of a project, but are not expected to occur in the future. 
: <math>
\begin{align}
EAC &= AC + (BAC - EV) \\
&= BAC - CV \\
\end{align}
</math>

# '''Past estimating assumptions are not valid'''
: This method is used when past estimating assumptions are not valid and new estimates are applied to the project. This could for example be if you are behind schedule or over budget. 
: <math>
\begin{align}
EAC &= AC + {BAC - EV \over CPI \times SPI}\\
&= AC + ETC \\
\end{align}
</math>
: Where ETC is the Estimate to Complete.

# '''Variances will be present in the future'''
: Here we assume that the future variances and performance will be the same as the past variances and performance, i.e. the CPI will remain the same for the rest of the project. 
: <math>
\begin{align}
EAC &= AC + {BAC - EV \over CPI} \\
&= {BAC \over CV} \\
\end{align}
</math>

==EVM vs. Traditional Cost Management==
[[File:Traditional.jpg|400px|right|thumb|Figure 6. Traditional Project Cost Management vs. EVM. <ref name="Fleming" />]]
There is a fundamental distinction between using a traditional cost control approach and the Earned Value management. In traditional project cost management the plan-versus-actual cost comparison gives no way to ascertain how much of the physical work that has been accomplished. Such displays merely represent the relationship of what was planned to be spent versus the funds actually spent.<ref name="Fleming" />

If we take a look at another example and look at the cost performance on top of Figure 4, it indicates great results against the original spending plan, where the planned funds are equal to the actual costs. This is only useful as a reflection of whether a project has stayed within the funds authorized by management, i.e. funding performance. This does not reflect the actual cost performance.<ref name="Fleming" />

In contrast, Earned Value Management displays three dimensions of data: the Planned Value of the physical work authorized, the Earned Value of the physical work accomplished and the Actual Costs incurred to accomplish the Earned Value. Thus, under an earned value approach, the two critical variances may be ascertained. The schedule variance, SV, shows that the project is experiencing a negative schedule variance of $100.000 from its planned work. This shows that the project management team is clearly behind the planned schedule. When used together with other scheduling techniques, for example [[The Critical Path Method (CPM)]], it could provide invaluable into the true schedule status of the project.
The other variance, namely the cost variance, CV, we see that the project has a cost overrun of $100.000 for the work performed to date. Experiences has shown that such cost overruns tend to get worse over time, and it is therefore of critical importance to the project. <ref name="Fleming" />

==Limitations==
Even though the EVM method is very useful, it has some limitations too. Earned Value as a technique is effective in the management of projects, but has very limited utility in the management of continuous business operations. <ref name="Fleming" /> Therefore it should only be used on projects – preferable on small and simple projects, as large projects has many components which have to be accounted for which can derail in the details.
Another crucial aspect is that the EVM method does only consider time and cost, but not the quality. Quality is such an important part of any project, that it necessary to have some kind of quality control. Without that, it means that a project can be on budget and time, but still be a very bad product.
Overall, it is also important to remember that the EVM does not tell the whole story, and therefore is the method not attended to be used as a stand-alone tool. <ref name="web1">How Earned Value Management is Limited (2013), http://www.brighthubpm.com/monitoring-projects/10056-how-earned-value-management-is-limited/ ''(Short about the limitations on the Earned Value Managment method.)''</ref>

==References==
<references />