Today, we are going to review the EVM calculator. Who can use this financial tool? Whether you host weddings, build skyscrapers, or hold an office Christmas party, EVM (earned value management) methodology could be helpful for you.
It can make sure you are always on budget and on time. With this amazing calculator, you can quickly obtain insights into relevant values, which may be of great help in the decision-making process. But it’s not all about the calculator and math.
In this article, you can also find out more about earned value management and how EVM is applied in project management. You will also learn how planned and earned values can be calculated. Besides, we will cover other important indicators of project progress like the planned, earned, and actual value. It’s worth reading!
Earned Value Analysis & Earned Value Management: What Is It?
Earned value (EV) is a project management technique that can be used to measure the performance of a project. EVM is also called earned value analysis (EVA). This accounting technique enables the project manager to estimate the cost performance of a project by comparing planned work and actual work.
EVA is aimed at measuring the performance of a project by looking at the value that has been “earned” so far. The Earned Value Management (EVM) is based on three components:
- The planned value (PV)
- The earned value (EV)
- The actual value (AV)
Who the Earned Value Management Is Intended for? How to Use and Apply EVM?
So, if you are a project manager, this methodology can let you inspect the current status of the projects and gauge their performance. It also allows you to predict the completion date and final cost of every project relevant to your business.
Every project manager is supposed to have a project plan when applying earned value management. That plan should be created to divide the project into indicates and tasks so that there’s a set budget and schedule for every task involved.
As a project manager, you will have to be familiar with the current status. This means you need to know how far the tasks have progressed. It is also important to know exactly how much they have cost as of now. With the most recent information on tasks and a good project plan, earned value analysis can provide meaningful and important data for every project manager.
What Are the Advantages of EVM?
Earned value management is a mighty project management tool that has a lot of advantages and benefits. Listed below are some of the best features of this project management methodology.
- It is very dynamic and robust: The EVM can help reveal many valuable insights that can be difficult to extract when it comes to hard-to-interpret tasks and large projects.
- It is scalable and flexible: Thanks to its flexibility and versatility, this project management methodology can be applied to both small and large projects regardless of their type and size.
- It is quite reliable: Another advantage of earned value management (EVM) is that the final expenditures can be predicted within a 10-percent margin after completing only 20 percent of the project.
Formula: How to Calculate EVM?
Now that you know more about this project management technique, it is time to see how EVM is calculated in economics. If you decide to calculate it by hand, use the formula below:
EVM = Percent complete * Task Budget
For example, if the Percent Complete (actual progress) is 50% while the Task Budget is $10,000, then the EVM calculation is as follows:
EVM = 50% * $10,000
EVM = 0.5 * $10,000
EVM = $5,000
We will split this process into 3 steps to make it easier for you to understand earned value management. Here’s what you need to do:
- First, you should collect task information, including scheduled progress, actual progress, costs, and budget.
- Then you need to evaluate the performance of each task to check how effective they are and find out how efficient your project is as a whole.
- Lastly, you will have to make predictions regarding the future of your project. It will help you get a better idea of the total cost of getting the project done.
How to Compute EVM Using Our Calculator?
The EVM can be difficult to calculate by hand sometimes. It is especially true for large projects. That is why you should consider using our calculator to save time. This amazing tool can help you compute EVM in a matter of seconds by performing the calculation for you.
All you need to do is provide the task data. Actually, you need to enter them in the appropriate fields. Almost right after entering the task data like scheduled progress, actual progress, costs, and budget, this tool will deliver a comprehensive EVM report. Give it a shot!
FAQs
What Is Earned Value Analysis?
Earned Value Analysis is a management technique for measuring the performance of a project or program. It is used to assess the performance of a project or program by comparing the budget and planned schedule with the actual cost and work performed. It is also used to measure progress against that plan.
Earned Value Analysis has been in use since the 1950s, as it was first developed by engineers at NASA as they were working on complex projects such as rockets, satellites, and manned space flights. As a matter of fact, Earned Value management was developed by the U.S military to measure the performance of their projects. The military wanted a tool that could measure progress without having any bias for or against certain types of projects or technologies. It is still widely used nowadays.
Why Is Earned Value Management (EVM) Important?
As we have stated above, Earned Value Management is a technique that helps project managers to measure and control the performance of their projects. This management technique plays a role in assessing work progress and providing information for management actions. It also helps managers in the decision-making process.
Earned value management can be applied to any type of project, but it is most commonly used in engineering, construction, and manufacturing. Likewise, it can be used in various industries for the sake of measuring the performance of different tasks and projects.