Earned Value Analysis
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Why is it important? It is a quick, accurate way to monitor the profitability of a project during and after the project lifecycle. |
Earned Value Analysis (EVA) is the relationship between a project’s contract amount, spent (earned or burn rate) amount, and the project’s Reported Percent Complete (RPC).
When you compare these three items against your estimated project timeline, you start to paint a clear picture of where your project stands. The EVA data is most commonly displayed using a three-line graph (see example below). For a project manager or principal, this graph can be a valuable tool for quickly determining if a project is on time and on budget.
Before you ever start work on a project, you should enter your contract amounts, and budget the project down to the phase level. After your contract is set and your project is active, you begin capturing your time and expenses, and spent amounts.
The final piece of the EVA puzzle is the one that is used the least: Reported percent complete (RPC) at the phase level. RPC is a critical piece of EVA. It should come directly from the project manager and be updated at least once a week or as predetermined milestones are met.
If you have all of these elements, then you have everything you need to create an Earned Value Analysis graph.
In a perfect world as your project nears completion, you would see your contract, spent, and RPC values all follow the same path. The reality is that projects will change and evolve while you’re working on them, which can make tracking and management difficult if not impossible. This is where the EVA graphs are most useful.
You can compare your RPC vertically to your spent value to see where your project stands in terms of budget to actual. You can gauge whether or not your project is on schedule by comparing your RPC horizontally to your contract amount. When you analyze your EVA at the project or phase level, you can easily take the guesswork out of determining your overall project status.
With Ajera, you can use the Progress report to see real-time, up-to-date Earned Value Analysis at the project and phase level, at any time.
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