Earned Value Rules or (EV) is a technique (sometimes referred to as fixed formula progress reporting) that creates a consistent status report for project activities. It starts in the planning process where the split is defined, which could be as simple as saying that when the project activity begins, it is considered 25% complete and when finished add the 75%–with the percentages chosen by the sponsors and or the project manager.
But Earned Value Management (EVM) takes this concept and offers a technique for measuring the progress of a project by looking at it’s scope, schedule, and cost in an integrated way.
For example, if the Budget at Completion or BAC of an indy film is $100,000, you could assess that at the end of today:
• The film is 40% completed, thus $40,000 of work is done so far–That is the EARNED VALUE.
• From there you could access that the film was planned to be 60% complete or a PLANNED VALUE of $60,000. This excludes any work started in advance.
• You could also assess that the amount spent (ACTUAL COST) is $80,000. Including any work started ahead of schedule.
With these assessments, you produce the subsequent Performing Schedule Analysis and Performing Cost Analysis to report to shareholders with easy to understand indicators that quickly inform stakeholders (eg investors) if film is behind or ahead of schedule AND if it is over or under budget. Or if, in fact, everything is running as planned.
Also check out posts EVM 2 on Schedule Analysis and EVM 3 on Cost Analysis.
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