Project Earned Value Analysis is a part of Earned Value Management (EVM) that is a method for assessing a project performance and progress objectively; its features include possibility to measure progress at any given point in time, forecasting a project’s finish date and final costs, and analyzing variances in the schedule and budget as the project performance continues.
This method stands for monitoring the amount of work that has been actually accomplished and comparing it against the amount of work planned to be done at that date, so the managers can easily determine if the costs, schedule, and work already done match the plan.
Project Earned Value Analysis concentrates on three basic parameters:
- How much work should have been completed so far;
- How much money has been spent to move the project so far;
- What is the value of work that has been accomplished;
By comparing these values, an assessment can be made on how efficient a project is. In other words it shows how much of the budget and time should have been spent, in comparison to the amount of work done so far. Project Earned Value Analysis can be done via the following indexes:
- Cost Performance Index (CPI = Earned Value/Actual Costs): it shows you the amount of work completed for every unit of costs invested into it. A value that is above 1 means that a project is doing well against the budget.
- Schedule Performance Index (SPI = Earned Value/Planned Value): it shows you if the actual work matches the progress schedule. A value that is above 1 means that the project is doing well against the schedule.