Earned Value Management (EVM) is a project management methodology that integrates cost, schedule, and performance data to assess project progress. It compares the value of work completed against planned costs to determine project efficiency.
Key Components of EVM
- Planned Value (PV) – The budgeted cost of work scheduled at a given point.
- Earned Value (EV) – The budgeted cost of actual completed work.
- Actual Cost (AC) – The real cost incurred for completed work.
- Cost Performance Index (CPI) – EV / AC, showing cost efficiency.
- Schedule Performance Index (SPI) – EV / PV, indicating project schedule adherence.
Why EVM is Essential in Construction
EVM provides early warnings of budget overruns and schedule delays, allowing project managers to make timely adjustments. It enhances decision-making by providing objective, data-driven performance analysis.
Related Terms: Cost Variance, Schedule Variance, Baseline Budget, Critical Path Method