; Earned Value Technique In Project Management
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Earned Value Technique In Project Management

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                <p>Earned Value Technique is an excellent way to track
the Project Progress against the Project Plan.</p>
<p><a rel="nofollow" onclick="javascript:_gaq.push(['_trackPageview',
'/outgoing/article_exit_link/1825696']);"
href="http://www.simplilearn.com">Earned Value Technique</a> is a method
of objectively measuring project performance against the Project
baseline. Result from an Earned Value analysis indicate deviation of the
Project from cost and schedule baselines.</p>
<p>Baseline means, the first approved <a rel="nofollow"
onclick="javascript:_gaq.push(['_trackPageview',
'/outgoing/article_exit_link/1825696']);"
href="http://www.simplilearn.com">Project Schedule</a>. There are various
terms used in Earned Value Techniques. For example, PV, meaning Planned
Value, is the Estimated Value of the Work Planned to be done. This value
is measured in terms of currency, say dollar. So, if planned value is
$340, it was planned to do work worth 340 dollars.</p>
<p>But, how do you calculate Earned Value? It’s quite simple. Just add
the budget allocated to each of the activities that have completed at
that point in time. The resulting value is Earned Value at point of
time.</p>
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<p>Now that you have gone through the Earned Value Terms, Let’s look at
the formulas involved in calculating the Earned Value.</p>
<p>Here again, all the formulas are listed in the slide along with their
explanation. Remember to</p>
<p>note that Negative cost variance means that the project is over
budget, positive means the</p>
<p>project is under budget.</p>
<p>Similarly, Negative schedule variance means that project is behind
schedule where as Positive schedule variance means that project is ahead
of schedule.</p>
<p>The next two parameters i.e. Cost Performance Index (CPI) and Schedule
Performance Index (SPI) are also quiet important parameters. Their value
varies between 0 and 1.</p>
<p>So, if CPI is say 0.8, it means that we are getting 80 cent out of
every dollar spent in the Project.</p>
<p>If, SPI is say 0.9, it means that project is progressing at only 90%
of the speed originally planned. The next parameter is Estimate At
Completion. So, at any point of time during the project execution, if it
is required to know how much the project would actually cost by the time
its gets completed, just divide the Budget At Completion by the Cost
Performance Index.</p>
<p>What is Budget At Completion? It’s just the Budget of the Total
Project.</p>
<p>The next parameter is Estimate to Complete, which is how much more
would the <a rel="nofollow"
onclick="javascript:_gaq.push(['_trackPageview',
'/outgoing/article_exit_link/1825696']);"
href="http://www.simplilearn.com">project cost </a>from this point
onwards. This is calculated simply by subtracting Actual Cost from the
Estimate at Completion.</p>
<p>Also, Variance at Completion can be calculated by subtracting Estimate
At Completion from the Budget At Completion.</p>                <!--
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