Earned value management (EVM) assists project managers when measuring the overall performance of a project. EVM can be very useful in project forecasting and is used for cost and schedule control.For this assignment, write an essay detailing the basic elements of earned value management. Additionally, discuss how the calculated results from EVM are part of an audit.
Basic elements of earned value management
The performance of any particular project is paramount to any project manager. As a result, most project managers will look for the best and ideal techniques to measure the performance of their projects. In most cases, project managers have always settled for Earned Value Management (EVM) which is a systematic project management process that helps the project managers to identify variances in projects. Through the comparison of accomplished and performed work and the work planned or budgeted, the project manager identifies the need for correction and rectification (Vanhoucke, 2013). Earned value management can also be used to detect and identify variations in time and schedule making them very important to all project managers. This paper seeks to examine and explain the basic elements of earned value management.
There are three basic elements of earned value management that should always come into play whenever the techniques are used. Below are the three elements:
- Planned value – it is widely referred to as budgeted cost of work scheduled, and it comprises of the total work planned as of certain reporting date.
- Actual cost- usually known as the actual cost of the work performed and comprised of the total cost taken to complete the work or task as of a certain date.
- Earned value – it is widely known as to the budgeted cost of work performed, and it is the total of the work performed as of a specific date.
The calculated results from Earned Value Management are an important part of an audit which seeks to inspect the organization’s accounts (Vanhoucke, 2013). Thus, the calculated results should be inspected whether they are accurate and are correctly entered in the books of accounts to eliminate any chances of corruption or overspending.
Vanhoucke, M. (2013). Earned Value Management. In Project Management with Dynamic Scheduling , (pp. 217-240). Springer Berlin Heidelberg.