Definition:
A project performance measurement technique that integrates scope, schedule, and cost data to assess project progress and forecast completion outcomes.
Key Components:
- Planned Value (PV): The estimated cost of work planned to be completed at a given point.
- Earned Value (EV): The value of actual work performed.
- Actual Cost (AC): The real costs incurred for the completed work.
- Performance Indices: Includes cost performance index (CPI) and schedule performance index (SPI).
Use Cases/Industries:
- Oil and Gas: Monitoring budget and schedule adherence in refinery expansion projects.
- Renewable Energy: Evaluating progress in wind and solar farm installations.
- Infrastructure Development: Tracking costs and schedules in road and bridge construction.
Advantages:
- Early Risk Identification: Provides early warnings on cost and schedule deviations.
- Objective Performance Measurement: Uses data-driven insights for decision-making.
- Improved Cost Control: Helps maintain project budget and prevent overruns.
Challenges:
- Data Collection Complexity: Requires consistent and accurate project reporting.
- Specialized Knowledge: Project teams must be trained in EVM methodologies.
- Potential for Misinterpretation: Incorrect calculations can lead to misleading conclusions.
Related Terms:
Project Controls, Key Performance Indicators (KPIs), Schedule Variance (SV)
Example:
A natural gas plant construction project tracks EVM metrics to compare actual costs against earned value, ensuring work is progressing as planned.
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Synonyms:
Performance-Based Project Monitoring, Cost-Schedule Integration
