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What is an Earned Value Management System?

By J. Airman
Updated Jan 26, 2024
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An earned value management system, commonly called EVMS, is a method used to measure and plan the labor costs and progress of a project. This type of system is usually used in project management in production and manufacturing. Steps performed in this type of system include budgeting and tracking work, measuring worker performance, and identifying and implementing steps to solve recurring problems in the system. An earned value management system helps identify the actual work used to complete a project versus the projected amount of work for the project, and it identifies the cost of that work. Many government funding organizations require data from an earned value management system to qualify for funding.

Generally, a project manager using an earned value management system first assigns a cost goal to a phase of a project. The cost may be in dollars or in work hours. This system helps identify budget overages early because it breaks down budget costs into milestones that can be examined at different points in a project. Project managers often place these milestones on a time line basis and review the budget and expenditures on a regular basis, often weekly or monthly, to determine project progress. After the estimated cost is determined, the project manager begins gathering data about project progress and the labor used to complete each phase.

This type of system can help a project manager deliver final project results on time and at the projected labor cost. It also provides a project manager with up-to-date information about the budget and progress of a project. Without an earned value management system monitoring expenditures, a project manager may find out too late that a project is hopelessly late or over its allotted budget. When this type of situation is caught early, corrections can be made during following project phases to help make up for the deficit and avoid costly delays. This type of system can also help indicate to a project manager that the project is running behind schedule.

In addition to managing a project budget, an earned value management system can also help determine whether project workers are performing as predicted. It can give clues as to which parts of the project were more difficult and lengthy than expected. Once the project has been completed, this data can help the project manager make more accurate future predictions about the work requirements for a similar project phase. This type of data can also help identify and address productivity problems in a work team.

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