Earned Value Analysis

Level: Undergraduate | Grade: 2:2 | Approx. Word Count: 1,540

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This report has been prepared at the request of a project manager (PM) to provide an evaluation of the process of earned value analysis (EVA) and establish the relevance of its implementation as an integral element of the project management system. Following an overview ofthe EVA concept, the report highlights it advantages and disadvantages prior to concluding that, with the appropriate management, EVA can prove advantageous, particularly in terms of project cost and risk analysis.

The main aim and objective of project management systems is to assist in the assessment and monitoring of its execution performance and outcomes (Portney 2001; Kerzner 2006). Essentially, from a cost aspect, this measurement process can be conducted through a comparison of actual costs with the budget set for the project. However, the disadvantage of this simplistic approach is that it fails to provide data that indicates the potential impact the actual costs are likely to have on the overall completion of the project (Webb 2000). The EVA system extends the comparison and measurement process (Hillson 2004). EVA collects data, including time expended and actual cost of work performed (ACWP) to date, which is then measured against the budgeted cost of work performed (BCWP)  together with the budgeted cost of work previously scheduled (BCWS). Based on the outcome of these indicators, the EVA then process can then be used for the purpose of assessing how the current project situation is likely to affect the cost outcome of its completion. There are three basic equations that can be performed