PMP — Earn value management explain

Earned value management (EVM) is a project management technique that involves comparing the actual cost and progress of a project to its planned cost and schedule. This allows project managers to identify any potential issues or problems early on and take corrective action to keep the project on track.

EVM involves tracking three key metrics: the planned value (PV), which is the budgeted cost of the work that has been planned; the earned value (EV), which is the actual cost of the work that has been completed; and the actual cost (AC), which is the actual cost of the work that has been completed to date. By comparing these metrics, project managers can determine whether the project is on track, over budget, or behind schedule.

For example, if the PV for a project is $100,000 and the EV is $80,000, this indicates that the project is under budget. However, if the AC is $90,000, this indicates that the project is actually over budget, even though the EV is under budget. In this situation, the project manager would need to take corrective action to bring the project back on track and avoid future cost overruns.

EVM is a valuable tool for project managers because it allows them to monitor the progress and cost of a project in real-time, identify potential issues early on, and take corrective action to keep the project on track and within budget.