Variance And Earned Value Analysis Essay

Variance And Earned Value Analysis Essay

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Variance and Earned Value
After a period of meticulous planning, project managers (PM) anticipate that their projects will be executed on schedule and within the proposed budget. According to Maheshwari and Credle (2010), there are internal and external factors that can impede a project’s progress. Therefore, once a project is in motion PMs often rely on tools to assist them with staying on course - and to mitigate project risk. One such tool is the Earned Value Measurement System (EVMS) that can be used to quantify a project 's progress and assist PMs with managing and controlling project costs, instead of merely monitoring costs during various stages of a project. The EVMS can also be used to forecast a project’s completion date and present an analysis of variances, which may occur due to additional or misinterpreted requirements, to determine a project’s earned value (Kerzner, 2013).
According to Hayes (2002), earned value analysis is primarily performance focused; however, it is a methodology which accounts for a project’s scope, schedule, and overall budget. Furthermore, the scope is defined by separating a project into measurable tasks or deliverables such as labor and materials, which can help a PM to manage and track the status of each task more efficiently. This is essential because although a PM may carefully forecast requirements for a project’s labor and materials, a change in the market conditions could dictate the availability of resources; high demand could equate to a shortage of planned project materials, and labor resources (Mammarella, 2014). EVMS is a tool that detects project deviations and small variances, and allows a PM an opportunity to implement corrections early on (Kerzner, 2013). This paper will b...


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... the components of an EVMS and the importance of tracking and managing a project’s materials and labor costs effectively, and more importantly, separately. The EVMS can assist a PM to effectively track a project’s budget and provides essential information pertaining to BAC, EV, AC, PV, and CV. Projects are susceptible to being over budget and not on schedule due to various factors – internal and external (Maheshwari et al., 2010). Whether a project is deemed in jeopardy of going over budget due a PM misconstruing the project scope, or there is an unexpected occurrence such as a shortage of materials to successfully execute a project, implementing an EV analysis as a project management tool, “allows the project managers to refer to tangible numbers, not just a gut feeling, to determine whether the project is advancing on time and within budget” (Hayes, 2002, p. 80).

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