- [Presenter] So let's talk about earned value management.
Now, some of this you've actually seen
already used in the course,
but I want to provide a little bit more focus here
because EVM is a very important concept
in project management,
and it helps us understand how we're performing
in an objective way,
so it gives us some data to evaluate our performance.
And the other thing is that it integrates various risks
into the metrics themselves.
So it helps us understand the scope, the cost,
and the schedule, and where we are with all of those things.
And finally, it helps the people in your organization
understand what the future of the project's going to be.
So let's talk about three metrics.
We've used them in some way already,
and you're likely to come across them
as you manage projects as well.
Okay, so planned value is the total cost
of the work planned to be completed.
So that means that you take the amount budgeted
and you proportion it out
to the amount of time that's elapsed.
So it's like if we were going to spend a certain amount,
by this time, we should have already spent this amount.
Now earned value is how much of the work
you've actually completed to date
against how much you planned to complete.
And then finally, the actual cost
represents the real expenses,
the real costs that have incurred.
So you may actually see these
being used under different names,
but know that all the calculations you want to know
are going to tie back to these three metrics,
at least in this course.
So some key performance indicators.
Again, we've already done schedule performance
and cost performance index,
but let's talk about schedule variance and cost variance
'cause they're also important.
So schedule variance is really easy.
It's just the earned value minus the plan value.
If it's positive, we know we're ahead of schedule.
If it's negative, we know we are on a delay.
Now cost variance is going to be the expected value
less the actual cost.
So again, if the resulting calculation is positive,
then we are good, we're under budget.
If it's negative, we are over.
And just as a reminder,
scheduled performance index is going to be EV divided by PV.
So earned value divided by plan value.
Greater than one is good.
Less than one is bad.
And cost performance index is going to be EV,
so earned value divided by actual cost.
Greater than one is good.
Less than one is bad.
All right, so now that we know the metrics
that are important to earn value management,
let's talk about how to build an EVM calculator in Excel.