Earned Value Management (EVM) is a powerful advantage for project controls as it gives you both the historical picture and an insight into what the future might bring. One of the pieces of your earned value management system is the chart, and people sometimes get confused about what the graphs and charts show. That’s what we’re digging into in this article.
What is an Earned Value chart?
An earned value chart is a way of displaying earned value management metrics over time. Typically, the chart has lines that represent budget (planned project cost), actual cost and earned value, which is a measure of how much progress has been made. Together, these data points create a chart that provides useful management information about project performance.
Here’s an earned value chart example to illustrate what that looks like when the graph is created.
As you can see, there are lines on the chart that show each of those measures, and a timeline that shows how the situation has changed as the project has progressed. The earned value calculation is shown in green.
How to make Earned Value charts
The easiest way to graph earned value is to use professional software that does it for you. Tools like Primavera P6 Professional form part of an earned value management system: when all the pieces come together and project managers embed EVM in the way they deliver projects, all the data will be available in your tools. Then it’s a simple job of pressing a button to create scheduled reports and seeing your charts put together almost instantly!
You can create earned value charts in Excel or other spreadsheet tools, but the manual overhead required to maintain these makes them a less good solution than professional project management tools.
Here, you can see the lines showing planned value, earned value and actual cost, as well as the variances. The difference between planned value and earned value is the schedule variance (SV). The gap between the earned value and the actual cost is the cost variance (CV). The trend lines continue into the future as well, showing the forecast (estimate to complete or ETC) and the budget at completion (BAC).
Earned value charts can be created in your project management software of choice, depending on what enterprise tools you have, and then exported as PDF files in order to be shared with stakeholders. Alternatively, you can take screenshots or export the charts as images to paste into presentations.
We’re big believers in minimizing the admin overhead of managing projects, so we would recommend you use the reports and dashboards within your earned value management system instead of trying to create charts for earned value outside of those tools. That is going to reduce the chance of manual keying errors, data duplication or creating inconsistencies within the reporting, which is a key consideration for certification and audit.
Interpreting Earned Value charts
Earned value analysis is a good tool to ensure the project is sticking to the performance measurement baseline expectations, but it’s only a set of data points. As the project manager, it’s important that you can adequately interpret and communicate what the chart is showing you. That’s the only way to adequately manage project risk and ensure corrective action can be taken if necessary to get the project back on track.
The graphs can give you the data to calculate the cost performance index, schedule performance index, actual work, total cost, total budget and more, but all of that is only useful if you then work with the project team to deal with a cost overrun when you see it, for example. That might involve reviewing the work breakdown structure or revisiting the baseline cost of the project if things have changed.
The current status of the project is shown by the graph, and this is useful information to share with project stakeholders, along with any new estimates or changes to the original plan that now need to be put in place as a result of current performance. Ideally, we’d like projects to stick to the original plan, but the earned value chart provides the insights required to establish whether that is really the case for this current project, or whether the baseline is not being achieved.
The chart provides a visualization of the data to help clients and team members understand where the project is currently and where it needs to be in order to deliver something of value for a reasonable price and amount of effort.
The good news is that charts are a lot easier to understand than a table or narrative describing all the different indices and their values. Charts provide clarity and you can pack a lot of data into a small space which makes of efficient reporting! The earned value method really does have a lot to offer.
If you aren’t comfortable explaining the planned schedule and variances to your stakeholders, then don’t worry. Earned value management training covers all this in detail, and a lot more! When you understand the core concepts of EVM, you can easily interpret charts and data points, putting this information to use in both your stakeholder communications and reports and also how you choose to lead the projects.
Ultimately, successful outcomes for you and your clients are all that matter, and if being able to create and use EV charts can help you get there, that’s better for you and your customers.