Earned value analysis
Earned value analysis in its various forms is the most commonly used method of performance measurement. It integrates scope, cost, and schedule measures to help the project management team assess project performance. Earned value involves calculating 3 key values for each activity:
· The budget is that portion of the approved cost estimate planned to be spent on the activity during a given period.
· The actual cost is the total of direct and indirect costs incurred in accomplishing work on the activity during a given period.
· The earned value is a percentage of the total budget equal to the percentage of the work actually completed. Many earned value implementations use only a few percentages (e.g., 30 percent, 70 percent, 90 percent, 100 percent) to simplify data collection. Some earned value implementations use only 0 percent or 100 percent (done or not done) to help ensure objective measurement of performance.
These 3 values are used in combination to provide measures of whether or not work is being accomplished as planned.