Why is it useful?
Earned Value
allows you to see trends in performance, and thus to predict
potential overruns. At an individual task level, it is a
good indicator of how much time and cost should have been
spent so far, compared with how much time/cost has actually
been spent.
However, it is advisable not to place too much reliance on such
forecasts, especially in the early stages of the project's lifecycle, as
few tasks have been started or completed; as time moves forward, the
accuracy of the predictions increases, although you are still reliant on
peoples' assessments of progress.
How does 4c work with Earned Value?
After you have
estimated the project tasks, and 4c has calculated the hours and
the costs
(based on the resources allocated), you baseline the project.
This sets the planned hours and cost budgets for the tasks and the
whole project.
When
time starts being booked to the tasks, task progress is indicated by the
percentage complete figure. This may be calculated by 4c,
based on the current estimated time needed to complete the task as entered on the timesheet,
together with the
current date; or, where a task is shared by several resources, it may be aggregated from
the resources' estimates of their progress on the task.
Alternatively the task percentage complete may be estimated by the
project manager and entered
manually.
The budget cost
is multiplied by the percentage complete figure to give the
Earned Value.
4c calculates a Performance value for hours and costs, by
dividing the earned value by the actual hours and actual costs. The
Predicted Forecast is calculated by dividing the
Remaining hours/costs by the performance figure, and adding the
result to the the Actual hours/costs.
Graphs (s-curves) showing the cumulative planned, actual, current
(forecast) and earned values can be produced.
