Question

How fors project acope relate to project budget and earned calue managment?

How does the project scope and project budget relate to earned value managment in projects?

How does the project scope and project budget relate to earned value managment in projects?

Answer 1

Earned Value Management is the process to measure project performance by the project manager. Earned value management is the process to find the variance between work performed and work planned in the project up to date. Earned value management is helpful in understanding and analyzing costs and examine project expenditure related to finished work. As a project manager, it is essential to manage various constraints effectively and monitor the status of the project on a real-time basis. Earned Value management helps the project manager to achieve these tasks carefully and effectively.

Apart from the Earned Value Management, there is no other tool that addresses the issues with schedule and budget in the project. It is one of the favorite and important tool or method for any project manager. Earned value management is a tool or method to integrate project cost, schedule, and scope. It provides various and useful information about a project and helps the management or project manager to have a better decision. There are three main components to understand EVM (Earned Value Management) that we will discuss in the below points,

a. Earned Value: It is also known as a budgeted cost of work performed. Earned value is the value of the work performed on the basis of the authorized budget for that work element finished. The Earned Value is helpful in understanding current project performance and to know the long term trend in the project.

b. Planned Value: It is known as a Budgeted cost of work scheduled in the project. The planned value determines the authorized budget assigned to the work schedule in the project.

c. Actual Cost: This is another element in earned value management. The actual cost is the cost that is also called the Actual Cost of Work Performed in the project.  The actual cost is basically cost incurred actually for the work performed during a particular period of time of the project.

Earned value management helpful in determining more accurately where our project stands in terms of scope and budget. It is basically a comparison between planned and actual situations or conditions in the project and explains the reasons for variance between the planned and actual conditions in the project. EVM helps the project manager to quantify the work accomplished and work needs to be finished by this time in the project and calculate the variance for project scope and project budget and we can determine whether we are on schedule, ahead of schedule or behind the schedule as per the plan. In the same way, we can determine if the project is running on a budget, over the budget, or under the budget as per the actual plan.

So we can see that there is a strong relationship between Earned value management with project scope and project budget. Earned value managerment helps the project manager to understand and calculate the project scope, project budget, performance and progress in the real time. It is one of the best method for project planning and control the project on the basis of different elements.