How do we know that our project progress is good enough with respect to completion of work (schedule progress) and money spent (cost). Earned value management system helps us to know the exact status of the project with respect to work completed and money spent just by tracking two ratios;

Schedule Performance Index (SPI) and the Cost Performance Index (CPI).

If SPI >=1, then the project is doing well schedule wise. If SPI < 1, then the project is not doing well schedule wise.

Similarly, if the CPI>=1, then the project is doing well budget wise. If CPI < 1, then the project is not doing well budget wise.

If SPI>=1 and if, CPI is also >=1, then the project’s health is good.

A fully implemented earned value management system can even forecast how the expected cost and time of completion. That will help the project managers / controllers to be more proactive than reactive.

Quick EVM

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