Earned value management is modern method for controlling and managing costs, which is used worldwide. Using this concept, the project management team is able to control time and costs, thus reducing potential losses. In this model, projects are considered successes if they are completed on time and within budget.
At every point in time, three numbers are used for analysis:
- According to the schedule, how much should have been spent to achieve the current progress? (Schedule)
- How much progress has been made and at what cost? (Project reality)
- What is the cost of the current progress according to the schedule? (Earned value)
By integrating time, cost, and scope, EVM allows measuring progress accurately so that decisions regarding reactive measures can be made.