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Feedback Please – Earned Value Exam Question

Paul Naybour Paul Naybour

Published: 11th June 2018

Hi Paul,

Please can you provide some feedback on the following exam question?

Thank you.

Part a, within the context of Earned Value management explain the term earned value.

Earned value is the total value of the products and deliverables of the project which cannot be taken away and therefore belong to the project. Earned value is calculated by multiplying the budget at completion by the percentage of work complete. It allows the project manager to understand progress. This can be done by comparing the earned value figure to the planned and actual costs

Part b, explain four benefits of using earned value management

1. The project manager can assess progress and determine if the project is running quickly, slowly or on time. This is done by using other factors such as planned and actual cost and estimated completion dates. We can use these figures to calculate performance indicators such as CPI and SPI. This information allows the pm to take corrective action if required to bring the project back on track.

2. It can provide assurance to key stakeholders e.g. the sponsor that the project is being appropriately monitored and managed. This is done by presenting impartial reports based on the Earned value data. The performance indicators CPI and SPI are particularly useful for this purpose. The sponsor can easily learn that greater than one is good whilst less than one is bad. These can be used to contrast with the forecasts provided by the project manager.

3. The Earned Value allows accurate forecasts relating to estimated total costs and completion dates. Previous estimates can be updated based on actual progress. This is particularly powerful where the forecast produced by the project manager and earned value are different. The earned value data can be used to inform the forecast made by the project manager. This will make the overall forecast more accurate.

4. It allows a proactive approach to be taken as any delays in overspending can be identified earlier. This will enable additional resource either sourced or alternative rectifications made to realign two initial budgets and schedules. By producing a systematic performance measure for each work package the PM can quickly identify those packages that need attention. They can then plan the most effective corrective actions

  1. Paul says:


    Again you need to include more detail in your answer to get the necessary marks. I have added some additions sentences of explanation, in italics. I hope this helps.

    You could also look at this answer I prepared earlier.


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