Earned value management is a term used by PMI to describe the general application of earned value analysis to monitoring project progress. The concept of earned value provides a mathematical way to accurately assess the project's actual progress against the project's planned progress. The DOD, as a way of instituting a standard project analysis and reporting methodology, developed earned value. Fortunately, the earned value methodology not only served the purpose of providing a standard way of reporting project progress to the DOD, but it turned out to be the most accurate, and simplest to use, method for tracking how a project is doing.
There are several earned value formulas that are used to provide different and extremely important cues to the health of the project's progress. It is well worth reviewing these formulas before launching into a practical example and analysis.