Advantages and Disadvantages of Earned Value Management

Earned value management is project management technique for measuring the performance and development of the project which the company has taken in hand for completion. An example of earned value management is school exams while in school there is one main annual exam but in between that there are quarterly or monthly tests taken so as to see whether students are learning or not, in the same way in case of earned value management before seeing the final performance of the project top management continuously evaluates the ongoing project against the plan and see whether the project is going according to plan and budget. In order to understand this concept better let’s look at some of the advantages and disadvantages of earned value management –

Advantages of Earned Value Management

  1. The first and foremost advantage earned value management is that it helps the management in seeing that whether the project is going on track in terms of work progress and also on budgeted line or not. It not only analyses the work done but also analyses the cost or expense needed to do that amount of work so if a project is worth $10000 and on 50 percent completion of work if the company has used $8000 then it cannot be called a success because even if the project is on time but company has used 80 percent of budget for 50 percent of work done.
  2. Another advantage of earned value management is that management can take proactive steps if the project is not going according to the plan and avoid any embarrassment and loss happening because if this method is not used than management has no idea about the project work and cost involved and they came to know it only when project is finished and one the project is finished you cannot do anything to rectify it so in a way earned value management give a management a second chance in between a project to rectify errors in a project execution and make the project a success for the company.
  3. If in the company there are multiple projects going on than earned value management can be an effective tool in comparing the performance of different projects and analyzing which project is running the best compared to others and reasons for its performance.

Disadvantages of Earned Value Management

  1. The biggest disadvantage of earned value management is that it only checks whether the work is on time and within budget or not but it does not have a check system for quality of work so the project may be completed on time and within budget but the quality of the work can only be seen once the project is complete.
  2. Another limitation on earned value management is that it involves constant supervision on the part of management and which results in management getting too involved in project which in turn can create a rift between management and people who are executing the project which in turn can lead to disruption of relations at different within the company which in long run can have an harmful impact on the company.
  3. Earned value management is a complex methodology and it cannot be comprehended easily and therefore company needs to have the separate team of specialist to carry out this process which in turn can lead to more cost for the company and also it can time consuming.

As one can see from the above that earned value management has both benefits as well as limitations and company before implanting earned value management for the project should carefully analyze both benefits and limitations and then take the decision.

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