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Performance Measurement Baselines

In order to develop that common understanding of the project work, another key project deliverable should be created: the Work Breakdown Structure (WBS). The WBS is defined in the PMBOK® Guide as a deliverable-oriented hierarchical decomposition of the work to be executed by the project team to accomplish the project objectives and create the required deliverables. It organizes and defines the total scope of the project. Each descending level represents an increasingly detailed definition of the project work.

There is a saying in project management that “if it’s not included in the WBS, it’s not included in the project!” A WBS is a direct representation of the work scope in the project, documenting the hierarchy and description of the tasks to be performed and relationship to the product deliverables. The WBS breaks down all authorized work scope into appropriate elements for planning, budgeting, scheduling, cost accounting, work authorization, measuring progress, and management control. The WBS must be extended to the level necessary for management action and control based on the complexity of the work.

As one can plainly see, project planning is a necessity for project success and the incorporation of earned value analysis on your project. Now that basis for EVA has been established, let’s focus on three primary areas of information needed to compute EVA.

EVM Foundational Concepts

As introduced above, Earned Value Management Systems allow the project manager to answer the following three questions, as they relate to the project:

  1. Where have we been?
  2. Where are we now?
  3. Where are we going?

In Earned Value Management, unlike in traditional management, there are three data sources:

  • – the budget (or planned) value of work scheduled
  • – the actual value of work completed
  • – the “earned value” of the physical work completed

Earned Value takes these three data sources and is able to compare the budgeted value of work scheduled with the “earned value of physical work completed” and the actual value of work completed.