Earned Value, Clear and Simple
Tammo T. Wilkens, Los Angeles County Metropolitan Transportation Authority
(Currently with Primavera Systems, Inc.)
April 1, 1999
The term “Earned Value” is gaining in popularity around project management circles as if it is some wonderful new concept
to be embraced. Yet, it has been in use since the 1960s when the Department of Defense adopted it as a standard method of
measuring project performance. The concept was actually developed as early as the 1800s when it became desirable to
measure performance on the factory floor. Today, it is both embraced and shunned, often in response to prior experience or
stories told “in the hallway.” The opponents will generally cite the cost and effort to make it work, and the limited benefit
derived from its implementation. The proponents will cite the cost savings to the project overall, the improved analysis,
communication and control derived from its implementation. No doubt, the two camps have vastly different experiences to
formulate their perceptions.
This paper will explore the three major questions regarding this topic: What, Why and How? The purpose is to allay any
fears the reader might have about applying this useful project management tool and to point the way to making it work. It is
expected that the reader will gain a thorough understanding of the concept as well as a recipe for implementing Earned Value
on his/her project.
What Is Earned Value?
When we speak of Earned Value, we generally are speaking of a methodology. While Earned Value is just one element of
this methodology, it is the key element. The simplest way to think of Earned Value is to equate it with physical progress. As
the name implies, it is something that is gained through some effort. In project management, this value is earned as activities
Consequently, Earned Value is also a measure of progress. As we shall see later, there is a direct relationship between
Earned Value and per cent complete. The attributes of Earned Va