By Ray Myers, Jr., PMP Here are some basic rules to interpret the results of Earned Value calculations. Negative numbers for cost and schedule variance are bad Positive numbers are good CPI and SPI less than 100% are bad If you are studying for the PMP examination you may also find the following information...
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By Ray Myers, Jr., PMP These 3 terms are the keys to Earned Value Management. Planned Value (PV) Planned Value is also called the project budget It is the total estimated cost that is planned to be spent of the project It is the approved budget by the project sponsor or by contract Actual...
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By: Ray Myers, Jr., PMP The basic elements of Earned Value Management (EVM) are: Planned Value (PV) PV is the planned, budgeted, or estimated cost for the work performed as of a reporting date.  PV is calculated by multiplying the hourly rate times the number of hours planned to accomplish the work. PV =...
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By: Ray Myers, Jr., PMP Return on Investment (ROI) is a measure of the profitability of a project or business investment.  Net Benefit Compares benefit to cost of initiative = Benefit – Cost Benefit Cost Ratio Ratio for benefit returned for each dollar invested = Benefits / Costs Return on Investment % Percent in...
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By: Ray Myers, Jr., PMP Net Present Value (NPV) is a measure of the net benefit of a project in terms of today’s dollars.  NPV is a financial analysis technique that considers: Timing of cash flows Time value of money  Projects with positive NPV add value to a firm, while projects with negative NPV...
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By: Ray Myers, Jr., PMP If you haven’t seen or used EVM formulas, you will at some point in your project management career and you will need to know these formulas to pass the PMP examination.  EVM stands for Earned Value Management.  Earned Value is a simple and easy to use method to quickly...
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By: Ray Myers, Jr., PMP Definition:  Return on Investment, or ROI is a performance measure used to evaluate the net benefit of a project to the performing organization.  ROI is usually expressed as a percentage. Every organization has a wish list of projects that they would like to be implemented, but funding and resource...
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