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MGT 437 Week 4 DQ 2

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Discussion Question #2:
What is the concept of earned value? What real life examples would illustrate the earned value
concept? How does this approach to performance measurement differ from simply tracking cost
or schedule?
What is the concept of earned value?
Earned value is a management technique (EVM). EVM relates resource planning to schedules
and technical performance requirements.
“Earned value management (EVM) is a systematic process that uses earned value as the primary
tool for integrating cost, schedule, technical performance management, and risk management”
(Kernzner, 2006, p. 612).
What real life examples would illustrate the earned value concept?
Some companies systematically replace older equipment, such as trucks/service units. The
replacement of equipment would benefit from the use of EVM. If a company has a fleet of
vehicles that are being replaved with new vehicles, the use of EVM would give a clearer view of
the status. In addition, EVM will assist in identification of trends and variences from the plan.
How does this approach to performance measurement differ from simply tracking cost or
schedule?
Without using the EVMS, determining status can be difficult. EVMS identifies problem early in
order to prevent and resolve them early. “The EVMS provides an early warning system, thus
allowing the project manager sufficient time to make course corrections in small increments”
(Kerzner, 2006, p. 614). Since smaller variances are easier to correct, EVMS should be used
throughout the entire project.
Kerzner, H. (2006). Project Management a Systems Approach to Planning, Scheduling and
Controlling (9th ed.). New York, NY: Wiley.

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Discussion Question #2: What is the concept of earned value? What real life examples would illustrate the earned value concept? How does this approach to performance measurement differ from simply tracking cost or schedule? What is the concept of earned value? ? Earned value is a management tech ...
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