Earned Value is essentially an integrated schedule progress and cost measurement.
The Earned Value System closely correlates with a projects’ measurement of “percent complete” with project spend. It provides a quantifiable evaluation to the likely cost of the project before it concludes - an Estimate at Completion (EAC).
The EAC is a value of great interest in all projects, since it is an indication of over or under budget, a critical project success factor.
A secondary use for the EAC is to define some joint project control opportunities, leverage or incentives with contractors responsible for project implementation.
Once a system is developed for one project, linking of other like data for multiple projects provides the project-based business more accuracy in determining point-in-time cash flow requirements. On a longer time frame, better point-in-time estimates allow the business manager to free up the project retained cash assets for other projects or revenue generating activities.
Recall that the cost performance of the project directly influences the cash flow of the business. A business that uses the cash flow process to its maximum can turn it into a profit center. Accurate cash flow forecasting provides cash capability in the business enabling liquidity and leverage, and precludes inadvertent over investment within the project system.
