What is the principle of Earned Value Analysis? How to use it to control the cost and schedule of the project?

Earned Value Analysis (EVA) is simply a monitoring and forecasting technique that judges a project's performance based on its plan and actual execution, and can make predictions about future development based on the current situation. Earned value is the preferred method of measuring project execution because it can measure both progress and cost, and the results are easy to analyze.

Earned value management avoids the drawbacks of measuring progress or cost performance separately, and it requires one to ask not only how far the project has progressed, but also how much money has been spent to get to that point.

"Earned value" is a term for "planned value," which, in layman's terms, means that the planned value is "earned" back, bit by bit, to indicate the value that has been realized.

To understand the earned value, it is necessary to grasp the following basic concepts:

Plan value (PV): the value of the work to be completed to indicate the value of the work is planned to complete the work of the budget value. PV = workload to be completed to plan * budget unit price.

Earned Value (EV): the budgeted value of the work that has actually been completed. ev = the actual amount of work that has been completed * budget unit price.

Actual Cost (AC): the cost of the work that has actually been done. ac = actual amount of work done * actual unit price.

Budget at Completion (BAC): the cost base for the entire project, which does not change unless a change request has been approved.