Earned value analysis is like the idea behind that old Smith Barney slogan, "We make money the old fashioned way—we earn it." According to earned value analysis, progress is measured by how much of the project value (its cost) you've earned so far.
Project customers, sponsors, and stakeholders want to know how far along a project is. Earned value alone tells you how much of the project cost you've earned, but it doesn't say anything about the schedule. If a project has spent half the budget, consumed half the project duration, and performed half the work, you're all set. On the other hand, if the budget and duration are half spent, but the work is 25 percent complete, something's wrong. 50 percent of the budget and duration are left with 75 percent of the work still to complete.
Earned value analysis requires a baseline in your Project file, so you have a plan to compare to. If you haven't set a baseline yet (Setting a Baseline), all the earned value fields are zero. You must also enter actual values (Entering Actual Progress in Project) to show what you've accomplished and how much it cost.
Earned value also needs a status date at which you measure progress like last Friday's date if you evaluate progress at the end of every week. Choose Project → Project Information. In the Project Information dialog box, in the "Status date" box, choose the date you want, and then click OK.
Earned value analysis uses several calculations ...