The method entails evaluating the estimated value of a venture or asset with its precise earned worth, sometimes at particular intervals. This comparability identifies any discrepancies between deliberate expenditure and the work accomplished, offering a monetary snapshot of venture efficiency. For instance, if a building venture was budgeted at $1 million with an expectation of fifty% completion after six months, however solely 40% of the work has been completed in line with worth earned, this disparity highlights a possible value overrun or scheduling difficulty.
This observe is essential for efficient venture administration and monetary management. It permits organizations to proactively establish and deal with potential issues, comparable to funds overruns, inefficient useful resource allocation, and scope creep. The ensuing improved monetary transparency helps higher decision-making, stakeholder communication, and finally, venture success. Traditionally, these comparisons have been typically carried out manually, however fashionable venture administration software program facilitates extra frequent and correct analyses.
