Does anyone have any insight into how material purchases should be treated in earned value management? Many of my projects have large one time material purchases at the start of the project. These represent the bulk of the budget. If I include the cost in my EVM calculations, it appears to throw off the numbers, making the project look like it is far over budget and behind schedule. If you don't earn the value upon purchase, do you earn it when invoiced or when the material is used? If that's the case, do you track and report on budget separately as well?
You can consider the following:
If the material procured is part of the project, you could distribute the material cost to the duration of the project. For e.g. software license procured for a particular project is $1000, and if the duration if the project is 10 months. You can load the cost evenly as $100 per month for 10 months. If the material is used for multiple projects you could distribute the cost accordingly between projects. This way you will not load the cost upfront to skew the calculations. If the material procured is a capex, then the cost gets tracked elsewhere not in EVM. Hope this will help.
By the many comments, you know EVM is not to track budget. One way not perfect but more in line with EVM. Will be to build material utilization in the calculation. So a week or a month account of material that has been installed.