If you’re a project manager and aren’t familiar with Earned Value Management (EVM) you may want to learn more about it. It has been around since 1966 when it became a requirement to fulfill certain Air Force contracts. In the government world, it has changed little over the years with the EIA-748-D standard currently consisting of 32 guidelines. The 32 guidelines are divided into five sections:
- Planning, Scheduling and Budgeting
- Accounting Considerations
- Analysis and Management Reports
- Revisions and Data Maintenance
It’s these 32 guidelines that define the requirements for a companies Earned Value Management System (EVMS) and its ongoing use. Companies with governmental contracts, over a certain Dollar threshold, often have no choice and are required to comply with all of these guidelines. In addition, they are often subjected to quite rigorous audits by the DCMA (Defense Contract Management Agency) to ensure continued compliance.
You might think, well why would I need to know about this for my smaller projects. Why would I think about implementing it unless I am required? We don’t even do government contracts. You may be too busy trying to manage your projects that you think you don’t have time to even start the process.
Earned Value Management is Best Practice Project Management
The irony is that implementing EVM on all your projects can save you time, effort and reduce risks in the future. In short, it’s considered a best practice project management and something every organization should strive for.
Here’s how it can help you be a better manager of your projects, resources and in communicating project performance to your stakeholders.
The foundation of EVM is in setting a baseline for individual projects and using more empirical measures to track actual progress. With the Performance Measurement Baseline (PMB), you will then be able to use these empirical measures to calculate the value of work completed throughout the life of your project. The PMB integrates with the budget, schedule and scope and will allow you to regularly monitor your project performance.
To get the robust baseline required for EVM, customers often see improvements to their planning process, better-defined work scope and a clearer view of who’s responsible for the work. Before they even start measuring project progress, EVM drives improved project planning combining the schedule, cost and technical elements.
This has the benefit of allowing you to see, ahead of time, where your project might be off and to make quick and effective adjustments. The more visibility and early insight you have into the project throughout its life, the more likely it is to be successful.
EVM will help you to see if you are running late, running over budget, experiencing scope creep, etc. It ensures more accurate progressing of your schedule. You will be able to locate where the project is having issues, to assess how critical the issues are and to determine what needs to be done to fix them. EVM does this by showing variances in both schedule and cost and then projecting these variances forward.
In addition to this, EVM will allow you to have tighter control and more flexibility in managing your projects. The more flexibility there is in a project, the more likely it is to succeed. EVM data will also allow you to run more focused “what if” scenarios. These can help by highlighting changes that will correct problems and even show opportunities to improve project performance.
The benefit of EVM is that it provides more accurate and up-to-date project performance and forecasting. You can use this in communicating with stakeholders keeping them better informed of progress, delays, problems and corrections. They will see that the project is being managed more closely and effectively. This can keep them more committed to the project, which can help to see it through to a positive conclusion.
With all these benefits, why wouldn’t you use Earned Value Management on all your projects, whether a customer mandates it or not? You would enjoy improved visibility and accountability and therefore, improved control.