Does Your Project Use Earned Value Management?
You’ve heard about earned value management as a way to track and monitor project performance. But is it right for your project? We’re often asked what kinds of projects get most value out of adopting an EVM system for project management.
Every project is unique in its own way, but there are certain types of project where the robust performance management tools of EVM provide the required level of assurance.
Here’s an overview of the types of project where an EVM approach is typically used to help you decide whether your project portfolio would benefit.
At the top of the list we have projects where using an EVMS is mandated by contract. Large, capital, government projects fall into this category, and you might find large-scale commercial contracts mandating the EVM requirement too.
You’ll know if the project you are bidding for requires earned value because it will be mentioned in the proposal request. We support businesses with RFP responses, specifically around helping prepare an EVM system description and implementation plan if required. By making sure the EVM requirements are robustly covered by your proposal response, you can increase your chances of winning the bid.
IT projects aren’t known for their ability to stay on track and deliver on time and on budget! You only have to look at the world media to find some high-profile examples of late and over-spent IT projects.
Using an EVMS on an IT project doesn’t guarantee that you’ll hit your deadlines and come in under budget – because that comes down to your management decisions and a thousand other factors – but it will help you identify performance trends quickly enough to be able to do something about them.
A sub-category of government projects, defense projects can have multi-billion dollar budgets and use Earned Value Management. When the numbers are so large, the impact of any delay can be substantive. Contractors involved in defense projects need to show they are on top of their part of the work, and be able to provide information to the program team overall so that a full assessment of progress can be made.
Energy and utility projects
Electricity, oil and gas, water and waste… energy and utility projects require a large investment and often many years. The corporate plan to decommission the UK’s Sellafield nuclear site, for example, has project milestones that stretch forward to 2036.
EVMS provides a long-range project tracking mechanism that will help you monitor progress historically and predict performance going forward. When your project is a multi-year investment, a little slippage here and there doesn’t seem like much. EVM gives you the tools to decide whether those deviations combine to give you a performance problem worth investigating.
Housing, transportation and urban development projects
Housing, construction, transport and development projects often have many stakeholders, contractors and sub-contractors. EVMS is a way to gather information from a diverse number of sources and present a consolidated view of project progress. Data from various sources can be combined to give key decision makers a realistic overview of project progress.
EVM systems are often certified for exactly this reason: the people reviewing the data need confidence that your data is robust and realistic. The certification process is a way of achieving that level of oversight and providing assurances that your team can manage within the best practice guidelines.
You don’t have to be managing a multi-million dollar project to get any return from earned value. The principles and processes work well to provide management information for projects on a much smaller scale. Any organization that wants to accurately measure cost and schedule performance in a reliable and transparent way will benefit from EVM.
However, given the implementation effort and cultural change required to get the best out of any EVMS, it is advantageous to have an established approach to project delivery already within the organization, as well as a number of large (for you) projects to make the effort worthwhile.
Projects that don’t fit EVM easily
Earned value analysis works best on projects that can produce a clear scope baseline and work breakdown structure, accurate cost estimates and a timeline that effectively represents the proposed schedule for the work.
As a result, agile projects where the scope is drawn from the product backlog on an iterative basis are not great candidates for the robust application of EVM. Of course, agile projects do track project performance with a high degree of accuracy, but they do so using tools different to those we typically see as part of an EVMS.
Another ‘pass’ for EVM is a project with a high degree of uncertainty; those that Dr Eddie Obeng would describe as ‘walking in fog’ where neither the end goal or the path to get there are clear. Many business change projects begin this way, and with our world requiring the delivery of more and more programs under VUCA circumstances – volatile, uncertain, complex and ambiguous – project teams are leading plenty of this kind of change. However, when you are truly unable to plan and schedule with any degree of accuracy, earned value analysis becomes inaccurate and therefore unhelpful.
You can adopt EVM in most environments and on most projects – we’d like the challenge of showing you how to tailor earned value to fit your team! Project managers working on initiatives of all shapes and sizes will tell you how important it is to know how the budget and schedule are performing against the planned effort. That’s exactly what EVM can give you, so even if your projects seem a little smaller than the large-scale public works that are often used as case studies, it’s worth giving earned value a second look.