Success Factors for EVM Implementations
The U.S. Government Accountability Office is the agency that provides guidance to government bodies around how to work efficiently and increase the return on investment from tax payers’ money. They also create standards that are useful reference guides for project teams, and their guidance on earned value is essential reading if you intend to bid for government contracts.
Even if your business has no intention of taking on government work, their guidance on earned value management systems is based on lessons learned from federal and industry projects, and was created with a great deal of input from people who work with the tools and techniques every day.
The GAO Cost Estimating and Assessment Guide is a freely-available handbook for creating reliable cost forecasts and managing project budget estimates.
The Guide identifies three characteristics of successful earned value management systems. They are:
- Comprehensive
- Accurate
- Informative
Those characteristics are quite broad, so let’s look at what they mean in terms of your EVM implementation.
Comprehensive
We interpret a comprehensive EVM system as one that has broad acceptance across the organization and is fully embedded into the way projects are managed. If necessary for the performance of a contract, you should work to gain EVM system certification to ensure your tools meet the necessary guidelines.
Another factor of a comprehensive implementation is that Integrated Baseline Reviews are conducted. This ensures that the baseline is a true reflection of all the work that needs to be delivered as part of the project or program and that nothing sits outside of the performance measurement system. Risks should be understood and managed appropriately.
There also needs to be a comprehensive schedule that ticks all the boxes for schedule best practice:
- Representative of the work breakdown structure
- Logically sequenced
- Updated with resources required.
Then that can be used to create the budget baseline in relation to the schedule of planned work.
Finally, a comprehensive EVM system is one that has governance in place. There should be management oversight to ensure processes and procedures are followed, whether that reflects internal practice or whether that involves auditing a contractor to ensure they measure up to their own standards.
Accurate
Earned value analysis is such a data-driven discipline that without accuracy, the results can be meaningless. Data must be reliable and reasonable.
A good way of checking the robustness of the data is to create different EVM reports in a variety of formats and compare the results. An accurate system will tell the same story, regardless of how the data is presented. If you start to see varying results or different interpretations from the same inputs, that should be a red flag for your team. Dig into the anomalies and understand where they are coming from.
You know the phrase: Garbage In, Garbage Out. Your EVMS relies on accurate data, so your system should be set up to make that easy to get and easy to use.
Informative
The third characteristic of a successful EVMS, according to the GAO, is that the system is informative.
In other words, it provides information that the project or program team find useful and valuable for decision-making. There must be enough data out of the system on a regular basis to inform management decisions and to provide that early warning system that EVM is known for.
You’ll need reporting tools to track trends and record historical results so you can monitor performance over time. The outputs of your system calculations should be a regular part of project reviews so that corrective action can be taken in a timely way. Any changes to the underlying data, such as updated baselines or new estimates, should be incorporated into the system as quickly as possible to maintain the integrity of the output and ensure the data remains useful.
Three Success Factors for EVM
Those three characteristics: comprehensive, accurate and informative, have been identified by GAO research as key to ensuring that high-quality data comes out of your EVMS. And of course, better data out should mean better quality decision-making and project steering. How does your EVMS measure up?