Earned Value Management (EVM) is a requirement for many government contracts, and specified by many clients looking to secure project teams to deliver their work. If you are taking your first steps into Earned Value (EV) to meet the demands of your clients, it’s worth understanding a little about the limitations of the system so you can plan how you are going to overcome them.
Three common limitations of earned value are:
- You need a well-defined project scope
- You need well-defined project dates
- You need skilled staff.
While they might seem like big challenges at first glance, you can mitigate for all of them, choosing actions that allow you to still use EV where it’s appropriate to do so.
Below, we discuss those three challenges and give you some tips on how you can manage around them, or resolve them completely.
1. You need a well-defined project scope
Earned Value (EV) relies on having a well-defined project scope so that value can be assigned to specific chunks of activity. Typically, the requirements are recorded in a Work Breakdown Structure (WBS) and WBS dictionary that holds all the information needed to accurately estimate and plan the work.
Not all projects fit that model.
For example, you might be working on a project where the scope is not clear at all, or you do not have all the detail to be able to construct a work breakdown structure, let alone a plan. Dr Eddie Obeng describes these projects as ‘walking in fog’ projects where you don’t know what you are doing (yet) and you don’t know how you are going to get there (yet).
Make sure your project can be scoped in a way that allows the creation of a work breakdown structure and discrete work packages.
That might mean spending more time on the requirements elicitation and documentation, making sure there is robust and accurate information and detailed plans.
However, it could also mean giving EV a miss on this project and choosing a different approach to project controls that is more suited to work with an evolving scope. Otherwise, you could end up investing a lot of management effort into producing EV reports that don’t really tell you anything useful.
2. You need well-defined dates
EV calculations are date-driven. In other words, you’re looking for value earned during a specific time period of when the work was scheduled.
In today’s knowledge economy, there are often tasks that need to be done but that don’t fit within specific dates. Expert input, for example, can be hard to judge, especially when you are asking your SMEs to come up with things that are brand new. Examples of this include:
- Creating new policies to respond to changes in legislation
- Designing a training program for a system that has not yet been built
- Creative work
- Some aspects of transformative business and cultural change that are driven by results, not dates, and are managed as a journey.
‘Brain work’ is particularly hard to schedule because you can’t reliably know how much effort it is going to take to come up with the solution. In the example of policy design, writing the policy down might take a day or two, but coming up with what goes into the policy might require many late nights of heated discussion… or it could be very simple and finished in a couple of hours.
EV for project controls doesn’t have a lot to add for these tasks.
It may be possible to structure the project into activities where EV is an appropriate method of project control and activities that will be tracked and managed in a different way.
However, don’t let comments of ‘we can’t estimate that’ go unchallenged. It might be hard to estimate, and it might involve some uncomfortable conversations, but most project work can be estimated to a level that makes it possible to use EV for tracking.
3. You need skilled staff
The third limitation for adopting EV is that it’s important to have experienced project professionals who can produce the inputs for the EV tools and interpret the outputs. You might not have project accountants with the relevant skills – or enough of them to support all the projects you are running. Your project management experts may not be confident enough using the tools to create the required baselines.
EV is a topic that’s often talked about at a high level but not truly taught in detail on many of the popular project management certification programs. It’s also not applied in every industry, so depending on where your staff have come from, they may not have had to use it before.
A competent and experienced project manager, with a long history of project success, may hold several certifications and still not have enough knowledge of EV to be able to use the tools efficiently.
No one starts off with experience. You can shore up the skills of your internal team with experienced EV staff who can support your own team to learn tips and tricks, as well as build their confidence in using the tools. They’ll make sure that the data going into the EV system is accurate and detailed enough, and that it’s being entered in a timely way so the data coming out is meaningful.
Over time, contracted experts can prepare a knowledge transfer so they can fully step back. Then your in-house team will be able to run the Earned Value (EV) systems and provide compliant reporting to clients.
As you implement EV in your organization, you may find other limitations or assumptions that would benefit from being discussed with experts who have led successful implementations in all kinds of companies, in all kinds of industries around the world. It’s always OK to reach out to us for an informal chat about how we could support you in making the most of your Earned Value (EV) system or developing a new one, so you can continue to focus on what you do best: serving your clients.