Earned Value Management System Compnoents
People sometimes talk about ‘earned value management systems’ as if they are a specific thing you can buy at the store – a tool that comes in a neat box that you simply plug in and it works straight away.
That’s not exactly how it works.
Your EVMS is made up of four main components. You may have some of the components provided by the same software; others may need to be integrated so the whole thing works together. Some you might already have in your IT estate; others might need to be purchased and set up before you can get started.
The four components of an earned value management system are:
- Scheduling tool
- Earned Value/Cost management tool
- Reporting tools
- Accounting or ERP software
Let’s look at each of those.
1. Scheduling tool
You may have one (or more) scheduling tools already in use across your organization. Popular tools for project scheduling in an earned value environment include:
The scheduling tool is the part your teams will use to plan the project work and create the baseline timeline.
The important aspect of the scheduling tool is that it is robust enough to allow for enterprise use, that it gives you accurate options for resource allocation, task management, critical path management and progress tracking. It needs to be easy enough to use so that the project team can keep it up to date regularly on a near-real time basis (if not in real time).
It should also work closely (or be capable of being integrated with) the way you manage project costs so you can allocate financial costs to resources and tasks as necessary.
It’s often less disruptive, cheaper and faster to stick with what you have and build on that. As long as you have enterprise-grade scheduling features in your current project management tool, you should find that it can be integrated and adapted into an earned value management system.
2. Earned Value/Cost management tool
This tool is a specialized product that is used to integrate the cost and schedule data. It takes the actual cost figures and data around work performed to create EV reports and forecasts.
Deltek Cobra is, without a doubt, the most popular cost engine.
As you can see, many software vendors offer various modules that fit together to provide a holistic solution. It’s often easier to choose modules from a vendor if you already use their products as you can guarantee that the integration will be straightforward.
One of the advantages of using a specialized tool is that it’s designed purposefully and has features like recording historical results so you can easily track trends in project performance over time.
There are sometimes exceptions to that, where the best choice for your company will be a tool from a different provider instead of the supplier you use for the scheduling engine. We can advise on earned value management tool selection to ensure you are investing in tools that are fit for purpose.
3. Reporting tools
The cost management tool you use will do the heavy lifting and number crunching, but you’ll also need a reporting engine to help present the data in a way that makes it easy to use. You will get some reports out of your EV tool, but we find that clients benefit from having a ‘serious’ data analytics product to help with in-depth analysis and reporting suitable for use across the business.
The benefit of a mature reporting tool is that you can more easily interpret the data – and if people find it easy to use, they are more likely to act on the information. You’ll get a better adoption of EV techniques if people can see why they are doing it and how the information serves them in the daily management of their projects.
Good management information should also lead to better decision making and ultimately more chance of project success. Easy-to-use reports also make it easier to evidence what was done and audit performance.
Popular reporting tools for earned value management include:
- Deltek wInsight
- Encore Analytics Empower
- Microsoft Excel
4. Accounting or ERP software
Finally, we have the money part! Again, you are likely to already have accounting software in use in the organization, and this can most likely be integrated into your EVMS.
Common accounting tools in use in businesses using earned value include:
- Oracle Applications
- Deltek Costpoint
- Deltek GCS Premier
- JD Edwards
This part of the system brings together hours worked and the cost of project delivery. The information from here feeds into the EVM reporting to provide data on cost baselines and performance.
Once you have all your components in place, you can start to see how an EVMS system description will help document how each component links to the others, supported by processes.
When all the components are working together, you can get fast, accurate, relevant data on project performance and true visibility of status. It can feel like a headache to get all the pieces in place, but once it is done, you’ll never look back!