Why you should consider Earned Value Management in your project management methodology.
Earned value management, or EVM, is a tried and tested way to monitor and predict project performance. Its systematic approach can help project managers identify potential variances in projects, thus acting as a forecasting tool to flag potential issues that can then be anticipated and avoided.
It takes a holistic view of the project trajectory to create a projection of likely future outcomes. However, in order to achieve this, a large amount of information is needed up-front. It’s therefore essential to be clear about the expected benefits of EVM in order to understand the payback from collecting and analyzing this level of detailed data.
EVM as part of the PMO
EVM provides a useful way to compare work performed as compared to work planned. It’s therefore vital to be clear about your project baseline: without a clear definition of the costs, schedule, and scope of a project, it’s not possible to identify where things may deviate from the project plan.
The actual calculation of EVM can be complicated, although established formulae cover data points related to cost forecasting, variances in cost and schedule, and other performance indices relevant to the project. If a project is 10% of the way through its schedule, with 20% of the money spent but only 5% of the work completed, for example, then EVM can be used to calculate the actual likely time span of the project and the budget which might realistically be expected to be needed.
The use of EVM within a PMO, therefore, offers additional insight into likely project performance in the future. So, what are the key benefits of using an EVM methodology?
As EVM operates as a calculated look into the future, it’s a helpful tool to help reduce risk in project delivery. This is invaluable when identifying trends that might impact the Estimate at Completion for the project.
The elimination of subjectivity from using EVM leads to a calculated, fact-based assessment of progress and likely outcomes, allowing the risk of unseen overruns to be reduced.
One of the criticisms sometimes leveled at EVM is that it is a calculated, formula-based methodology that may not translate into usable information from which the whole project team can benefit. However, EVM can actually provide an incredibly useful visualization of project progress if the information is interpreted and shared in the right way.
EVM analysis can be used to create scorecards and other visual aids, which in turn can help the whole project team, and wider organization, understand project progress.
Improved communications to stakeholders
EVM provides a fact-based assessment of likely project progress. This makes it a very useful approach when interacting with the stakeholders for a project, as it creates a positive and defined focus for communications and ensures that everyone is of the same understanding about deadlines and budgetary considerations.
EVM provides an impartial assessment of project health based on past performance and shareable calculations, and is therefore a good tool for stakeholder engagement.
Improved internal accountability
In the same way as providing a helpful subjective judgment for wider stakeholders, EVM can also offer better internal accountability as to the progress of various elements of the project lifecycle.
If there is a calculated assessment of where a project should be at any point in time, rooted in the facts of the baseline and expected schedule, cost, and scope, then it’s easier to challenge the delivery of some of those elements compared to the expected plan. If something has veered off course, then EVM will highlight that fact and can act as a framework for the conversation as to why
EVM provides a holistic analysis of likely future performance
Earned Value Management requires a lot of data to be collated initially, but offers valuable insight back out at the end of the process. While it’s true that you need to be explicit about Planned Value in order to calculate Earned Value, it’s also true that the resulting increase in understanding about the likely outcomes for schedule and cost can be worth the investment of time and staff resources.
DRMcNatty are experts in all aspects of Project Management Services, including Earned Value Management. We can work alongside your PMO to collect the necessary data inputs and calculate the sums needed to create an EVM assessment. If you would like a conversation about the help we can offer, get in touch with our expert team to learn more.