What's wrong with Earned Value Project Management?Well there must be something wrong with it because very few people actually use it.This article will try to establish just what the problem is.What is Earned Value?Earned Value is a technique that clearly shows whether you're getting Value For Money. It is a major component of Best Practice in Project Management. It is mandated in USA and Australia and is being used more and more in the United Kingdom. The technique essentially identifies the value in physical terms of the useful work done at any given point in time, in all areas and at all levels within the project. By comparison with the original plan, Earned Value can be used to identify other parameters such as time to completion, cost to completion and expected final costs. It also enables project managers to identify those areas of the project that are proceeding well, those that are in trouble and enables percentage progress and performance indices to be calculated.

Earned Value can be used in almost any project situation and in almost any project environment. It may be used on large projects, medium sized projects, tiny projects (in cut-down form), complex and simple projects and in any market sector. Some people, of course, know all about earned value, they have used it for years - but perhaps not as effectively as they could have?

Good project management will produce good Earned Value Data. Poor project management will produce poor Earned Value Data.

Skilful interpretation and application of Earned Value information will make a major contribution towards ensuring project success. 



  
The above graph shows how Earned Value can be used to determine schedule and cost variances as well as providing estimates of completion.The earned value line shows simply how much of the forecast has actually been done.  How much has been earnt for every pound spent.  How much it is costing to earn a pound.Unsurprisingly it rarely costs just a pound to earn a pound and quite often costs several.  For some reason most projects do not have this information or as in the case of Quantity Surveyors in the UK construction industry, they have this information but do not use the information to manage with.It is also more often than not the case that the last person on earth that the supplier would wish to share project information with is his customer.The best projects have crossed this Rubicon and treat earned value information as commonly shared data which is used to manage the project from both sides.  The success of the project then becomes the central issue rather than how much can be earnt or saved to the detriment of the other.In general, British business doesn't seem to like or trust the idea of working together or for the common good.  Our education, health, transport, construction and agricultural industries are testament to that.  However the pendulum seems to be swinging back after some very harsh lessons. Organisations now see earned value as the way to leverage good practice into projects. What does Earned Value do for you?

It provides simple but powerful answers to many questions such as:How much is it really costing us to earn each unit of forecast value? How much is going to cost by the finish? When is it going to finish? Where are we now? Exactly! Where are our problem areas? How does this compare with other projects?

It will not however guarantee a successful project. Only people can do that.

The Problems Associated with Earned Value

Historically, Earned Value was developed for and used on massive projects, particularly in Defence. This has created the perception that it is hugely complicated. Common criticisms are that it is only good for large defence projects, far too complicated for us, far too costly for us. A common problem with small or non- project oriented organisations is that they do not have internal mechanisms that can collect effort and costs to individual projects or parts of projects. Other problems may be associated with the culture of the organisation - not used to reporting meaningful progress information.



What is wrong with earned value?

It works!

 

Steve Wake is current Chair of the APM Specific Interest Group on Earned Value and can be contacted on 0208 886 5594 or swprojects@blueyonder.co.uk.co.uk