The Earned Value Management Compass

Association for Project Management (APM)

• Publisher: Association for Project Management (APM)
• Year: 2014
• Print ISBN: 9781903494332
• eBook ISBN: 9781903494370
• Topic: Business
• Subtopic: Project Management
• Index: Business

Earned value principles and the benefits they can bring to project control may be applied in a variety of ways. In some cases the principles are being applied without knowing that they are part of earned value. The key is to understand how and where earned value principles are being applied and to encourage them. This guide gives a defined means of establishing and improving project control capability. The Earned Value Management Compass, written by the APM Earned Value Management Specific Interest Group, is intended to support projects or organisations by improving their project control and earned value management processes.

Guidance information

INTRODUCTION

This section aims to provide guidance to support the use of the EVM compass maturity assessment tables. For each of the four stages the following explanatory text is provided for the underpinning attributes. This text outlines:

•The aim – the objective of the attribute;

•The reason – why the attribute is important;

•Guidance information – additional information to assist users who are less familiar with the implementation and utilisation of earned value management systems.

EVM FOUNDATIONS

Attribute 1 – earned value management competencies

Aim:

•To ensure that the project team has the appropriate competencies to implement and manage using an earned value management system.

Reason:

•EVM is often a new process to a project or business and requires appropriate training and education for its implementation to be a success. Implementation and operation of an EVM system can be a complex exercise and can be facilitated by the use of experienced resources.

Guidance information:

It is important that training and support are provided during EVM implementation and that on-going training is also available. The team members should be trained in EVM techniques appropriate to their role within the project team.

Implementation of EVM is best facilitated by using resources with previous implementation experience. Learned experience from other projects is also a valuable source of information.

Attribute 2 – sponsorship

Aim:

•To ensure that there is clear and visible EVM sponsorship for the project from within the delivery organisation.

Reason:

•It is important that the implementation and execution of EVM is sponsored at an appropriate level within the project/organisation.

Guidance information:

The introduction of EVM may cause the need for a significant cultural change, which must be led with senior management support and sponsorship. This should be communicated throughout the entire project structure. The understanding and commitment of the entire project team and organisational functional areas is vital for success, and hence there is a need for comprehensive communication outlining the nature of EVM, the aim and objectives of the implementation.

EVM BASICS

Attribute 3 – project level authorisation

Aim:

•To ensure that the project has been given appropriate approval and authority to proceed.

Reason:

•The project should be formally approved by the responsible organisation. This approval should indicate the overall budget available and assign delivery responsibility/authority onto the key individuals within the project team. It should also indicate the sponsor within the organisation.

Guidance information:

Prior to commencement of work on the project, the approval authority should formally sanction the project to proceed and assign the required level of responsibility, authority and accountability (RAA) to the project manager. To further delegate this RAA to the team delivering the project, a responsibility assignment matrix (RAM) is used.

The RAM process is principally concerned with defining the work to be done, as a work breakdown structure (WBS), and assigning that work to specific parts of the project’s organisation via the organisational breakdown structure (OBS). The WBS and OBS should be aligned and combined to produce a concise RAM, an example of which is shown below.

Figure 6: Example responsibility assignment matrix

Within the RAM, each element of work is assigned to an organisational element and a single person within the organisation. This is regarded as an individual control account (CA). Each control account will be owned by a control account manager (CAM) and will contain lower level, detailed work packages (or near term work) and also summarised planning packages (or far term work).

Attribute 4 – work definition

Aim:

•To ensure that the full scope of work associated with the project has been broken into manageable elements in a manner that supports performance reporting.

Reason:

•The project scope of work should be broken into manageable elements in a manner that supports delivery of work and performance reporting. Failure to break down work appropriately can lead to difficulties with assigning a single point of accountability for delivery of the work and also lead to confusing, conflicting and sometimes incomplete performance data.

Guidance information:

All work authorised to be performed under the contract must be formally authorised and defined within the framework of a logical breakdown of work, normally via a work breakdown structure (WBS) and will be assigned to individuals responsible for undertaking that work.

The WBS provides a common management framework for all project activities, and so there must only be one WBS for any single contract. The WBS will be cross-referenced with the contract statement of work or a statement of requirements to ensure the full scope of work has been covered.

The level to which a WBS is broken down depends upon the complexity of the contract and the level of detail required for effective management. Essentially, the breakdown should continue until all contract requirements and business requirements can be attributed to meaningful packages of work.

In any project the WBS is of critical importance because it defines not only how the work of the project is broken down, but also provides the framework for collecting actual cost, reporting progress and measuring achievement.

Attribute 5 – detail work authorisation and budget assignment

Aim:

•To ensure that all distributed work has an associated budget, has been assigned to an individual with delivery responsibility, and that all work is authorised before it commences.

Reason:

•Every package of work within the WBS should be assigned an agreed budget for its completion that is commensurate with the scope of work to be delivered (i.e. is sufficient to cover labour, material and other direct costs that will be incurred while delivering the work). Before work commences, the associated budget and schedule must be authorised to indicate approval to proceed (typically this would open associated cost booking numbers).

Guidance information

The detail work authorisation and budget assignment process ensures that every package of work within the WBS is assigned an agreed budget for its completion. This is part of the formal authorisation process that allows work to commence against the agreed schedule baseline for each control account – and therefore the project as a whole. These budgets may consist of a labour element (resources) and/or materials element and will be assigned to all work packages (WP) and planning packages (PP). However, it is recommended that the different cost types should be kept in separate WPs/PPs where possible.

To manage the completion of work against work packages they will...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Foreword
• Acknowledgements
• The EVM compass
• Guidance information
• EVM compass questions
• Conclusion
• Annex A – terminology and glossary
• Annex B – related documents
• Back Cover