Earned Value Management in easy steps

Keep tabs on the real status of all projects, including agile projects

John Carroll

• Publisher: In Easy Steps Limited
• Year: 2017
• Print ISBN: N/A
• eBook ISBN: 9781840787801
• Topic: Business
• Subtopic: Project Management
• Index: Business

Measuring Project Progress What we are concerned with in project management has been defined as the Iron Triangle of: Time, Cost and Scope. Traditional project management methodology tends to focus on time and cost, as scope is fixed, isn't it? But the way progress is typically reported is through the Gantt (or bar) chart, and in particular a tracking Gantt chart illustrates where a project currently is against the schedule. Also typically, the accounts department will produce reports on cost against budget, but this just shows what we have spent up to the last accounting period against the total budget. But this doesn't really tell us exactly where we are in terms of progress today and where we will be at the end of the project. And that is precisely why Earned Value Management was developed. Earned Value Management Earned Value Management (EVM) helps us to determine the real status of a project. As well as telling us how much time and money we have spent, it also shows us how much we have achieved. Further, it tells us how much we still need to do and provides a good indication of final costs and expected completion dates of the project. EVM builds on, and therefore supports good project management practice and underpins good corporate governance. Its introduction can drive the cultural and organizational change key to supporting these objectives. In summary: It provides an objective measurement of what has been achieved on a project; It enables accurate forecasting; It provides project management information in a format that is easy for all stakeholders to understand and act upon; It provides an early warning of problems, which allows the timely identification and analysis of progress and cost issues and corrective actions to be identified; It shows stakeholders whether they're getting value for money; It enables detailed project comparisons across programs and portfolios; It can be scaled to fit projects of all sizes and complexities; It has the ability to combine measurements of scope, time and cost (the Iron Triangle) in a single integrated system. In summary, EVM provides a set of metrics that will enable you to accurately report on project progress to date and to completion. In addition, research has shown that the areas of planning and control are significantly improved by the use of EVM; and similarly, using the methodology improves both scope definition as well as the analysis of overall project performance. Finally it has shown that the use of EVM is a positive predictor of project success. Earned Value Management in easy stepscovers: Introduction to EVM; Key Elements of EVM; EVM Project Life Cycle; EVM Planning; Using EVM; EVM Reporting; EVM Criteria; EVM Lite; Glossary of EVM Terms

1

Introducing EVM

EVM is a completely different method of measuring project progress that can add real benefits to project management.

Earned Value Management

Benefits of EVM

Brief History

Why Use EVM

About the Book

Summary

Earned Value Management

Earned Value Management (EVM) is a project management technique for measuring project performance and progress. It provides a way of keeping control of a project and illustrating its progress towards completion in terms of work and value (cost). Although once considered fairly esoteric and even too complex for managing simple projects, it has nevertheless grown in use and popularity in recent years, and this is in some significant part due to its inherent accuracy.

What is EVM?

EVM is more than just a unique method and technique for tracking project progress. It also includes a set of 32 guidelines that define the requirements that a project management system must meet if it is to be used on government contracts in a number of countries. Primarily developed and used extensively in the United States, it is now widely used in the United Kingdom, Canada, Australia, China, Japan and a number of European Union member states.

Objectives

The objectives of an Earned Value Management system are to:

•Develop time-phased budgets for all the work in a project, broken down through a Work Breakdown Structure, to individual Work Packets.

•Provide methods for monitoring Work Package progress against a Performance Measurement Baseline plan.

•Provide timely data to enable management to assess progress and take corrective action where necessary.

•Supply summary reporting for senior management.

Once EVM has been implemented on a project there are likely to be significant benefits to both the Project Manager (or supplier) and to the business. Supplier benefits include increased control, and the ability to respond proactively to any issues and meet the project schedule, cost and technical requirements. The business benefits include increased confidence in the contractor’s ability to manage the project and identify and deal with problems swiftly. But the greatest benefit is the use of objective rather than subjective status reporting on project progress and costs.

Why EVM?

You may be looking at using EVM for a number of reasons. You might be working for an organization or client that requires you to use it. You might be doing work for the US Department of Defense or some other similar government agency that stipulates the use of EVM. Or you may be interested in finding another way of assessing the true performance of projects. Whatever your reason for looking at EVM, this book will guide you through the methodology and how to implement it in easy steps.

Project Size

While EVM was developed for major projects and is still mostly used on medium to large projects (over $1m budget and nine months or more duration) it can also be used on much smaller projects to great effect. There is also now a specification for a more simple form of EVM (which is introduced later in the book), which incorporates the best strengths of EVM, but tailored for smaller projects.

Who This Book is For

This book is aimed at project managers, program managers, portfolio managers, project planners, project office staff, project team members and anyone else who needs to understand and work with EVM. But whatever your reasons for looking at EVM, this book will guide you through the processes and technique of EVM in easy steps, and show you how to use it and how to implement it on a project.

The book will introduce you to the key elements of EVM

It will explain how and where EVM fits into a typical project life-cycle

It will explain how the EVM planning process works

It will show you how to use EVM to control a project and report on progress

It will explain the 32 EVM criteria and introduce the 10 criteria that make up Simple EVM

Benefits of EVM

First and foremost, EVM will help you to determine the status of a project accurately. As well as telling you how much time and money you have spent, it will show you how much you have achieved. Further, it can tell you how much you still need to do, and provides a very good indication of the final cost and the likely completion date of a project.

Good Practice

EVM builds on, and therefore enforces, good project management practice and it also underpins good corporate governance. Introducing EVM can drive the cultural and organizational change key to supporting these key objectives.

•It provides a truly objective measurement of what has been achieved on a project.

•It enables accurate forecasting of the future, based on what has been achieved to date.

•It provides project management information in a graphical format that is easy for all stakeholders to understand.

•It provides an early warning of problems, which allows the timely identification of necessary corrective actions.

•It shows stakeholders whether they’re getting value for money from the project.

•It enables detailed project comparisons across programs and portfolios.

•It can be used on a wide range of projects and can be scaled to fit projects of all sizes and complexities.

•It has the ability to combine measurements of Scope, Time and Cost (the Iron Triangle) in a single integrated system.

•It is able to provide accurate forecasts of likely project performance problems.

In summary, EVM provides a set of metrics that will enable you to report accurately on real project progress to date, and provide accurate Estimates to Completion.

Let us look at a simple example of the use of EVM in a project.

EVM Example

Let’s say we need to have a wall built and have drawn up a plan for it. After a suitable tendering process we have con...

Table of contents

• Cover
• Title
• Copyrights
• Contents
• 1 Introducing EVM
• 2 Key Elements
• 3 Project Life Cycle
• 4 Planning
• 5 Using EVM
• 6 EVM Reporting
• 7 EVM Criteria
• 8 Agile EVM
• 9 Appendix