Itchy for Earned Value
Table of contents for Earned Value Basics
When I originally started this blog, it was because I wanted to explore 
ways of making Earned Value Management (EVM) work with Critical Chain project management. I still believe that is a worthwhile goal. I have been doing a lot of brushing up on EVM lately, and am ready to dig in again. Since I am already very familiar with the theory behind Critical Chain and buffer management, I am going to focus on EVM for awhile and then try to meld Simple EVM in the terms described by Joel Koppleman and Quentin Flemming to Critical Chain.
Why EVM?
EVM at it’s core is a way to measure performance in terms of cost, schedule, and technical performance. One of the key benefits I have heard cited regularly is that with EVM, you can tell early on whether or not a project is at risk. Quentin Flemming said in an interview on The PM Podcast that there is strong evidence that poor EVM performance at the 20% done mark in a project is very unlikely to be made up unless more resources are added, more funds are appropriated, or the scope gets trimmed.
Another benefit of EVM is objectivity. It measures performance compared with an original baseline schedule and budget. The performance indexes in EVM allow comparisons between projects even when their actual budgets and schedules are very different. You can compare a 6 month project to a 6 year project in the same terms. Because of the objective and universal measure, it also can help make project performance visible to all levels of stakeholders.
Why Not EVM?
There are a few criticisms of EVM I have heard that I would like to discuss. First, full-blown EVM is simply too much overhead for small projects. Simple EVM was introduced for this very reason, and I believe it could be a suitable replacement for smaller projects.
Another thing to keep in mind is that EVM does not take the critical path into consideration. It treats all work equally, which works really well for cost performance but not so well for schedule performance. At first blush, it seems to me that in addition to the SPI (schedule performance index) which I will detail in later posts, there should be an index that tracks progress along the critical path. This could be done by simply tracking schedule performance on the critical path against the original baseline. In this way, the SPI relates more to the amount of work done than the timeliness of the project. They are different but related ways of looking at project schedule performance.
Nov 25th, 2008 at 1:56 pm
I know this is an old post, but on the assumption that some newbies will drop by and read it …
– Potential users should not confuse “EVM” with “EVM as implemented in the Defense industry.” The former is simple, straightforward, and no more difficult or time-consuming than any other approach to measuring and reporting project progress. The latter is … well, not.
– Although EVM *totals* don’t specifically address the critical path, it is easy enough to look at subsets of the totals. In fact, any PM that looks ONLY at the totals is making a big mistake. There are more than a few ways to manipulate the results if you’re looking only at the totals. In addition, this is a bit of a red herring. If an activity on the critical path is behind schedule, that will show in the numbers. In fact, ANY work-item that is behind schedule (and this also at risk of moving onto the critical path) will show up in the numbers, so one could easily argue that EVM provides better schedule information than a system that focuses exclusively on the critical path.
– Unless there is a new study that I’m not aware of (very possible), the results that Quentin is quoting are about 20 years old and dealt almost exclusively with cost plus fixed fee contracts. There is no real incentive for contractors working on CPFF contracts to improve their performance, so drawing conclusions about the predictive value for other kinds of projects is risky at best, foolish at worst. I am not aware of any research done on other kinds of projects.
– For the most part, I agree with you about limiting progress to done/not-done. I’ve been teaching it for years. But that assumes that the work-items involved are relatively short and that they have well-defined completion criteria.
– EVM is **not** very effective for projects with unstable scope