Earned Value Management (EVM) and Objectivity
What is this and why is it so important?
Earned value management is a sound management concept that has existed for decades, but it often struggles in terms of credibility for a number of reasons. Many of those reasons relate to the manner in which it is implemented, and by that we mean the methods and processes that underpin the development of the data. To extend this comment further, one such example is the methods by which progress is assessed and thereby Earned Value itself is calculated and presented within the data.
Any project that is implementing EVM, must decide and communicate preferred (and allowable) methods and processes for assessing progress and gathering and allocating actual cost data.
What evidence is there to support this?
History shows that if you allow predominately subjective methods of assessing progress, human nature steps in straight away, and the temptation is often so great that the data is manipulated until people get the (EV) answer they want to see. That is very very common. If subjective methods dominate the way in which EV is calculated, it is very simple to do this and quite difficult for others to challenge the authenticity of the results (without a good deal of work). Just in case anyone doubts this, there is huge evidence of this practice occurring. For example, very costly and resource hungry efforts like EVM surveillance activities, as are common in some sectors, would be far less necessary if this practice could be prevented at source.
So, how could we take out the subjectivity?
Firstly, we can only prevent this a) if we want to and b) if we consider this question carefully as we set-up the EVM process and system. In other words, if we try and bolt it on afterwards, it is highly likely to be far too late. Then, assuming we are the stage of designing the EVM system itself, we should examine every work package we have, and look for clear indicators of real achievement. In any development environment, they will always be there, if we want to find them. For the sake of discussion, let’s call them milestones. The achievement of these ‘milestones’ is exactly what we should use to drive the calculation of EV. When we assess progress, we should ask only one question: is is 100% finished or not? Yes or no. We could also, if we choose to, use this method to construct the EV Baseline in exactly the same way, meaning our comparison of plan to actual is comparing exactly the same things.
Additional benefits – alignment with technical objectives.
One unfair criticism of EVM that is often mentioned is that the data may well be showing that all is well, but technically the project may be in trouble. EVM was never designed as a concept to show technical performance, but this is of course of key interest to project teams and customers. The good news is that when you extend the principle of objective indicators of progress, you should naturally find and focus on many things that relate to real achievement of technical Workscope and even technical performance, which of course is an excellent way to drive the calculation of accurate and reliable EVM data.