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The Purpose of Earned Value Management (EVM)

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Fri, 2022-10-14 23:12
Patrick Weaver
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Over the last couple of months there has been a discussion running in the Project Management World Journal around the purpose of EVM. The general consensus seems to be EVM is a performance management system, focused on measuring the performance of the managers assigned to manage the work packages, control accounts and overall project.  Identifying emerging issues early, at the work package level allows management intervention to improve the situation.

EVM was developed in the 1960s, based on PERT COST, which in turn was developed from the PERT TIME scheduling system EVM also drew on the well-established practice of cost engineering, but these two disciplines are designed for very different purposes. Cost engineering is focused on project cost estimating and control, EVM is focused on performance management. Appreciating the difference between financial management, cost accounting, cost engineering, and earned value management is important for their successful implementation. These terms are not, and never have been, synonymous.  

Our latest published article The Purpose of Earned Value Management summarizes the discussion and identifies the role of EVM in a comprehensive project controls framework. Download from https://mosaicprojects.com.au/PMKI-SCH-040.php#Overview

For more on the implementation of EVM and free EVM resources see: https://mosaicprojects.com.au/PMKI-SCH-040.php

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Tue, 2022-10-18 02:20
#1
Alex Lyaschenko
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> The general consensus seems to be EVM is a performance management system When someone says: 'performance management system', others think about the question: "Are we on track to deliver the project to the committed date and budget?" And EVM could NOT give answers to this fundamental question. EVM has many methodology pitfalls, and projects should never use it as a project performance management system. However, EVM can be used is a CONTACT performance system or ‘CONTACT payment compensation system’.  Unfortunately, consultants that profit from implementing EVM, providing trainings or publishing books only show the positive side of EVM and never touch the methodological issues. Some examples (each of them is an interesting topic to discuss!):  1. SPI=EV/PV. At the end, each project has SPI=1 as all planned work is earned. Wow, based on the EVM all projects are always delivered on time! 2. Completion activities that are not on the critical path and delay of the CP activities will delay the project, but EVM may show that project is ahead of schedule (SPI>1). 3. Changes in risk profile are ignored by EVM. The project is on track, but new emerged risks (or issue) may negatively impact the Estimate at Completion. EVM only take current performance in the calculation.  4. EAC has to include 'Project management cost' that depends on 'time performance'. 5,6,7... Pat, I know you recently published an EVM book. By any chance, have you explained the EVM pitfalls in your book?  I am trying to find a book or white paper that explains mentioned above and other methodological EVM issues, but so far only found "how to sell EVM" challenges. 
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Tue, 2022-10-18 02:23
#2
Alex Lyaschenko
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Duplication post

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