When many project managers think about earned value (EV), they think of large complex projects and projects that deliver major government contracts. In addition, many project managers run scared at the very mention of the name as it is associated with complex concepts that are difficult to understand and even more difficult to implement.
It is true that there is a lot of work and challenges in implementing and using EV. However, the payoffs can be significant. This article presents EV Lite and argues that EV need not be scary and can be applied to projects of any size including small and medium sized projects. However, a number of prerequisites must be in place before EV can be implemented.
Firstly, a basic set of organisation supports must be place. These essential supports must exist for you to collect the financial data that is the foundation of the EV method. Methods to accurately record the time people spend on projects and to calculate the sums actually spent to date, must be accessible. Typically, this means that a time recording system is in use and that the project has access to the organisation’s financial systems to determine what purchase orders have been raised.
Secondly, EV presupposes that your baselined plan has been rigorously prepared and is accurate within a range that is acceptable in your environment. You need to have prepared a Work Breakdown Structure (WBS) and identified well defined work packages. As with many other project management tools and techniques, The GIGO (garbage in, garbage out) rule applies. EV can make a fool of you and if your planning is of the finger in the air variety, don’t bother to even try to use it.
If the basic supports are in place, and your planning is meaningful, you have a good chance with EV. The trick is to implement EV at the work package level. Work packages need to be defined carefully so that they are ring fenced and well understood. Test your work packages to see how they stack up against the following criteria:
- Can the work package be allocated to a responsible department, section or contractor?
- Has the work package been negotiated with the responsible body?
- Can the work package be estimated with a level of accuracy that is acceptable?
- Can a business owner be identified for the business benefit that the work package will create?
- Can a set of business objectives be specified for the work package?
- Can the work package be tested or inspected independently?
Specification of business objectives and testing the work package is important. Consider the following example from an IT project. One of the work packages will deliver a new server that will host the database for a new order managing system. A set of business objectives for the ‘Install Server’ work package in an IT project might look like the following:
1. The availability of the application will be 98.75% of the time.
2. The system will highly secure with tiered levels of access and functions.
3. The number of order management transactions processed per hour will be not less than 5000.
The specification of a set of business objectives that are quantifiable and measurable provides the basis to test the work package. If the work package can be tested, it will be possible to verify that it is complete, meets its objectives, and is fit for its purpose within the wider project. It also provides proof that the work package is indeed properly ring fenced.
The rest is relatively straightforward. Working with work package level chunks of work, key all of the data into whatever project management software system that you are using and create your first baseline. Because you are working at the work package level, there will be relatively few tasks to track. The responsibility parties for the work packages may be managing their work at a much more detailed level. Their role in EV is to provide accurate information on task performance and the costs incurred by the work completed so far for their work packages. The project manager updates the EV schedule and reads off the EV parameters at regular intervals depending on the reporting needs of the project.
When you get some experience and hone your EV Lite process, the payoffs will be significant. You will have moved from a subjective and risky form of monitoring and reporting to something that has a solid foundation and that will lead to more accurate and meaningful status reports. It will also provide you with an early warning system due to the forecasting powers that will be at your command.