Enough Already, There is No “Value” in Earned Value Management (2024)

FAQs

Why is Earned Value Management not used? ›

EVM metrics are hard to evaluate in such a risk-driven environment. The effort required to create a baseline S-curve (or planned value curve) is very large. Establishing a bottom-up cost estimate and cost-loading your schedule with this estimate is a task with a questionable effort / value trade-off.

Using the 0/100 rule, no credit is earned for an element of work until it is finished. A related rule is called the 50/50 rule, which means 50% credit is earned when an element of work is started, and the remaining 50% is earned upon completion.

EVM is a systematic approach that integrates cost, schedule, and scope for objective performance measurement, ensuring profitability. By comparing planned work to actual work completed, EVM provides accurate insights into your project's status so you can catch issues before they snowball.

It will allow you to compare the total of work made until a certain date with the total of work planned for that same date. Ultimately, this will enable you to evaluate your project's state and determine if it's necessary to take any chances, which makes it an incredibly useful and important tool for its success.

An EVMS is too rigid, requires too much detail.

A common error made by companies new to EVM is to drive the data down into too much detail. This over complicates the planning and scheduling, budgeting, performance measurement, analysis, and change control processes.

External factors or assumptions such as inflation, exchange rates, market conditions, quality standards, or customer requirements can also affect EVM. The method is also vulnerable to misuse or manipulation if the project scope or deliverables are not well-defined, measurable, or verifiable.

What is the 50/50 rule in project management? The 50/50 rule, or earned value technique (EVT) 50/50 rule, helps companies decide on earning rules for their earned value management processes. It assignes 50% of a project's value at the start of the project and delivers the rest at the project's completion.

The Essential EVM Metrics You Need to Track

Here are the key metrics you need to focus on: Planned Value (PV): The budgeted cost of the work scheduled to be completed. Earned Value (EV): The value of the work actually completed. Actual Cost (AC): The actual cost incurred for the completed work.

20/80 RULE – A task is considered 20% complete when it starts. The remaining 80% credit is given when the task is completed. 0/100 RULE – A task does not get credit for partial completion, it get 100% credit only full completion.

Without the necessary level of detail in collecting planned and actual expenses, Earned Value Management effectiveness becomes severely compromised. The AATT Project found that the level of information gained did not justify the workload placed on the task leads and/or PIs or the AATT Systems Management staff.

Why would a PM use EVM? ›

Earned value management is a method for tracking the progress of a project to date and comparing it to the expected progress. This allows a project manager to get an accurate picture of where their project is in terms of cost, schedule, and scope.

The EVMS is applied to entire projects and contracts, while generally Agile is applied to software portions of projects. However, it could also be used on other development work.

They recognise that EVM is not reliable for schedule performance analyses, especially to predict the end of a project. Instead of EVM, they recommend the use of the critical path method – CPM as the most reliable way to forecast project duration.

While EVM is a powerful tool, it does have some limitations: Difficult to implement on small projects: EVM requires a significant amount of data to be collected and analyzed, which may not be practical for small projects.

The Zone Method¹ was developed as an alternative to the Earned Value Management (EVM) when projects cannot support the administrative load of EVM. The Zone Method uses two metrics, “schedule events” and “labor hours” to track project progress.

Earned Value Management (EVM) is a widely accepted best practice for program management, used across the DoD.

Agile Projects and EVM

The key benefit of using EVM/EVA for these projects was that the mathematical combination of cost/spend and technical progress measurement metrics gave project managers, and thus stakeholders, a set of standard, forward-looking metrics on which to make timely decisions.

Earned value analysis works best on projects that can produce a clear scope baseline and work breakdown structure, accurate cost estimates and a timeline that effectively represents the proposed schedule for the work.