Earned Value Management

Validating the Concept of Earned Value Management
It is important to note, from the onset, that most companies have in the past made extensive use of planned costs and actual costs in seeking to track project costs. In this case, if all the funds assigned to a specific project are used up, then the target is seen as having been hit. However, a cost under-run is perceived is less funds are spent than had been allocated. Similarly, we have an overrun situation whenever more is used than had been allocated. Although this approach has been used extensively in the past, it is important to note that it does not take into consideration the value of work performed – which is a critical dimension that ought not to be ignored.
The relevance of earned value management (EVM) cannot be overstated in the measurement of project progress as well as performance. EMV, in the words of Carroll (2017), “provides a way of keeping control of a project and illustrating its progress towards completion in terms of work and value (cost)” (102). In essence, it is important to note that amongst other things, EVM comes in handy in facilitating the measurement of work that has actually been undertaken in a project setting. As Flemming and Koppelman (2010) point out, EVM has gained widespread usage overtime. In general, those that embrace EVM are able to have access to timely data that enables management to not only evaluate progress, but also institute the relevant corrective measures if need be. Thanks to EVM, senior managers also have access to summary reports.
It should also be noted that one of the key components of EVM is project baseline. This is more so the case given that it is deemed to be a critical point of reference for the various activities related to EVM. The data EVM provides for project decision making purposes is largely quantitative. In basic terms, therefore, EVM systems provide answers to some basic project management questions. In relation to a specified project, the project manager does have insight on where they have been, the present status, and where they are headed.
In seeking to validate the concept of EVM, it would be prudent to highlight some of its benefits. As a matter of fact, EVM has a wide range of benefits that transcend the concepts of budgetary allocations. Unlike is the case with traditional management, EVM has several sources of data. Via the incorporation of these data sources, EVM enables the comparison of the scheduled work’s budgeted value with not only the completed work’s actual value but also what Fleming and Koppelman (2010) refer to as “the EV of physical work completed” (74). Thus, in comparison to normal project tracking, EVM enables project managers to have access to more useful information – and as a result, they are able to determine whether or not the project is at the desired point and the timelines with regard to completion. With EVM, it is possible to not only have better control the various activities of the project, but also a more enhanced visibility of the same (Fleming and Koppelman, 2010). On this front, emerging issues can be addressed early enough so as to ensure that the project progresses without any major hiccups and is completed in good time. In instances where EVM is not utilized, it may not be possible to chart the project status in an informed and accurate manner.
EMV should, in essence, be seen as an approach towards sound project management practices. This is particularly the case given that as Garrett (2011) observes, with EVM, it is possible for the project manager to determine or assess the much that has been achieved so far in an objective and informed manner. It is also important to note that with EVM, as has been pointed out elsewhere in this text, it is possible to forecast the future with a higher degree of certainty. This is made possible via an analysis of the much that been achieved so far. Further, the information provided by EVM can be presented in an easy to grasp graphic format. This is particularly important given the need to ensure that all the stakeholders are well briefed on the various specifics and aspects of the project or undertaking. With this information, stakeholders can be able to determine whether or not the project is giving them value for money.
According to Garrett (2017), the fact that EVM effectively fulfills the role of an early problem detection system further underlines its relevance. When problems are identified early enough, it is often possible to adopt or implement the appropriate measures to rein in the said concerns. In basic terms, the identification of problems in a timely manner leads to the effective application of corrective measures. In the words of Hickson and Owen (2015), “when a task is identified as heading off-course, the project team analyzes this trend, determines the root cause and the mitigating action to be taken, and then the team calculates the cost or schedule impact” (375).
Unlike is the case with traditional approaches, EVM’s application also happens to be wide (Carroll, 2017). This is to say that in addition to being applicable across a wide range of projects, it is possible to scale EVM to be suitable for various projects regardless of their complexities or size. In an organizational setting, for instance, EVM can be used in the performance measurement of various ongoing projects. In such a case, it is possible to tell the projects lagging behind as well as those progressing appropriately (and the reasons for the identified differences). EVM also gives the project manager enhanced control over various constraints of a project. The said constraints could in this case include, but they are not limited to, the schedule, cost, as well as scope. Taken together, these three, as Garrett (2017) points out, are referred to as the Iron Triangle. By enhancing communication as well as project visibility, EVM succeeds in the avoidance of scope creep. With reference to a project, scope creep could be seen as the expansion of the original goals during the progress of the project. One of the most significant downsides of scope creep is that it could interfere with project timelines or, in some instances, make it difficult for the project to proceed. In essence, therefore, thanks to EVM, a project manager can be able to better assess as well as report the progress of the project, and at the same time have (and provide to stakeholders) completion timelines that are deemed accurate. According to Carroll (2017), EVM does more than just track project progress. According to the author, “it also includes a set of 32 guidelines that define the requirements that a project management system must meet if it is to be used on government contracts in a number of countries” (131).
It should, however, be noted that despite its relevance as has been enumerated elsewhere in this text, EVM does have its fair share of limitations. To begin with, Hickson and Owen (2015) point out that “EVM has no provision to measure project quality, so it is possible for EVM to indicate a project is under budget, ahead of schedule, and with a fully executed scope, but still a poor-quality facility with an unhappy Owner and ultimately unsuccessful results” (375). The failure to take quality into consideration effectively means that a specific project could have high scores on the value performance front, but still come short when it comes to the delivery of quality work. This could be a significant drawback as the relevance of quality cannot be overstated in project management. Further, as the authors point out, EVM may come short in projects plans than have a significant portion of level of effort (LOE), i.e. non-discreet effort. In instances where a project has significant LOE portion (and the same is mixed together with discrete effort), Hickson and Owen (2015) are of the opinion that EVM results are likely to be unreliable as a consequence of contamination. It is also important to note that the full benefits of EVM cannot be reaped in the absence of project scheduling as well as project accounting management. As a matter of fact, the absence of the prerequisites, as Hickson and Owen (2015) point out, makes EVM a total waste of time.
In the final analysis, despite the limitations highlighted above, it should be noted that EVM remains a useful project management tool that enables project managers to objectively measure the performance of a project with reference to not only its scope, but also the schedule as well as budget. In contrast to traditional approaches, therefore, EVM facilitates project tracking on the basis of three critical aspects – i.e. work, time, and money. It should, however, be noted that predictions involve a lot of uncertainty. Planned value in EVM is deemed to be the baseline – and predictions and the relevant computations are founded on this. In essence, when doing EVA, the project may appear to be on-track as far as its schedule is concerned. However, unforeseen circumstances could delay the project at certain stages in the future. This effectively means that planned value ought not to be used as the basis of all the assumptions. EVM, however effective, must never be used as a stand-alone tool.













References
Carroll, J. (2017). Earned Value Management in Easy Steps: Keep Tabs on the Real Status of All Projects, Including Agile Projects. New York, NY: Easy Steps
Flemming, Q.W. & Koppelman, J.M. (2010). Earned Value Project Management. Mason, OH: Project Management Institute.
Garrett, G.A. (2017). Earned Value Management: Tools, Techniques and Best Practices. New York, NY: Wolters Kluwer
Hickson, R.J. & Owen, T.L. (2015). Project Management for Mining: Handbook for Delivering Project Success. Eaglewood, Colorado: SME.