As any seasoned project manager knows, projects can be technical and challenging and even the most organized of project managers will run into some problems along the way. Adding to the complexity of project demands is the fact that many organizations are facing increasingly difficult market or trading conditions, so now more than ever the requirement for planning and control around management of projects is critical. A re-occurring theme that project managers face is the management of their projects’ performance and any project’s performance can be diminished due to cost overruns and time delays.
A project manager’s job is ultimately to keep control of a project and aim to have their projects completed all within an assigned time scale and budget. To ensure that the project manager sees these potential or real overruns, a process needs to be in place that provides effective project control. A suitable system within project management that provides an organization with this functionality is Earned Value Management (EVM). The systemic approach of Earned Value Management is to aid project managers in the area of project performance and answers the “how is the project going?” question in a quantifiable manner.
Due to financial or market constraints, projects selected for implementation must prove successful so an early warning system in place to resolve any issues that may arise during the project implementation process is a must. Earned Value Management looks at the real-time progression of a project by examining the work completed, the costs associated with that work and also the total number of hours used. Observing this progression will enable an organization to have greater control of the risks that could be associated with a project.
Before a project starts, the project team sit down and prepare a plan. This plan will determine the goals of the project and is made up of a number of criteria such as, how long the project will take to complete and the resources and costs assigned to that project. As the project is in motion a real-time snap shot can be taken and, from here, an in-depth examination of the project’s progress can be taken into consideration using the Earned Value Management criteria.
To determine the cost and performance of a project an organization using EVM needs to look at the actual and planned costs associated with a project. Taking an assessment of these will enable a project manager to make a judgement on the revised completion date.
Earned Value Management’s reputation as a project planning function has increased over the years leading to it now being a popular choice among project managers for the successful delivery of their projects. The Earned Value Management process is designed to deliver project performance through information relating to the cost and schedule of a project and integrating these two items is vital to the working of earned value management.
If and when an organization decides to implement an EVM system in conjunction with their Project Management Process, they must follow the guidelines and practice of good Earned Value Management in order for the system to work to their advantage.
What does Earned Value Management bring to an organization?
Earned Value Management has been proven to aid in the performance capabilities of a project however many project managers may never gain from the offerings of EVM. While Earned Value Management has the ability to add many benefits to an organization it is also argued to present a number of limitations. The quality of a project is thought to diminish while having an EVM system. EVM is believed to focus on time and cost savings rather than the quality of the project. As referred to earlier EVM takes the planned value, however this planned value is merely a forecast of the future and the plan may be flawed from the start. This forecast may have discrepancies and from there have a knock on effect on the actual plan. This will mean that the organization will need to amend the planned and actual performance of the project.
Probably the biggest issue around implementing an Earned Value Management process is maintaining the information required to produce the calculations. Time and effort must be invested maintaining the project plan, in terms of both planned and actual time and cost. Whilst the intention may be there, the project manager may not always follow through with the process and, if this is the case, the information produced will be of very little value to the organization. Essentially, an organization will not gain fully from the Earned Value Management process if they do not engage with it properly.
Overall an Earned Value Management system will bring a number of benefits to an organization ensuring the success of projects. However an organization who doesn’t participate in the Earned Value Management process entirely will ultimately fail to gain the rewards that it has to offer.