On today’s chat, we discussed some of the mysteries surrounding Earned Value Management and asked ourselves why so many Project managers seem reluctant to embrace it. Is this reluctance warranted? Should we be looking closely at what benefits EVM brings? The chat was inspired by two things – a comment about EVM by Rhona Aylward @PsodaRhona on a recent chat, and “Earned Value Management, 4th ed. by Fleming & Koppelman (PMI, 2010).
I’d love to know more about EVM and am testing it out on one of my projects for the 1st time – I’m definitely a learner on this issue! With this in mind, I was keen to throw around a few questions about how we use EVM and whether it is really that scary.
As usual, I’ve added my replies in italics – please feel free to join the conversation and add your thoughts at any time!
We kicked off by checking in on our collective experience with EVM – who’s used it & who has any stories to share?
A1. I’ve never used EVM in practice, but am really keen to try. I’m taking extra time to set up one of my smaller projects at the moment, to see how I can apply it. I’m feeling very curious!
OK, we’ve broken the ice. Next, we peeled a few layers from the EVM onion and had a closer look.
Q2. Over recent decades, EVM moved away from its engineering roots (Planned Value, Earned Value, Actual Costs) and became bogged down in acronyms, making it really hard to grasp. Is your experience grounded in acronyms or the three foundation ideas?
A2. For many years, I was frightened off by the laundry list of acronyms. Such a simple engineering concept seemed way too complex and I stayed away. Only recently, I’ve wanted to find a way to better understand the relationship between cost & schedule
A3. Fleming & Koppelman offer 3 reasons – 1. EVM terminology is really hard to grasp, 2. The process devised for Minuteman rockets is overkill for broad-based use on all projects, 3. EVM can provide confronting projected cost & schedule impacts
Q4. At its core, EVM is about understanding project costs. It asks us to assign, level and cost resources for every WBS package. How do you approach this? Do you assign & cost resources for your projects? Does your approach change with the size of your project?
A4. I’m lousy at costing resources – I know I should but it feels like too much effort for little return. I track overall resource costs against budget, but don’t break this down to the WBS package. It means that I can’t identify cost variance at the lowest level.
Q5. A commonly accepted view is that EVM can identify schedule/cost variance trends after 20% project completion. Are these sort of trends useful to your project management practice? How would you use EVM early warning signs & predictive cost/schedule outcomes?
A5. Early warning signs are really helpful but can be a double edge sword. They allow me to identify problems and focus remedial action, but they can also create stakeholder noise and anxiety if not properly managed and communicated
Q6. At its heart, EVM is about understanding project costs down to the lowest WBS package level. But this can be difficult to manage on some project. How do you track actual resource (team member) costs on your project?
A6. I’m dreadful at this. When I do track activity/work package level costs, it’s normally by rough estimate, with a fudge to match the overall Actual Cost. I could do so much better if I found a way to get decent resource activity costing reports
Q7. Assigning “material costs” (i.e. work done by external vendors under a SOW or materials purchased) is tricky. How do you manage these when work is in progress? Do you apportion costs over time, assign them at milestone/trigger dates or something else?
A7. I assign costs based on contract dates/triggers. It’s a bit lumpy and I’d love to know a better way to reflect the value of the work done between these payment dates
As always, you are welcome to join the chat – look for the #PMChat hashtag on Twitter. Our new time is Tuesday 1500 PT, 1800 ET, 2300 GMT (sorry guys!) / Wednesday 0100 SAST (ouch!), 0800 AEST, 1000 NZST.