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Earned Value Management: Top 3 Challenges12 November 2014

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Project Management

Earned Value Management (EVM) has become a requirement in managing large-scale, complex, or high-risk IT programs. A program management tool used to manage performance and progress, EVM utilizes the baseline expectations and compares the planned value (PV), the value of the work being completed (EV), and the actual costs (AC) on a monthly basis.

Implementing the EVM technique helps ensure that programs are performing, and can identify future problem areas early. However, there are three main challenges associated with EVM. Here’s a look at what they are, and how to address them.

Challenge #1: Staff training
Ensuring staff is fully functional on the use of EVM is critical to its success. Some programs have an EVM requirement but either don’t know how to or don’t use the information once it has been collected and reported. If EVM is required on your program, you should be using the data that’s created to help you run your program.

How do you do this? First, ensure that your Program Manager supports EVM. If you have new leadership or resources supporting your program who don’t know about EVM, look inside your agency to see if there is anyone who can provide internal training, or create briefings to help individuals get up to speed.

Challenge #2: Variances
With EVM, variances are considered a bad thing. Programs may hide schedule or cost variances because they believe that reporting on a program’s status of anything but 1.0 looks bad for the program. But when properly used, variances can be beneficial as an early warning sign of problems within a program.

Every agency will have a dollar threshold for variances, and will likely require explanation for variances that exceed the threshold by some set percentage. It’s a checks and balances program so that there is an understanding of why programs might be behind schedule or over budget, and so that solutions can be developed to address these issues in future reporting.

The solution to this challenge? Always report the collected data accurately. By reporting any variances, an EVM analyst can provide the ability to quickly identify any positive or negative impacts to the program or circumstances that may deviate from the original plan.

Challenge #3: Not applying the correct measures to capture performance
In EVM standards, non-discrete effort is called “level of effort” (LOE). If a project plan contains a significant portion of LOE, and the LOE is combined with discrete effort, EVM results will not be accurate. Some programs either don’t have enough reporting information (tasks) to be effective in reporting proper performance, or just label everything as LOE.

A program’s LOE percentage to total program in the Work Breakdown Structure (WBS), which breaks the work into smaller manageable pieces as well as the dollars associated with each piece, is looked at to see if the program is reporting properly. If a program has used LOE for all or most of its tasks, it doesn’t present an accurate account on the work that is being done on the program.

Instead, LOE should only be used for tasks that are supportive in nature and or have no measurable delivery product. Break down work into smaller tasks that can be measured and show true performance of the work that is being done on a program.

At North Star Group, we adhere to the industry-standard EVM model ANSI/EIA 748, and can demonstrate how our EVM processes comply with these guidelines. We also ensure that no matter what agency we are supporting, the various required standards and policies are being followed. For help implementing EVM in your agency, contact us today.

  • Francisco Leal

    Is committed cost considered in EVM?

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