Other related sections of the PMKI:
Earned Value Management (EVM) has proven itself to be one of the most effective performance measurement and feedback tools for managing projects. It is often referred to as 'management with the lights on' because it helps objectively and succinctly identify where a project is and where it is going. The methodology incorporates project scope, schedule and costs and uses the fundamental principle that patterns and trends in the past can be good predictors of the future. Timely and targeted feedback can enable project managers to identify problems early and make adjustments that can keep a project on time and on budget by closing the loop in the classic business formula, 'Plan, Do, Check, Act'.
EVM provides organizations with the methodology needed to integrate the management of project scope, schedule, and cost. It can play a crucial role in answering management questions that are critical to the success of every project, such as:
The project manager can use the EVM methodology to help identify:
Effective use of EVM requires the principles of good project management, as outlined in the PMBOK® Guide, to be used and requires the foundations of a well defined WBS and schedule. EVM adds a number of effective practices in the areas of project planning and control that are related to the goal of measuring, analysing, forecasting, and reporting cost and schedule performance data for evaluation and action by the project team, managers and other key stakeholders.
Art: Earned Value - An Introduction to Earned Value Performance Management. This paper provides a basic overview of the workings of 'Earned Value Management' that is consistent with ISO 21508, and describes how EVM assists in the effective management of projects.
VIPER was a fully-fledged, commercial project control system that uses Earned Value as its core progress reporting system. It was designed to optimize repetitive project cycles (in this case, aircraft maintenance and repair programs) in a data rich environment.
The challenge solved by VIPER remains, business and project communities are facing a number of contradictory pressures:
The combination of these factors creates pressures on business systems (with particular reference to project control systems) to deliver enhanced efficiency and process integrity whilst minimizing risks.
During the heyday of project management software development (in the 1970s and 80s), it was normal for businesses to employ project and senior schedulers in permanent well-paid positions and to maintain staffing continuity within their businesses technical and administrative areas. This structure allowed staff to develop deep domain knowledge and to know, just by looking, when something was incorrect or missing (as well as having the resources to correct the problem). In the leaner, meaner environment of the 21st century, these luxuries are no longer possible. Systems need to be designed with the prudential checks and balances that experienced staff used to be able to provide, incorporated as an intrinsic part of their overall processes (as well as being super efficient).
The VIPER system was used to manage and schedule aircraft deep level maintenance programs for the Australian Defence Force (ADF) and a number of commercial businesses; it was retired when the aircraft it was customized to manage reached the end of their ADF life. VIPER integrates maintenance data, timesheet data, hangar floor reports and project scheduling using a number of data integration, management and automated capture processes, which in effect created an 'expert' system. VIPER generated cost savings in excess of 30% to the ADF deep level maintenance programs. The approach embodied in VIPER allows project control systems to be designed utilizing the most effective components (Scheduling, MRP, Timesheet, Data management, Accounting, etc) and then to integrate the data capture, information flows and analysis to ensure prudential processes are mandated whilst optimizing the overall efficiency of the business unit.
The evolution of VIPER also provided valuable insights into the way carefully structured information flows can influence business outcomes. These lessons learned are applicable to many process and are discussed in detail at the conclusion of the paper.
PP: The VIPER Experience. This paper analyses the evolution of VIPER as an aircraft maintenance management system over 10 years. It focuses on the use of Earned Value data and other project information as an agent of change and the benefits of automated and integrated management systems.
Managers working in a business environment where key processes have been outsourced are battling to retain control over projects they are responsible for delivering or funding. The key issue they confront is their lack of direct authority to control the destiny of the project. This is caused in part by their lack of visibility of many key commercial processes and in part by the outsourcing model itself. Many levers previously used by project managers to control vendors working on their projects (eg hiring/firing authority, options for future work, payment provisions, knowledge of contracted rates, etc) have been taken away from the project managers working within the ‘client business’ and subsumed into an overall ‘outsource’ agreement.
To succeed in this environment, project managers need to use new techniques to regain effective control of their projects. One of the most effective is to harness the power of Earned Value Analysis to create a high level of visibility (particularly early in the project) and to use the persuasive power created by the regular reporting processes to regain control. Understanding trends and trend analysis is a key part of this process. This process must be implemented with a blend of psychology and technology to obtain the maximum benefit and should focus on helping the vendors become effective and profitable. In an outsourced environment, the clients project managers can only achieve success by making their outsourcing partner successful.
PP: Earned Value Business Management - Using EV to Manage Outsourced Contracts. The practical application of EVM to the management of external contractors and suppliers.
WP: Earned Value Formulae. A summary of the basic values and formulae used in Earned Value calculations.
WP: Understanding the use of TCPI in EVM. The TCPI is the only EV metric that can provide a consistent measure of the likelihood of achieving a target total cost.
Art: Three Steps to Validate a Variance. Variances are to be expected, but before taking action to bring performance back into alignment with the plan, it is a really good idea to make sure the variance you are seeing in the control systems is real and significant.
Art: The CPI Stability Myth. Research has found CPI stability is not a ‘given’ at the 20% or any other 'stage' of a project; and it rarely exists on small commercial projects.
Art: Earned Value Confusion = No Value. Using a variety of different acronyms to define the same variable damages the credibility of EV globally.
Art: Earned Schedule. A brief introduction to Earned Schedule.
Art: Predicting project completion. Earned Schedule and the 'P-Factor' - improving forecast completion estimates.
The official site for Earned Schedule (including the ES calculators) is at: http://www.earnedschedule.com/
Practice Standard for Earned
The PMI Practice Standard for Earned Value Management expands on the earned value information in the PMBOK® Guide and is applicable across many Knowledge Areas and Process Groups. This practice standard is intended for anyone who wants to better develop their project management tool set and know how to potentially improve project performance through the use of earned value. The standard expands the available resources on the use of EVM for medium and smaller projects, whilst still being relevant for larger projects, provides insight and detailed explanations of the basic elements and processes of EVM, and demonstrates how to scale EVM to fit varying project sizes and situations. The PMI Practice Standard for Earned Value Management is available free of charge to PMI members as a non-printing PDF, see: https://www.pmi.org/pmbok-guide-standards/framework
Download the U.S. Government Accountability Office (GAO) Cost Estimating and Assessment Guide.
Download the U.S. Government Accountability Office (GAO) Schedule Assessment Guide.
the U.S. DoD Earned
Value Implementation Guide. This guide is
based on the implementation of EVM systems based on the 32
Guidelines contained in the Electronic Industries Alliance
Standard-748 EVMS (EIA-748). This approach to EVM
developed in the 1960s and has largely been superseded by
the performance based approach incorporated in ISO 21508
and the PMI Practice Standard for Earned Value
EIA-748-D Standard for Earned Value Management Systems – dated August 2018. A copy of the standard may be purchased from Tech America (www.techamerica.org). EIA-748-D contains a set of 32 guidelines that define the requirements that an Earned Value Management System (EVMS) must meet and is the governing document for its application.
Integrated Program Management Data and Analysis Report (IPMDAR). The IPMDAR contains data for measuring contract execution progress on Department of Defense (DoD) acquisition contracts and may be valuable in developing project controls specifications in a wider environment. The IPMDAR's primary purpose is to reflect current contract performance status and the forecast of future contract performance. Its Data Item Description (DID) contains the format, content requirements, and intended use of information for the data deliverable resulting from the work task described in the solicitation. Download the 2020 IPMDAR.
Earned Value Management Mentored Email™ Course. This self-paced, distance learning course, is designed to provide students with an understanding of the power of using Earned Value as a practical control and monitoring technique to deliver added value and insight from their overall project control process. At the end of the course, trainees will understand the benefits of using Earned Value as a practical control and monitoring technique designed to provide added value and insight to their overall project control process and appreciate the steps necessary to implement an effective EV system in their organization. The first module is available 'on-approval', you only pay if you decide the course is valuable: view course details.
Earned Value Management for Business. This workshop is designed to provide students with an understanding of the power of using Earned Value as a practical control and monitoring technique to deliver added value and insight from their overall project control process. The approach adopted is to assume everyone uses some form of software for EV, therefore rote learning of the formulae is pointless. What’s needed is an appreciation of the terms used and the value of the information created by the tools. Workshop available in half-day, one-day and two-day formats: view course details.
Earned Schedule Site - The official site for Earned Schedule (including the ES calculators): http://www.earnedschedule.com/
College of Performance Management - The premiere organization for earned value management and control: http://www.mycpm.org/