Each year, I work with hundreds of business people to prepare for the Project Management Professional (PMP)® exam. One of the most challenging topics in the course is Earned Value Management (EVM). Asking for a show of hands in response to the question, "who here actually figures out the Earned Value Management on their projects?" the response is, overwhelmingly, week after week, less than 10%. In an audience of 20 people, that is only one or two people at best.
Over the course of the year, let's say 750 people, about 75 are actively using EVM. Of those 75 people, 80% support large government contracts. When asked what they do with the data collected, they cite contract obligations. A comment or two usually follows where the person adds, "I don't do all of the earned value calculations. I have a team that gathers that data and gives it to me. I just put it into the customer briefing templates." I watch the group for signs of apprehension and see that about half the group has mentally moved onto another topic and shifted the conversation entirely.
Earned Value Management conceptually promises to help project managers better communicate the future effects of how a team is performing, reducing unpleasant surprises and better meeting stakeholder expectations. Who can't get behind those benefits? Most of us, however, are not blessed with an organizational culture of effective EVM implementation. Additionally, most project managers have neither the time, nor the motivation to attend weeks-long courses in EVM. Further, without the support of executive management to carefully plan all the work, allocate the necessary funds, track actual performance and, most importantly, take the necessary actions to bring performance in line with plan and revise inaccurate plans without career-limiting repercussions, a person would be fool-hardy to go it alone. So, what is the answer? Walk away? Business-as-usual?
Ray Stratton, in his book, The Earned Value Management Maturity Model®, abbreviated EVM3, offers a 5-staged approach to improving performance at both the project and organizational levels. Patterned after the Software Engineering Institute's Capability Maturity Model Integration, the EVM3 enables internal and external assessments leading to continuous improvements, learning and industry recognition. Think of EVM3 as a five-stage model providing a common language so that it is clear what a project does in order to recognize the total work to be done, identify and value the work in progress and use that information to forecast if the project will be completed on time and on schedule.
Here is a brief overview of each of the five levels of the EVM3:
Level 1: Little or no earned value management (remember, this is 90% of the market represented by those organizations that invest in getting their staff credentialed in project management)
Level 2: A low-cost EVM system is in place allowing the team to monitor cost and schedule performance
NOTE: According to Stratton, these first two levels can be achieved with little investment simply by following a structured approach to defining project scope, assigning related costs and monitoring schedule performance, skills most businesses readily possess.
Level 3: The organization is fully compliant with ANSI standards for EVM. Many organizations new to EVM focus first on this level and become overwhelmed by the amount of work required to get here. The author recommends taking actions to implement levels one and two if time, circumstances, and resources permit. If your organization operates in an environment where ANSI compliance is the expectation, this is where you start.
Level 4: The quality of EVM data and the EVM system health are constantly monitored. This level requires a significant investment and commitment to go beyond operational compliance to ongoing, systemic training in EVM, a repository of historical EVM data and the creation of an Earned Value Process Group. Whew! All of this must be in place in order to reach...
Level 5: Optimizing implementation. Here, the organization creates projects to improve its EVM systems
Is all this necessary? It depends on your industry and your project resources. You might expect, as the world economy continues to demand value and speed, your customers will want more transparency in your project performance. Sure, you are "given" a budget and schedule and are expected to comply with both parameters. From a personal standpoint, I know I would be much more comfortable with a home remodeling contractor that was able to work with me to understand my requirements, schedule and budget and provide regular updates (home remodels are always full of surprises) that helped manage my expectations. For many, however, not knowing is good enough. How about you?