Random Acts of IT Project Management

Project Management for Information Technology

Earned Value Management Now More Important Than Ever

Posted by iammarchhare on 19 May 2009

Containing costs is a really big deal in this economy.  CEOs and CIOs are not likely to react favorably to unexpected project cost overruns.  Project managers (PMs)  do not want to get caught in this squeeze.  Early detection and mitigation are key factors in a project’s success.

As stated in the PM Hut article “Utilizing Earned Value Management During Economic Downturn”:

Utilizing EVM techniques does not prevent project costs overruns, but it does provide project managers with data for more effective cost and risk management, which has become increasingly important to corporations. Risks that are identified through the use of EVM provide early warning signals that immanent project risks exist.

~ Smith, Kevin.  (13 November 2008).  Utilizing Earned Value Management During Economic Downturn.  Retrieved 12 May 2009 from http://www.pmhut.com/utilizing-earned-value-management-during-economic-downturn.

While the article’s main premise is that company executives will (or will need to) pay more attention to EVM, I haven’t worked anywhere where that was a major problem.

What I find useful is to maintain 2 EVM calculations.  If you have a tool like CA Clarity, then it has a built-in EVM calculator that is rolled up into the various dashboards.  If you do not, then consider which EVM method you want to use to present to the world.  I would pick either percentage or 50-50 methods to present the most accurate data at that snapshot in time.  I would consider this my “tracking EVM” because it is the one being reported and the one everyone will be evaluating you on (officially or unofficially).

However, you, as the PM, need to know even before the rest of the world knows.  Therefore, I have always kept a 100% method EVM spreadsheet to update on a weekly basis to gauge when the project is even thinking about falling behind schedule.  Using this method, you are either late or not on a task.  There is no middle ground.  If you are even one day late, severe penalties are built into the calculations.  Then, you can dig in to find out what is going on underneath the calculations.

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