Tuning performance with earned value management
As economies emerge from the downturn, a restructuring of the economic order, a "New Normal," is being defined. With persistent uncertainty, tighter credit, lower consumer spending and greater government involvement predicted, what does the New Normal mean for IT leaders? |
A common approach to project health is Traffic Light Reporting but a weakness to this status approach is that it is subjective to perception and influence, as human nature attempts to rationalize multiple points of view into one status. During this evaluation process, there are no objective metrics to measure current health or forecast future performance.
Alternatively, EVM provides an objective measurement of project progress by combining measurements of scope, schedule and cost in a single integrated system. When properly applied, EVM provides an early warning of performance problems. Additionally, EVM promises to improve the definition of project scope, prevent scope creep, communicate objective progress to stakeholders, and keep the project team focused on achieving progress.
In a nutshell, Earned Value analysis is a point in time evaluation that measures project health by asking three key questions. Once you have answered these questions, the Earned Value metrics can be easily calculated:
- How much work did you PLAN to complete (Planned Value - PV);
- How much work did you ACTUALLY complete (Earned Value - EV);
- How much did it COST to complete the work? (Actual Cost - AC);
The basic steps of EVM analysis:
- Define the work… (WBS), that is, tasks and deliverables.
- Assign a planned value to each step.
- Define rules that determine when the step is completed, or partially complete.
- Perform the project.
- Accumulate the earned value as the project progresses.
- Accumulate the costs as the project progresses.
- Compute the earned value vs. actual costs vs. budgeted costs “curves.”
Large and complex projects require the addition of Pert, Gantt, and Critical Paths networks to assess schedule and time.
To compute EVM, you will also need:
- Project plans identifying the work to be accomplished.
- Valuation or budgeted costs of the planned and scheduled work.
- Earning rules that quantify the earned value of accomplishment.
- Comparisons of planned work and its planned costs to actual work accomplishment and costs.
- Cost-based allocations of the overall project budget to individual “deliverable units” of a project plan.
You can learn more about calculating Earned Value Management in the following resources:
Free tutorial on EVM - http://www.tutorialspoint.com/earn_value_management/index.htm
ezEVA Template – a tool to track and manage project health throughout a project. Download Excel doc
How to Calculate EVA with MS-Project - http://www.gantthead.com/content/articles/225762.cfm
Understanding Earned Value Analysis - This presentation provides an informative overview of the process to share with your team.
http://www.gantthead.com/presentations/Understanding-Earned-Value-Analysis.html
Contact Software Consortium or call 1-877-850-9393 if you would like to discuss how to leverage our top-level talent to empower your business.
Subscribe To InSIGHT
A Monthly Knowledge Sharing Resource for Business and Technology Leaders
|
Enter your email address to sign up now for the InSIGHT newsletter 
For Email Marketing you can trust
|