Earned Value Management

What it is, how it works and why your projects need it

If your IT shop isn't using earned value management, you may want to start thinking about it. EVM, which has its roots in the U.S. Department of Defense, is moving into private industry. More important, it's coming to IT.

When used properly, EVM helps team members, project managers and their bosses accurately gauge progress against an established project plan. EVM also enables teams to accurately assess where they'll be in the future, allowing managers to make key decisions on resource allocation or revisions before projects unexpectedly spin out of control.

"When people report percent complete, you might get 'I'm 50 percent complete,' based on that person's intuitive knowledge. Earned value analysis takes that guesswork out of it," says Robert Leto, director of the IT effectiveness practice at PricewaterhouseCoopers Advisory Services in New York.

The Defense Department has employed EVM for years, requiring its contractors to use it for reporting on federal projects.

So, what exactly is EVM? "It comes with a reputation for being complicated and difficult, but I don't think anything could be farther from the truth," says John M. Nevison, president of Oak Associates a firm that provides consulting and training services related to project management.

EVM is based on several figures that are used in calculations to determine whether a project is adhering to schedule and budget. Results can be measured in terms of money or time.

EVM is not about producing perfect scores. "It's accepted that you're going to vary from your plan," says Marilyn S. McCauley, owner of McManagement Group, an EVM consulting and training firm. "If I see [perfect scores] every time, someone's cooking the books, because that's not reality."

The point of EVM, she says, is "to see how close we are against what we planned, and when we're not close, to ask, 'Why aren't we there, and what are we doing about it?' "

This is where EVM offers much of its value. If project managers and their executives can see early on that projects are falling behind schedule or going over budget, they can make key decisions about how to proceed, rather than reacting to problems after the fact.

"What earned value does is provide you navigational tools early to let you look ahead to see where you'll be if you do nothing," Nevison says.

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