Like any worthwhile system or process, the underlying concepts are sound, but implementation is everything. Unfortunately, Earned Value (EV) has gained a reputation as too difficult & administratively burdensome, so a common misconception is that only the largest & riskiest programs should ever implement EV.
So what is EV? Here is a basic introduction.
EV is a program management methodology for objectively tracking cost, schedule, & technical performance that must answer these questions:
Before starting the work:
- What is our Statement of Work?
- What is our OBS?
- What is the period of performance in our baseline IMS?
- What is our Negotiated Cost?
- What are our technical, schedule, resource, cost, & management risks?
- Note: Once we agree on the above & concur to move forward, we create our Performance Measurement Baseline.
Once work has started:
- What is our cumulative BCWP?
- What is the status in our IMS?
- What is our cumulative ACWP?
- Do we have a Cost Variance? If so, does it trip a threshold?
- Do we have a Schedule Variance? If so, does it trip a threshold?
- What is our Estimate to Complete?
- What is our program Critical Path?
- What is our Estimate at Completion?
- Do we have a VAC? If so, does it trip a threshold?
- What is our program Baseline Finish?
- What problems have our VARs identified? What is the progress on our corrective actions?
As things change:
- Repeat: What are our technical, schedule, resource, cost, & management risks (or opportunities)?
- Do we need to mitigate the risks or capture opportunities by adding or revising incomplete work?
- Do we need to add, delete, or revise some work?
- If so, do these changes affect the 1) baseline for remaining work and/or 2) the forecast for remaining work?
Hmmm...so that's Earned Value?
Okay, so you are thinking that if that's EV, then it sounds like basic program management. So, then why do folks say it's so difficult & administratively burdensome?
The hard truth is that program management is difficult. Program management takes skilled people; documented and sometimes rigorous processes; and tools for collecting, reporting, and analyzing management data.
Once you understand EV as stated above, the real question becomes, which of those questions can you ignore and still expect to successfully manage your program?