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5 Good Reasons to use Earned Value and 5 Reasons not to

  1. You are getting paid based on it - when your work is tied to a schedule of payments for a set of measureable work it is just a short step away to set up earned value, and it offers a great way of knowing if you are profitable and on schedule.
  2. You are getting paid to do it. This usually means that you are a professional and it shouldn't be too difficult for you. The organization values your efforts.
  3. You are cash constrained - while earned value does have schedule performance indexes and is intimately tied to a schedule, the primary purpose is to know how you are perfoming against your budget. The timescaled aspects of it primarily help you understand if your burn rate is reasonable or not.
  4. You are resource constrained - ok, I lied just above. You can also use earned value to see if you have enough resources to achieve your goals. Adding cost loaded resources to your plan and seeing if you have enough resources to complete the work in time will give you an excellent idea of whether you are fine or finished before you start.
  5. Your management insists on it - what more to say about this?

Now 5 reasons not to:

  1. You just don't care - I've worked at a number of places where it just doesn't matter. The cost of the work being scheduled was inconsequential to the overall value of the project. Doubling or tripling the development cost moved the IRR or NPV of the project by a miniscule amount. In environments like that the goal is to complete the work as quickly as possible and the challenge is focusing the team on completion. EV advocates (hey I'm one of them) will state that without knowing your rate of progress you can't know how far you are from the finish, but as financial advisors are legally bound to advise, past performance is no guarantee of future performance. EV is not particularly powerful at focusing the mind on innovative ways of achieving the goals. Driving the team to delivery should be the primary goal.
  2. You don't trust the data - THere are a number of reasons not to trust the information provided by an Earned Value schedule. The initial estimates and budgets may have a very wide confidence interval - which of course should be maintained through out all of your calculations based on it and actions taken based on those calculations. If you are taking (potentially expensive) corrective actions based on a 5 or 10% threshold and your estimates are only accurate to +/- 20% then you may be over-reacting and causing wasteful churn. The flip side of budgets and forecasts is Actual data. How accurate are your measurements? Do you trust your current schedules and forecasts? Do you have inspectors of one sort or another verifying work in place? Is progress measurable?
  3. You aren't getting paid to do it - maybe there are more important things to do? WHen it comes to payback on a system that requires involvement of your team, and EV can have a fairly high involvement, there is an opportunity cost associated with any initiative. everything takes time and money and steals attention. Are the problems solved by using EV your most serious? Is the time of your valuable team members best used caring for and feeding an EV system rather than working on issues and risks and just getting work done? Does it make sense to take the attention of your organization for this? What payback will you see which can't be delivered by a simpler or less intensive system?
  4. You can't do it - Earned Value is fundamentally simple, but it becomes complex when there are a large number of people involved and where a number of different systems need to be brought together to produce the calculations. It becomes more difficult when the types of work to be modeled are diverse across the organizations involved. When people are involved they sometimes need to change and change does not come easy. Not to mention managing change on the project. EV demands good change controls in order to give meaningful results. Do you have change control handled now? If not, manage that first. Do you have the political power and technical expertise to put a large EV system into play? What are your inputs to the system? How timely are they? Do you have a way to capture all of the actuals expended? If you capture costs in one system can they be mapped to your scheduling sytem? What will your people put up with? Are your people ready for it?
  5. Your management insists on it - if they are insisting without a fundamental understanding of the costs, benefits and probability of getting good actionable data out of it, you should definitely be afraid that it might not be possible to meet those undefined expectations. Better to explain why and what and move away from insistance and toward informed consent.
Project Management systems and techniques are like plants. You need to take a close look at the soil conditions and weather before you sow the seeds and hope to reap a good harvest.
  • Books to Consider – Decision Making
  • PM Web #001 - Glen B. Alleman's Herding Cats
  • Taking and Passing the PMP Exam - Part 15 - PMBOK version 4
  • Seeing Other Scheduling Software
  • Project Management Office and the Monorail
  • The Cashmere Bikini
  • Project Management Immaturity Model
  • All your models are belong to us
  • Top Ten Mistakes Made by a New PMO Manager
  • The Lifeless Project Life Cycle

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