Right Sizing: Shrink to Fit – How to Scale your EVMS

Why would an organization set up a complex, robust, customized Earned Value Management System for a few projects valued at less than $100K? They would not, because it isn’t necessary.  Yet, many organizations have fallen victim to implementing the Ferrari EVMS when a Ford would have done the job.
In our last blog, we noted that for a non-certified EVMS, you don’t have to implement all 32 criteria of ANSI/EIA 748 rigorously to realize the benefits of an EVMS. Using the NDIA ANSI/EIA 748 Intent Guide, you can cherry pick the criteria that you think would generate the greatest ROI in the immediate future.  While you’re reaping those rewards, you can then focus on your longer term goals, which may mean broadening your EVMS to include more of the 32 criteria as your organization matures and grows. Then, eventually, you may win some contracts requiring a certified EVMS, and you'll already be 10 steps ahead.

A certified EVMS can yield fabulous results, but it can also be costly, time consuming, and fraught with bureaucratic red tape. When certification isn't required, it makes sense to implement only what you need right now: the measurement of earned value and comparisons to the planned value and actual cost. Reviewing all 32 criteria, while implementing only high impact items, is a great way to look at your proposed EVMS comprehensively, and allows you to plan for growth. Start with the end in mind and your implementation will be smoother, less expensive, and will easily integrate with your software packages. 

What does the Ford version of an EVMS look like? Look at the first of the five areas of the ANSI/EIA 748 for an outline of what the framework should include—and which ones you might get away with skipping for now:

The first of five essential frameworks (ANSI/EIA 748) is Organization

1. At a minimum, develop a Work Breakdown Structure (WBS) for your projects; make sure it encompasses the entire scope and is the same in all your systems.  I can’t stress the importance of this enough: the same WBS is KEY to integration and will allow you to compare apples to apples.  Otherwise you have to create a crosswalk from one system to another and THAT is messy.
2. Your organization may not have an Organizational Breakdown Structure (OBS).  You can develop one from your organizational structure, but if you don’t want a formal OBS, you can at least assign groups responsible for executing the work elements in the WBS, thus assigning authority and accountability.
3. Make efforts to integrate the WBS/OBS into your processes and systems, especially between the accounting system, the project schedule, and the work authorization process or system.  
4. A simplified EVMS doesn’t need Control Accounts (CA), which is the intersection of the WBS and OBS.  If you have a basic understanding of who is performing specific elements of work in the WBS, you can still hold them accountable.  However, it does formalize the authority and responsibility, and allows you to publish a Responsibility Assignment Matrix (RAM).  This makes it easier to summarize performance by WBS and/or OBS for further insight and management control into those areas.  Good stuff.
5. You MIGHT NOT need a separate effort to identify who is controlling indirect costs.  This is because many organizations already have it in place, at some level (if not, it IS a good idea).  However, I do recommend you review the criteria and discussion in the ANSI/EIA 748 Intent Guide.  Reading it may help you understand why you might need to build these elements into the design of your system.

The suggestions above are not difficult to implement, but they do take time to ensure they’re designed appropriately and make sense for your company and project.  Yet, taking this time up front is well worth it, since you’ll now be able to tell what scope is related to current project performance, who is responsible for it, and you can roll it up in a summary or expand it to see details.

Have you worked on a project where you’ve seen the design and implementation of the Organization elements of the 32 criteria?  How did they proceed and what worked?

Next week we’ll take a look at the next area of the 32 criteria from the ANSI/EIA 748; Planning, Scheduling, and Budgeting.  Don’t miss it!

- Melissa Duncan (About Melissa)

Read the previous posting RIght Sizing Your Earned Value Management System

Subscribe to Blog  

Earned Value legend as there may be a few of us that don’t yet have this memorized…

CA=Control Accounts
CAM=Control Account Manager
CPI=Cost Performance Index

EVM=Earned Value Management

EVMS=Earned Value Management System

EAC=Estimate At Completion 
IPMR=Integrated Program Management Report
OBS=Organizational Breakdown Structure
PC=Project Controls
PM=Project Manager
RAM=Responsibility Assignment Matrix
SPI=Schedule Performance Index
WBS=Work Breakdown Structure

Right Sizing Your Earned Value Management System

The concept of obtaining the biggest bang for your buck is not new, certainly there are thousands of managers attempting to maximize their Return On Investment (ROI) every day.  Truly, a smart business will squeeze every ounce of worth out of any good or service purchased; this is just common sense.  The trick is to find the right balance of squeezing those ounces without sacrificing something along the way, such as burning out your resources.  The same is true for your Earned Value Management System.  Implementing your EVMS is similar to a game of limbo; the lower you go, the harder it is to maintain balance.  More details and granularity means more complexity, time, and money.  It costs significantly more to control and maintain very low levels of detail.  Yet if the data exists at higher, summary levels, it won’t yield the details you need to effectively manage and you’ll lose control and visibility of the status of the project.

So how do you find your balance when implementing an EVMS?  The key is in the planning and design of the system.  The level of detail of the EVMS should be commensurate with the organization’s control and reporting goals, as well as the customer’s requirements.  This is one of those instances where you MUST define the rules before you play the game.  A certified EVMS, adhering to the ANSI/EIA-748 32 criteria, will have set requirements and therefore some of the planning and design is fixed.  Variables will include structure, procedures/processes, and the EVMS software tools.  The key in this scenario is to keep it as simple as possible and be careful in your design and software choices.  You can easily add complexity with systems that don’t speak the same language and intricate interfaces will make your head hurt.  Do your research and planning; map out the processes and software—you won’t regret it.

But what about organizations and projects that don’t require a certified EVMS?  Should they toss the whole concept out the window?  I’ve worked in organizations that attempted to implement various aspects of the 32 criteria—or some rudimentary Frankenstein cousin of them in any case.  Sometimes it works, other times it’s so painful you begin to think that implementing all 32 criteria would be easier!

When scaling your EVMS to align with your organization’s goals, remember to make it flexible enough that your company can grow without it blowing up.  By putting a few key elements into place, you can make your implementation easier, and crossing over into a certified system won’t require a painful redesign.  This means setting up the framework for a certified EVMS, but only implementing the pieces you really need right now.  Using the ANSI/EIA-748 Intent Guide, your framework should cover the five areas containing the 32 criteria.  These areas are:

1.     Organization

2.     Planning, Scheduling, and Budgeting

3.     Accounting Considerations

4.     Analysis and Management Reporting

5.     Revisions and Data Maintenance

Implementing only a few elements of each area can give you the ROI you need in order to convince management an EVMS is a good investment.  It will also set you in the right direction if you ever do need to get your EVMS certified.  

In our next Blog, we’ll break down these five areas and discuss which elements are most needed as you begin marching to the EVM drum.  However, you can start looking at the 32 criteria now, and determine which elements seem most useful to your organization.  Your gut feeling may be right on the money.

- Melissa Duncan (About Melissa)

Read the previous posting Weathering the Storm of Cost Variance Analysis

Subscribe to Blog  

Earned Value legend as there may be a few of us that don’t yet have this memorized…

PM=Project Manager

PC=Project Controls

CAM=Control Account Manager
CPI=Cost Performance Index

EVM=Earned Value Management

EVMS=Earned Value Management System

EAC=Estimate At Completion 
WBS=Work Breakdown Structure

OBS=Organizational Breakdown Structure
SPI=Schedule Performance Index
IPMR=Integrated Program Management Report