You should be, if there is any chance your earned value data doesn’t align with the real status of your projects. It’s rather embarrassing to report work as being finished, only to walk out in the field with the client and SEE that it isn’t done. Unfortunately, the technique used to measure earned value on that activity cannot prevent such a scenario. Earning techniques can be thought of as administrative controls to enhance the reliability of earned value data. That’s all fine and dandy, but administrative controls are simply not enough to ensure your EV is on target. Even if you have employed the best earned value technique for each activity in your schedule, your earned value data may not pass the snicker test. Projects are dynamic; they require the addition of common sense sprinkled with the school of hard knocks to add reliability to the earned value measurement.
While earned value software is typically blamed for incorrect data, more often than not the problem is with the humans using it. It isn’t any secret that your EVMS is only as good as the data you put into it. Lack of employing some practical tips to improve earned value measurement is like contracting a deadly disease: your project can become very sick over time. However, there ARE some things you can do to increase or enhance the reliability of the earned value data. After all, you and your management are making critical decisions about the project based on this information, so you had better find some dependable ways to measure EV.
Some of these practical tips are intuitive, others not so much. Let’s take a look at some examples:
TIP 1: Get the project manager, CAMs, and schedulers out in the field or workspace to see progress for themselves. Frequency depends on the project and how often the schedule is statused. Generally speaking, they should put their eyes on the work before each status update. This is probably the number one key to enhancing the reliability of the earned value data, yet it is also where many fail. Visiting the field, looking at drawings, or reviewing a software update are activities that are often put on the back burner because there is “real work” to be done. However, seeing progress and talking to workers can make the difference between success and failure. Get out of your chair and go look at progress for yourself.
TIP 2: Review every work package or control account and see where you can add periodic and objective deliverables. This can even work for program management and support. For example, a PM will likely have a status report due each month, period, or quarter. That’s a deliverable. It has scope with a start and finish that can be defined and measured. Digging a hole for the next 4 months? Measure the cubic yards of dirt extracted, or how deep the hole is—make them weighted milestones if needed. The point is, expand your definition of a deliverable and you’ll find you can objectively measure more than you thought. Other common methods of increasing objectivity include using gates, milestones, and breaking up long duration tasks into shorter, more manageable ones, preferably with a tangible deliverable as its output.
TIP 3: Limit LOE tasks. We all know LOE is the ugly redheaded stepchild of EV techniques. But it has its purpose as well. In addition to finding measureable deliverables in the land of support tasks, you can increase your confidence in your EV by limiting LOE to 10-15% of the overall project budget. This is a common general rule of thumb, and I bet there are folks who have done similar projects with a cap on LOE. Talk to those people. What did they do to reduce LOE tasks or convert them to objective and measurable deliverables?
TIP 4: Plan for rework. Rework is a huge drain on the project’s earned value. If you didn’t plan for enough rework, you’re going to be spending a lot of effort on things that aren’t yielding ANY performance and are eating up your margin. Suddenly your positive cost variance tanks. Some rework is inevitable—so research similar projects and see how much rework was needed. Plan for it as best you can and document your strategy and assumptions for rework upfront. That’s right, plan for it. Just as you would contingency. In fact, sometimes the project risk matrix will give you a heads up as to the areas at greatest risk for rework. Remember to include the risk of the effects of out of sequence work and cancelled work, both of which can cause rework.
TIP 5: Make vendors prove their progress. If a vendor or subcontractor is performing work offsite, visit their facility or work site if possible. See progress with your own eyes. If you cannot visit their work site, require them to take pictures or videos of progress as part of their periodic progress report or hire an auditor to be your eyes. Otherwise it becomes too easy for them to lie to you during conference calls and in emails. They’ll say they are getting close to completion. Then they have to push out the completion date for some unforeseen issue….over and over and over again. So make evidence based progress reports a deliverable in their contract, and build payments around progress and performance. You can also incentive them with bonuses for performance.
Bonus Tip: There’s one major tip for improving your earned value measurement that I have left out because I believe it to be obvious. However, it is so paramount to project success that I can’t skip over it completely. That is: develop a realistic project plan. This includes using lessons learned from other similar projects and engaging the entire team during the planning process. After all, earned value is performance measured against the plan, so a poor plan will yield poor earned value data as well.
Do you have other tips for improving the measurement of earned value? Please feel free to leave a comment. Upcoming next month: Secrets of Long Term Earned Value Success. Subscribe so you don’t miss it!
- Melissa Duncan (About Melissa)
Read the previous posting - It’s Harder Than You Think! Measuring Work Performed Successfully Part 1
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
EAC=Estimate At Completion
CAM=Control Account Manager
CPI=Cost Performance Index
EAC=Estimate At Completion
EVM=Earned Value Management
EVMS=Earned Value Management System
EVT=Earned Value Techniques
EAC=Estimate At Completion
IPMR=Integrated Program Management Report
LOE=Level of Effort
OBS=Organizational Breakdown Structure
OTB=Over Target Baseline
PC=Project Controls
PM=Project Manager
PMB=Performance Measurement Baseline
RAM=Responsibility Assignment Matrix
SPI=Schedule Performance Index
WBS=Work Breakdown Structure
