By Rod Hutchings AdvDipPrjMgt BAppSc MAppSc MAIPM MACS(Snr) RegPM(CPPD)  

Earned Value is a technique that clearly shows whether you'regetting Value For Money. It is a major component of Best Practice inProject Management. It is mandated in USA and Australia and is beingused more and more in the United Kingdom. The technique essentiallyidentifies the value of the useful work done at any given point intime, in all areas and at all levels within the project. By comparisonwith the original plan, Earned Value can be used to identify otherparameters such as time to completion, cost to completion and expectedfinal costs. It also enables project managers to identify those areasof the project that are proceeding well, those that are in trouble andenables percentage progress and performance indices to be calculated.

Earned Value can be used in almost any project situation and inalmost any project environment. It may be used on large projects,medium sized projects, tiny projects (in cutdown form), complex andsimple projects and in any market sector. Some people, of course, knowall about earned value, they have used it for years - but perhaps notas effectively as they could have?

Good project management will produce good Earned Value Data. Poor project management will produce poor Earned Value Data.
Skilfulinterpretation and application of Earned Value information will make amajor contribution towards ensuring project success.

Cost is often a factor in selecting a project management software package. Most packages are a bit costly, ranging from several hundred dollars at the low end to several thousand dollars at the high end. Fortunately, overall functionality and ease of use has greatly improved while cost has generally decreased. A good package can be procured within the $500-$600 range.

The classical analytical approach to selecting the best project management software would be to determine the functionality required and find a package to match the requirements. In comparing packages, however, satisfaction could depend more on the software's "feel," especially where functionality and price are approximately equal. Therefore, it could be beneficial to obtain a demonstration copy from the vendor or "test drive" a coworker's software before making the final decision.

Finally, the project manager should be aware of any existing standards for project management software within the organization. At best, purchasing a "nonstandard" product might prove to be inconvenient when sharing project data files is desired. At worst, it could be a waste of money or even a hindrance to the project itself. 

What does Earned Value do for you?

It provides simple but powerful answers to many questions such as:

• How much is it really costing us to earn each unit of forecast value?
• How much is going to cost by the finish?
• When is it going to finish?
• Where are we now? Exactly!
• Where are our problem areas?
• How does this compare with other projects?

It will not however guarantee a successful project. Only people can do that.

Potential/perceived Problems Associated with Earned Value

Historically,Earned Value was developed for and used on massive projects,particularly in Defence. This has created the perception that it ishugely complicated.

Common criticisms are that it is only good for large defence projects, far too complicated for us, far too costly for us. A
commonproblem with small or non- project oriented organisations is that theydo not have internal mechanisms that can collect effort and costs toindividual projects or parts of projects.
Other problems may be associated with the culture of the organisation - not used to reporting meaningful progress information.

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Geoffrey Allen
Posts: 1

EVA
Reply #1 on : Thu March 04, 2010, 15:16:59

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The problem with earned value management is the indicies trending towards 1 as the project nears completion which then distort the view of cost to complete and BAC. The issue is, at what point to you call EVA no longer an effective measure of project performance.