I hear a lot of bullshit about earned value’s complexity. Also the impossibility of introducng it to projects once started or a whole load more excuses. The one arguement I have sympathy with is that many people make a very simple idea horridly, unnecessarily complex.
My major reservation is that some people overlook that without clear acceptace criteria mapped by QP (Quality Planning) to objective tests & verification performed by QC (Quality Control) the raw % complete that is the foundation of every subseqent piece of derived ‘information’ is subject to many caveats.
EV is a simple and powerful project status reporting mechanism. If you are not following the principles of EV then you are not reporting project status with the necessary insight to make informed decisions.
Below is the whole EV story in words and pictures
1) First build a baseline. To do that …
a) ask the bill payer “What will you pay for ?” – capture in a Product Breakdown Structure
b) ask the technicians “How will you deliver that” – extend the PBS to be a Work Breakdown Structure*
c) estimate effort, divide by resource capability for durations, multiple by unit costs
d) plot cumulative expected cost verus schedule (Conventionally Blue in graphics)
Called “Planned Value” or “Planned Cost” or “Budgeted Cost of Work Scheduled” – all meaningful lables if you think about the words as you say them.
PV / PC / BCWS is the vertical axis tat runs from 0% to 100% or from £0 to £Budget at Completion as you prefer.
If money is not an easy mertic for you to use then calculate cost in staff hours, if that is too much of a challenge then make the planned resource use (vertical) axis of your EV model “Tasks completed”. If using tasks complete it is good if each one is of approximately the same size and significance
2) Track status to the baseline
a) Use the Quality Standard selected when determine the Acceptance Criteria that prove each each deliverable is conformant to specification to check if a PBS element is complete. When it is plot the cumulative baseline allowance for its creation as ‘Earned‘ (Convetionally green)
b) Compare tasks completed (Hours or budget ‘earned’) with intended achievement by this point in time for a totally reliable expression of schedule performance. If minded to do so then project out rate of achevement versus planned rate to forecast a date at completion
c) if desired plot the acutal effort (cost) used to create the result – this only matters in environments where costs are tracked. In many projects the use of in-house staff who are on the pay-roll anyway is not seen as worth ‘costing’. Of course a shareholder would realise that more wages paided for the desired result is either reduced dividends or reduced equity
The mechanism above works and is immediately available to all. If you put this much in place you can quickly refine it with the means to assess partial value for work-in-progress not complete and 101 other improvements.
If you can’t do what is described above it must be because you don’t know what the sponsor’s project goal is, or you don’t know how to deliver it or you haven’t thought through task effort and sequence or you are not minded to be in control.
A key point to understand is that EV gives you a headine status that is aggregate of all progress. Unless you restrict your data to te critical path you are uninformed about a crucial element of your schedule status.
— PMNewGenThinking (@pm_ngt) February 2, 2014
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