What’s the Big Deal about EVM Anyways?

Posted by Megan Cacioppo on January 26, 2018

What’s the Big Deal about EVM Anyways?

If you’re a long term-reader of this blog, you probably already know the answer to the question we’re covering in today’s post: What’s the big deal about EVM anyways?

But if you’re new to project management, are preparing to bid on your very first contract with an EVM requirement, or are just plain lost when it comes to the basics, then I invite you to re-fill that cup of coffee, sit back, and dive into EVM 101 with us for the next few minutes…

 

Earned Value Management for Dummies


Get to Know EVM

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To help explain what EVM is and why project teams should care, we sat down with Jason Kinder, Director of Product Marketing at Deltek.

So, Jason. Let’s start at the beginning. What exactly is EVM?
To put it simply, Earned Value Management (better known as EVM) is a set of project management best practices. It’s a methodology that integrates scope, schedule and cost. It provides an objective measure of project progress while delivering early warning indicators through trends and estimates. Just by managing a project, you’re already practicing some of the fundamentals of EVM. But EVM takes project management to the next level by providing structure and a common lexicon for the entire team.

Where did the concept of EVM come from?
EVM sprang up in turn-of-the-20th-century factories, where concepts of planned standards, earned standards, and actual costs were created to refine the manufacturing process. During the 1960s, the U.S. government selected one of the earliest forms of EVM as its methodology for tracking cost and schedule performance in the Minuteman missile program. EVM was so successful in giving the project management team insight into cost and schedule issues and trends that the U.S. government adopted the process for most of its major development programs. Now EVM is a ubiquitous throughout the PM community.

What are the fundamentals of EVM?
At the core of EVM, a budget is established at the activity level, and as work progresses, the cost for each activity is earned, which means you measure the task against the projected budget and timeline. EVM provides a way to measure what was spent and the budgeted amount of the work completed, or earned value.

Why should organizations care about EVM?
There are a multitude of reasons organizations should care about EVM. Some organizations care about it because their client requires it. Others care about it because they have a history of underperforming projects and they are looking for a way to improve. But the main reason organizations should care about EVM is simple – they should care because it works.

What benefits will organizations achieve by using EVM?
The list of benefits is very long so I’ll focus on just a few of the key ones. Early warnings to project delays or overruns; objective measurement of accomplishments against scope, schedule and cost; the ability to reduce scope creep; improvement in the control of contract performance; and finally – demonstrating a competitive advantage and improving customer goodwill.

We hear a lot that EVM is hard. Is that true?
EVM has earned a reputation of being a rigorous process and rightfully so. Where most people struggle with EVM is when they don’t invest enough energy in the upfront planning. But even if you didn’t use EVM, you still need to manage project scope, schedule, and cost — which exist in every type of project — and you still need to collaborate and communicate. Project management is tough, but EVM gives you a rule book that makes the job easier.

Where can people go to learn more about EVM?
There are lots of great online resources from organizations like The Project Management Institute (www.pmi.org) and The College of Performance Management (www.mycpm.org); as well as two major events each year where EVM is a main focus: EVM World in the summer and IPM Workshop in the fall. Deltek has also authored a great eBook, Earned Value Management for Dummies, that goes into a lot of great detail on the questions I covered above and offers real-life examples about EVM.

 

Earned Value Management for Dummies


Get to Know EVM

Download Now