Dave Jones (c)

Project Controls and

Earned Value
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David Jones
IkutiMengikutiBerhenti
MengikutDavid Jones
Sales Executive, Primavera at Oracle
(Chemicals, O&G, & Heavy Industry)
A Project Controllers work is often assumed to culminate in the
creation of an Earned Value graph. Earned Value is to some
viewed as representing the Holy Grail of project control reports,
and perhaps a rite of passage into understanding the black art of
project controls. An Earned Value graph is interesting, but does it
really help?

First, what is Earned Value? Earned Value measures project

performance by comparing actual work completed and the actual
cost against budgeted work planned (at a given date in the project
schedule). To calculate Earned Value, you need to be able to
compare how much work has been completed against how much
was expected to be completed at a given point. To get that, you
need to have an agreed project scope, agreed planned value of each
agreed work package, assigned and budgeted work packages, and
agreed progress measures. To complicate things just a bit, there are
multiple ways of calculating earned value, so you also need to agree
on a standard way of calculating earned value, and what that
standard means.

With all of that agreed, you can start your Earned Value graph by
looking at the Planned Value which is the amount of work you
expect to be completed at points across time. Graph it. Then as the
project progresses, you need to calculate the Earned Value by
looking at the amount that was actually earned in each
period. Graph that. When you are done this, you get a picture of
where the project has been. Add another curve, the Actual Costs and
the Expected at Completion, and you get a really good picture of
what has happened on the project. You can also start to focus where
the project will end up. Hold onto your stomach, heres what an
Earned Value graph can look like:

So, what does this really tell you? Surprise, you are behind. Surprise,
youre over budget. It could help you figure out where youre going
and how much it will cost you.

Overall, here are some problems with the Earned Value graph:

1. Complicated. It is very complicated to get to the ultimate

outcome of the Earned Value graph, and it is often a fleeting
thing. It takes a lot of effort to build and maintain the rear-view
mirror of the Earned Value picture. The amount of effort
 required to build and maintain the Earned Value graph takes
time from controlling the project. It is also complicated to
interpret the graph. There are so many lines on an Earned
Value Report, it is hard for someone like a Project Stakeholder
to really understand it without an informed project manager
who can walk them through it.

2. Calculations on top of calculations derived numbers. To

get to the Earned Value, you have to pull numbers together,
summarize them, run calculations against them, and represent
them on a graph. In doing so, you lose the granularity of what
is driving your project. You cant reflect back on a change
request that caused you to run over, a key item that didnt
arrive on time, a contractor that caused an accident, cold and
snowy weather that hit in June, and so on.

3. Tells you that you are over-budget and late but you
already knew that. Yup, if you are over-budget and late, and
you know enough about what's-what to actually make an EV
graph, well you also know that you are over-budget and late.
On the other hand, in the rare case that you're are on-budget
and on-time, you know know that too. The EV graph just makes
it highly visible and keeps you from being in denial.

4. Maturity. If youve ever read up on the Capability Maturity

Model or other similar models, youll know that tracking
metrics like Earned Value are only valuable when you are at
the top-end of a CMM. At the lower levels, when you are in an
Initial, Managed, or even a Defined maturity, applying
metrics like an Earned Value shows only that you can create a
graph. It doesnt help you understand repeatable performance
across projects or portfolios.

5. It isnt prescriptive as to what needs to be

fixed. Because this picture is derived by rolling data up to a
higher level, then summarizing numbers and running
calculations on them, you cant see the individual problems
that are causing you to be late and over-budget. The only way
you get to that information is if you can look at individual
project facts, timing, trends, and forecast. The Facts are the
raw numbers and business processes on your project like a
Change Request or an Incident Report. The Timing reflects any
aging or delays on the business processes that ultimately
can cause the project to run late. The Trends are a view of the
impacts of several related items (like Change Requests) which
shows the overall impact of the group of items. Looking to the
 details of the facts, timing, and trends will help a Project
Controller actually control the project and increase the
likelihood of a successful project.

Dont get me wrong. The Earned Value Report & Graph has its
place. It just isnt the only thing, or even the most important thing,
that a Project Controller should be doing.

The Earned Value Report should be the outcome from an

integrated, automated, and collaborative project controls
system. Project Controllers should spend their days responding
to alerts, dashboards, and reports that help them quickly
understand exceptions that need to be actioned. When a
Project Controller takes action to resolve exceptions in the
facts, timing, and trends, the Controller will be causing better
results on the Earned Value Graph.

The EV Report itself should flow automatically from the

integrated, automated, and collaborative project controls
system. The Project Controller should only have to press a
button to generate the report. This gives the Project
Controller time to identify and action exceptions, in order to
drive the project forward to a successful completion.

Final thought ... The EV report is helpful to a Project Controller as a

mechanism to explain what is happening on the project and where it
is going. However, it's value improves greatly if you can actually dig
in and understand the details of what is happening on the project
and take actions to make the project better.

---------------

Want to read more of my posts about enterprise project and portfolio

management?

Follow me on LinkedIn by clicking follow above.

Have a look at my index of posts for more on EPPM strategies

and tactics.

---------------

Full disclosure Im an Oracle Primavera Sales Executive. I help my

customers find the value in enhanced project and portfolio
management solutions to optimize their return on their projects. To
that end, I help educate customers about Primavera products and
recommend Oracle and Primavera solutions for them.

The views and opinions expressed in this article are mine and do not
necessarily reflect the official policy or position of Oracle or
Primavera.

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