Earned Value Management (EVM) is possibly one of the most productive techniques to measure the performance of a project. A project manager always follows a plan-do-check-act management cycle to ensure all the measures of the project. That’s where earned value management helps the project managers to conclude the plan-do-check-act management cycle. EVM allows the project manager to find that all the tasks of the project are going on according to the schedule or not, whether the problems occurring are critical or not. EVM not only helps in recognizing the problems but also provides the approach that is needed to take the project back on track.
Key practices of EVM include :
- Establish a Performance Measurement Baseline (PMB) – The most prominent baseline used for measuring the project is the PMB. The PMB is a measure that the project manager uses to verify against certain benchmarks to get to know where the project currently is. Performance Measurement Baseline (PMB) is based on three factors cost, time, and scope. Under the baseline, the work is divided into an achievable level and a time budget is created for each task to maintain the integrity of PMB throughout the project.
- Evaluate performance against the baseline – After establishing PMB, it also becomes crucial to evaluate and analyze the project performance against the baseline. To evaluate performance, the project manager tracks the usage of resources, physical work progress, calculates the cost per schedule performance, and finds out the concerns in a project to perform the required action during project implementation.
Problems due to the absence of Baseline :
- Monitoring of Progress Problem – Monitoring means that we can compare the project’s progress with a plan. In actuality, the baseline is used to compare the actual work with the planned work so that we can evaluate the progress of a project. For Ex- If a project is planned to be completed in 3 months with a cost of $1000 and after a month the project manager realizes that it is not possible to complete the project with such cost and time, he/she can take the required actions for it.
- Delays in schedule – If things are not pre-planned and baselined on how much time the project needs then the project would be delayed. For Ex- If a project should be completed in 3 months and it is being started without any baseline or schedule, no-one knows how long it would take to complete.
- Lack of planning of resources – If a project didn’t baseline on cost, schedule, and scope, there will be issues in the planning of sufficient resources that are required for the project’s completion.
Benefits of Earned Value Management (EVM):
- Performance Measurement: EVM provides an objective and quantitative method of measuring project performance. It allows project managers to track project progress against planned performance and identify any deviations from the plan.
- Early Warning: EVM provides early warning signs of potential problems that may arise in the project. It enables project managers to take corrective action before the problems become too severe.
- Improved Communication: EVM provides a common language for project managers, team members, and stakeholders to discuss project performance. It promotes better communication and collaboration among all parties involved in the project.
- Cost Control: EVM enables project managers to track and control project costs more effectively. It provides a mechanism for monitoring cost performance and identifying cost variances, allowing project managers to take corrective action.
- Predictability: EVM provides a reliable method for predicting project outcomes. By analyzing cost and schedule performance data, project managers can make informed decisions about future project performance and adjust project plans accordingly.
Limitations of Earned Value Management (EVM):
- Complexity: EVM can be a complex technique to implement and understand. It requires a significant amount of training and experience to use effectively.
- Data Requirements: EVM requires accurate and reliable data to be effective. If the data is inaccurate or incomplete, the EVM analysis will be flawed.
- Focus on Cost: EVM tends to focus on cost performance and may not provide a complete picture of project performance. It does not consider other factors such as quality, customer satisfaction, and stakeholder engagement.
- Subjectivity: EVM involves subjective judgments, such as estimating the percentage of work completed. This can introduce bias and affect the accuracy of the EVM analysis.
- Lack of Flexibility: EVM is based on a predetermined project plan, and any changes to the plan can make the EVM analysis less useful. It may not be suitable for projects that require a high degree of flexibility and adaptability.