Earned value management (EVM) is an efficient methodology for monitoring and predicting project performance only if it is correctly and timely applied. Otherwise, it can become a negative risk for the project, as it ends up consuming managers’ and project teams’ time without producing accurate estimates.
EVM Drawbacks or Limitations
Putting an EVM system in place attracts implementation costs, training costs, software costs, and other associated costs. In addition, generally only organizations with a mature project management system – that is, those that use well-defined processes and procedures consistently across projects – rely on EVM. Organizations that have inconsistent project management practices or little experience with projects may have more to lose than to win if attempting to invest their efforts into using EVM, as it requires accurate project planning and effective change management practices. Proper project planning includes, among many others, documenting requirements well and creating a good work breakdown structure – both essential for EVM.
If the project plan is faulty, EVM will result in misleading results, which are not only a waste of time and effort, but may also lead to project failure. Some organizations start employing EVA analyses in their projects, only to find out later that they got no reliable results. Instead, they realize that employing this technique only added to the cost of managing their projects. Usually, in these situations, the culprit is not EVA, but a missing earned value management system, which may well be the case in an organization with little experience in running projects.
EVM Benefits and Applications
When a proper EVMS is in place, EVM benefits outweigh its costs, which is why it is such a popular methodology used to manage programs by government structures (including NASA) and many private sector organizations looking to enhance project performance.
EVM uses quantifiable data to estimate project performance and predict its outcome, at any time during project execution. EVM results become the base of earned value reports presented to project stakeholders. In turn, these reports can justify change requests (schedule, cost, etc.), which are either corrective or preventive actions meant to help the project succeed.
Moreover, managers can use EVA indices to compare the performance of multiple projects of that organization, which helps them to assess the enterprise’s health. The results of these analyses become part of the lessons learned database, which is essential for proper planning of future projects.
Earned value management is an effective project management methodology that can be useful for small or large projects and organizations. However, it is only effective when the organization has a solid project management system. The drawback of employing EVM is the cost of implementation, training, and software. Its benefits are repeatable metrics used to assess and predict the performance of a project and compare multiple projects.
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