Feedback from the publication of Easy EVM has highlighted how little most managers and project controls people understand about the methodology. In one respect, this is surprising given its some 55 years since Earned Value Management (EVM) was introduced in its current form. Although, given the almost impenetrable sequence of acronyms used by EVM expert’s to explain things, maybe this lack of general appreciation of the power of EVM is understandable.
Six of the biggest gaps in understanding are:
- EVM is a performance management system based on measuring the value of work performed, its sole purpose is to facilitate better management decision making
- EVM is NOT a financial accounting system, project cost control tool, or an incentive payment system, but does need information from the project’s accounts
- EVM is NOT a scheduling system, but does need information from the scheduling tool
- The Work Breakdown Structure (WBS) and WBS Dictionary is the heart of the EVMS
- EVM is a lot more than simple ‘S-Curves’
- EVM requires traceability and auditability
Implementing an EVM system requires appropriate tools, one of the biggest mistakes being to try running an EVMS in a scheduling tool – this is a recipe for disaster! The schedule is focused on time, the EVMS on value, these are very different measures of performance and need different systems to operate effectively.
These six points are expanded in our latest published article: Earned Value Management – Six things’ people don’t get! (click to download)
One of my objectives in writing Easy EVM was to cut through much of the unnecessary complexity and provide a straightforward guide to the value of using EVM on larger projects, see: https://mosaicprojects.com.au/shop-easy-evm.php
Pat Weaver
Lynda Bourne
Aavssitedev's Blog
Pat, while you normally do exceptionally fine research, how or why do you keep failing to feature the recommendations from the 1909 book by Gillette and Dana “Cost Keeping and Management Engineering: A Treatise for Engineers, Contractors and Superintendents Engaged in the Management of Engineering Construction” https://books.google.co.id/books?redir_esc=y&id=zO-ADudj-R8C&focus that clearly explains that EVM ORIGINATED as a “pay for performance” or “incentive payment” system based on the Unit in Place method that is still in use today in most factories in the form of “piecework” and is often used in construction, specifically civil works, painters, roofers, tile, carpet and other flooring contractors- any trades that BIDS and/or is PAID using the “Unit in Place” method.
The concept of linking PAYMENT to PERFORMANCE has largely been LOST by the US DoD, PMI and AACE and it is time we CORRECT this lost connection,
Speaking as a private sector, “firm fixed price” “hard money” contractor for 50+ years, this was and remains the primary way we use Earned Value Management and you need to make certain this is made clear. Your current paper has totally ignored this reality.
For more on this, go to these references:
1) https://pmworldlibrary.net/wp-content/uploads/2019/11/pmwj87-Nov2019-Giammalvo-Letter-to-Editor-on-the-history-of-evm.pdf
2) https://pmworldlibrary.net/wp-content/uploads/2020/02/pmwj90-Feb2020-Giammalvo-Letter-to-Editor-on-subject-of-earned-value.pdf
3) https://build-project-management-competency.com/1-4-1-11-unit-11/
4) https://managementation.com/types-of-incentive-plans/
Also, be sure to cite the work of these three SKEMA graduate students on the history of the elements of earned value management-
Yasmine Taybi- https://pmworldlibrary.net/wp-content/uploads/2019/09/pmwj85-Sep2019-Taybi-is-evm-consistent-with-sharia-law.pdf
Bertille Hu- https://pmworldlibrary.net/wp-content/uploads/2019/09/pmwj85-Sep2019-Hu-history-of-evm-through-incentive-plans.pdf
Sophie Geneste (PMWJ Student Paper Editors Award) https://pmworldlibrary.net/wp-content/uploads/2019/10/pmwj86-Oct2019-Geneste-the-true-origins-of-evm.pdf
Please update your work to reflect the FULL story or Earned Value Management
.
Hi Paul,
You keep repeating the same false premise without modification and it would really help if you responded to the actual post, not something completely unrelated.
The post refers to ‘EVM IN ITS CURRENT FORM’, not some historical past from the 13th or 19th century. EVM in its current form was defined in DODI 7000.2 building on from the ideas in PERT COST. These developments occurred in the 1960s and 70s.
The vital difference between EVM and previous accounting, motivational and other financial control processes was the introduction of the requirement for project completion to be forecast based on measured performance to date. This requires a budget (for the whole of the project) distributed over time, the assessment of the amount of budget achieved at a point in time and knowledge of the costs incurred. From this basis it is possible to forecast the expected final cost of the project and with some tweaking, the expected completion date.
None of the references you quote come close to meeting this basic definition of what EVM actually is and does. You may want to confuse EVM with project accounting, this is one of the core errors in management thinking dealt with in Earned Value Management – Six things’ people don’t get!
@Pat, the root cause issue is that EVM IN ITS CURRENT FORM IS NOT WORKING. https://home.kpmg/au/en/home/insights/2020/08/australian-project-delivery-performance-survey-2020.html So to quote from Einstein, “to do the same things over and over again and expect different results is the definition of INSANITY.” I sure as hell am not insane nor do I think you are.
Or how about Henry Ford who told us “If we always do what we’ve always done, we will always get what we always got.” Between Yani and I, we have been using EVM as it originated on the factory floor of the 18th Century Industrial Revolution as described in Gillette and Dana’s 1909 book for over 90 years now and we can ASSURE you that it works just as Gillette and Dana said it did as an INCENTIVE that promotes efficient and effective use of RESOURCES and REWARDS continuous process improvement. Now isn’t that exactly what both owners and contracts alike want to happen? Wasn’t it Michael LeBouf who told us “that which gets rewarded, get DONE?”
So my standing challenge to you is given even Dr, Kerzner and Dr. Al Zeitoun from IIL https://pmworldjournal.com/article/capturing-project-management-best-practices are starting to ABANDON PMI’s standard since 1996 of adopting “those practices, tools and techniques used on MOST projects MOST of the time” which by definition translates to AVERAGE practices, how long is it going to take before you too join the handful of us who have the interest and the expertise to be able to research “best tested and PROVEN” practices and share them with others? Doesn’t it seem the “right thing to do” is correct what PMI, AACE et al have been advocating for years that has NOT worked?
If all you are doing is publishing “same ol’ stuff” that others have already published, then why waste your time and energy? None of us is getting any younger and is it unreasonable that our legacy is or should be IMPROVING the practice of project management instead of perpetuating what PMI in their PMBOK and PRINCE2 have had to finally admit hasn’t resulted in any measurable improvement in project success rates? Is that something you REALLY want to leave behind as your own legacy?
I can only urge you to REVISE your work to reflect not “what is used on most projects, most of the time” but to raise the bar by incorporating “best tested and PROVEN” practices?
Here is our update to the work we did for the Guild and I will be updating it again in January of 2022. https://build-project-management-competency.com/1-4-1-11-unit-11/
PS @Pat, what “false premise” do you think I am working under? Is EVM working? If not, why not? We both agree that EVM is NOT complicated.
But if you follow my postings on the subject, we focus on EFFICIENCY (SPI and CPI) keeping it between 0.95 to 1.05 and also in applying 3 Sigma Statistical Process Control Charts to ensure that our workflow processes remain IN CONTROL and CAPABLE.
We barely even look at the critical path, although we do track FLOAT CONSUMPTION as we consider that a valuable resource.
Paul,
If you want to consider for your own benefit that EVM is something that originated on the 19 century ‘factory floor’, or in the Bible, or in 13th century payments of ‘piece rates’, carry on.
Everyone actually involved in EVM defines the system as a performance management approach capable of predicting project outcomes based on performance to date. Nothing in the papers and books you keep going back to demonstrates a process that uses current performance ratios to predict overall project outcomes. Many of the underpinning elements needed to achieve this certainly have deep roots but the individual components don’t make a functioning ‘whole’. And absolutely none of this is relevant to the post.
I’ve tracked down a good deal on scheduling and the WBS (both published), I’m currently working on project cost accounting for publication in early 2022. Then I will be looking at how the strands came together into EVM.
Pat
Given that between Yani and I, we have close to 90 years of 1st hand experience using Earned Value not as the governments or PMI or AACE advocate using it but as it is used as private sector contractors, we probably have more first-hand experience using EVM where our own money is on the line than most other self-proclaimed “SME’s”. So the first “test” of CREDIBILITY is who actually has “skin in the game” using EVM.
Then take the time to actually download and READ Gillette and Dana’s 1909 book https://books.google.co.id/books?redir_esc=y&id=zO-ADudj-R8C&focus, paying close attention to Chapter 1- “Ten Laws of Management”. (Law #1 will help your research on WBS evolution as well)
Chapter 3 is also a must-read for anyone SERIOUS about understanding the evolution of EVM- “PIECE RATE BONUS AND OTHER SYSTEMS”.
Lastly, go look at Figures 14m 15 and 16 on pages 99 – 104 and you can see what they call “Efficiency Factors” but what we know today as SPI and CPI.
Because we are CONTRACTORS working on single-digit net margins, being able to maintain our EFFICIENCY against our “as bid” unit costs is ESSENTIAL to our very survival, as is maintaining a neutral CASH FLOW.
If you actually take the time to RESEARCH to origins of EVM you too will see clearly how the US Government, PMI and AACE have modified what was originally a system designed to enhance project performance, paying PROMPTLY for that performance has been subverted into a bureaucratic nightmare?
These are exactly the same charts and graphs we use today to run the “for-profit” projects undertaken by our company, the only difference being we have automated them for use in Excel. For more on the various incentive formulas, you can go HEREhttps://build-project-management-competency.com/1-4-1-11-unit-11/ and look at Figure 88.
PS Note that much of the work done by Gillette and Dana was based on the work done by Frederick Taylor and Frank and Lillian Gilbreath. Many of these names should also be familiar to you- https://managementation.com/types-of-incentive-plans/
Paul,
You are becoming really tedious. This post WAS NOT and never has been anything to do with the ‘origins of EVM’. If you want to hold the view that EVM is 100s of years old – go ahead and produce a realistic paper showing how the basic EVM calculations were implemented at that time.
All you keep quoting are accounting and other processes that are patently nothing to do with EVM as defined by the various standards and two really strange papers that suggest EVM was based on the Bible and/or payment systems for some very limited class of works in the 13th century. EVM is a performance management system, not a payment system and definitely has nothing to do with working conditions (as important as these factors are in business and project management).
As a starting point I suggest you actually take the time to read current and past EVM Standards and implementation guide so you know what you are talking about. Happy to provide a free copy of Easy EVM to you if this helps.
Pat.
Pat, IF what you were advocating WORKED, then you would be on solid ground. But clearly Earned Value is NOT used by “most project managers. on most projects, most of the time” and even those who do use it fail to get the full value from it as it was originally designed.
The fact you fail to see how the ORIGINS of earned value are an indication of just how biased your research on this topic has become is both disappointing and scary, as all you are doing is leaving a LEGACY of a failed system, rather than using your researching skills to IMPROVE the delivery.
So you can find the TRUTH as “tedious” as you wish, but that doesn’t make what we are telling you any less TRUTHFUL or REAL
Right now, collecting payments for work done is a MAJOR issue for contractors all over the world, especially here in Asia and the Middle East and our model is no more complicated than you going to the greengrocer every week to purchase your fruits and vegetables, which is a model we have long advocated as being the TRUE and CORRECT origins of Earned Value and we have provided the PROOF to back it up going back to Biblical times.
Paul,
Send another post like the above and you will be blocked.
1. Your are insulting and WRONG – I have done more substantial and documented research on the history of project management than most; see: https://mosaicprojects.com.au/PMKI-ZSY.php
2. The roots of EVM are in three areas: accounting / cost engineering, plus the WBS plus scheduling but none of these elements is EVM – they are part of the foundations for EVM.
3. EVM is explicitly NOT a payment management system – you seem to be totally confused in this regard – go READ the books on EVM from the 60s and 70s – everyone who knows anything about EVM knows it should not be used as a payment system.
4. ‘Collecting payments’ may be a problem, it is ABSOLUTLY NOTHING to do with EVM. EVM measures actual costs incurred and the value earned based on the PMB – contact admin and payments are irrelevant to the EVM calculations.
5. The thing I find tedious in the extreme is you continuing to raise irrelevant issues that have absolutely nothing to do with the post. The only relevant comments in your entire set of postings are:
a) “clearly Earned Value is NOT used by “most project managers. on most projects, most of the time”” – totally agree.
b) “those who do use it fail to get the full value from it as it was originally designed” totally agree; assuming the ‘original design’ is the design of an EVMS from the 70’s or later. EVM did not exists as a system before then, or if it did its time for you to put up because absolutely nothing you have quoted ad nauseum so far demonstrates a complete EVM system only little bits of the foundations that were built into the modern EVM system defined in ISO 21508.
Pat
Hi Pat,
Sure, if you want to provide me with a courtesy copy of your book, you can email it to me at pauldgphd@gmail.com or send the hard copy to me c/o Sampoerna Strategic Square, South Tower, 18th Floor, Kl. Sudirman Kav 45-46, Jakarta Indonesia 12930
Keep in mind that Gallileo and Newton were excommunicated and Giordano Bruno was burned at the stake by the Catholic Church for going against the “popularity of the current wisdom” of the day.
Science is NOT a popularity contest nor is science determined by majority vote.
It is determined by tangible PROOF of what works and what doesn’t, regardless of what the “Current Wisdom” may believe or be advocating.
https://sciencing.com/five-characteristics-scientific-method-10010518.html