Earned Value as the Main Driver for Integrating Project Management

Michael A. Hatfield PMP, CCC

David J. Post PE

What is Integrated Project Management?

PMBOK Guide© lists, besides Integration, the following processes as part of Project Management:

•Cost

•Risk

•Time (Schedule)

•Scope

•Communication

•Human Resources

•Quality

•Procurement

Why should Projects have Integrated PM?

• Appreciable capability in one area depends on (at least) some capability in another

• Disparate, uncoordinated efforts are almost guaranteed to fail to improve PM within an organization

• But … how do you implement an integrated Project Management system?

The Capability Maturity Model (CMM)©

Carnegie Mellon University’s Software Engineering Institute (SEI) developed a Capability Maturity Model for software. This model, with some mild adjustments, has become the foremost maturity model for Project Management and PM Information Systems.

SEI-CMM© Five Phases

• Phase I: Chaos, uncoordinated

• Phase II: Very basic capability, but consistently applied

• Phase III: Documented, repeatable

• Phase IV: Seamless, exportable

• Phase V: Routine discovery of new, ground-breaking solutions to PM problems

Components of a Basic EVMS

• A valid Work Breakdown Structure• An Estimate, both in duration and resources, of

each WBS Element (at the reporting level)• The ability to collect Actual Costs for each WBS

Element• The ability to collect Start and Completion Dates,

and percent complete information• Acceptable report format

Once these elements are in place, a basic EVMS exists, and can

serve as the main driver behind moving the organization from

Phase to Phase.

According to the PMBOK Guide© ...

A complete PM capability involves a capacity in the following areas:

•Integration

•Scope

•Time (Schedule)

•Cost

•Risk

•Quality

•Human Resources

•Communication

•Procurement

How an EVMS helps driveScope Management

• In order for an EVMS to exist, it needs a Work Breakdown Structure

• Since EVMSs need percent complete data, OBS elements will tend to be weeded out of the WBS

• If a task incurs actual costs without any Earned Value claimed, unauthorized work may have been performed … but you wouldn’t know it without the EVMS

How an EVMS helps driveTime or Schedule Management

• In creating the time-phased budget, the basic information needed for the Schedule Baseline is made available.

• Pre-critical path duration estimating capability can be attained by dividing the EVMS’s percent complete data into cumulative duration.

• With an EVMS in place, all that is needed for the Critical Path capability is the relation between the activities (schedule logic).

How an EVMS drivesCost Management

Notice how this slide doesn’t say helps drive.• You have a project to make 2,000 widgets• You have two months, and $2,000, so you budget

$1,000 per month.• At the end of month 1, your accountant tells you

that you have spent $1,100

How are you doing?

How an EVMS helps driveQuality Management

Even a basic EVMS can generate Variance Analysis Reports, which can identify problems in the following categories:

• Formally added scope• Scope Creep (informal scope additions)• Resource Rate Variance• Legitimate Contingency Event• Poor Quality or performance

How an EVMS helps driveHuman Resources Management

By cross-connecting the WBS and OBS, it is possible to create a Responsibility-Accountability Matrix, or RAM, signaling high-performing teams as well as the less-than-optimal teams.

Depending on the detail in the resource estimates, an EVMS can also be used to transfer resources to the project areas of greatest need.

How an EVMS helps driveCommunication Management

By measuring performance via the EVMS, a common vernacular is introduced into the organization, enhancing horizontal communication.

With a Phase II capability, the entire organization is having its performance measured on the same basis, furthering enhancing vertical communication.

How an EVMS helps driveRisk Management

A basic Risk Management requires the following to be in place:

• WBS Dictionary• Cost and Schedule Estimates

With the basic EVMS capability, these are already in place. More advanced Risk Management depends on the same information that leads to more advanced Earned Value capability as well.

How an EVMS helps driveProcurement Management

From the PMBOK Guide©:

“Procurement planning is the process of identifying which project needs can be best met by procuring products or services outside the project organization.”

How could such an assessment occur without cost or schedule performance data?

To summarize ...

• Scope capability is created by the EVMS practitioner establishing the baselines

• Schedule capability is created and enhanced by the data made available through the EVMS

• Cost capability relies exclusively on EVMS• Quality capability depends on identifying

performance problems, which is what an EVMS does

To summarize ...

• Human Resources capability is enhanced by the EVMS

• Communications capability is also enhanced by the EVMS

• Risk capability depends on the information resident in the EVMS

• Procurement capability begins with performance knowledge, which is generated by the EVMS.

Any Questions?