Letter: EVM, Activity-Based Costing will reveal projects' problems
Regarding “Report identifies benefits, limitations of EVM
,” I would disagree with Clinton Bass, an analyst of government organization and management at the Congressional Research Service’s Government and Finance Division, who
concluded that "for example, even when EVM metrics are accurately captured and portrayed, the metrics typically will not reveal why a project might be experiencing schedule or cost variances.”
If earned value management is used with an Activity-Based Costing (ABC) accounting system, it will point out very clearly and concisely exactly where the problem lies. This is based on more than 35 years of firsthand experience using EVM as a general contractor.
More importantly for those projects funded by the World Bank, Asian Development Bank, U.S. Agency for International Development or other multi- or bilateral lending agencies, the use of EVM combined with ABC will help eliminate corrupt and collusive practices, by making the "leakage" of funds very difficult to hide.
Unfortunately, the most popular certifications being adopted by the government, the Project Management Institute's (PMI) Project Management Body of Knowledge Guide and Project Management Professional certification, fails miserably in making the clear link between EVM and the necessity of using ABC as part of that process.
In my professional opinion, the organization that bests explains this link is the Association for the Advancement of Cost Engineering.
Unfortunately, many information technology people have adopted the rather superficial approach PMI advocates, which has resulted in poor understanding of how EVM works and even less understanding on how to read and interpret the very simple graphics which result.
Bottom line, if Bass would write to me, I would be happy to help him understand the essential link between ABC and EVM.
Dr. Paul D. Giammalvo, CDT, CCE, MScPM
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