Vital checks for better health

Earned value management (EVM) techniques promise to give project managers a powerful early warning system for programs veering dangerously off course. But like committing to an early morning calisthenics routine or starting a low-carb diet, adopting EVM is sure to cause some initial pain.

Regarded as a solid means of forcing discipline on project teams and contractors, EVM provides a method for program officials early on to determine if a project will be successful — whether it will come in on budget and on schedule or abysmally miss both marks. What follows is a list of frequently asked questions and explanations gleaned from EVM experts, who described this method of project management and its use in government.

What is EVM?

With Defense Department roots dating to the 1960s and widespread use in the aerospace industry, EVM is a rigorous cost-

containment strategy now undergoing a bit of a renaissance in federal information technology contracting. Specifically, Office of Management and Budget officials, in a drive to impose cross-agency performance measures, are demanding that program managers show proof that they have technology programs under control. EVM is a way to give OMB the wealth of budgetary feedback now required, experts say.

For instance, OMB directives spurred the Pension Benefit Guaranty Corp. (PBGC) to use EVM techniques for more than 100 projects, said Valerie Sandy, PBGC's project office administrator. "Most of our earned value calculations are driven by OMB, which is the agency that provides funding for our initiatives," she said. "Risky cost-based, rapid-response contracts involving complex technology are also forcing government to embrace earned value as the most effective tool for managing such contracts."

How does EVM work?

Basically, EVM involves breaking down an IT project into manageable chunks at the project's inception and then clearly delineating individual work tasks and affixing budget figures to each of those measurable work packages. At prescribed points during the project, officials will do more than simply compare how much an agency has spent on the project against how much was earmarked for expenditure — the basic steps that make up traditional planned vs. actual expense methods.

Instead, project managers using EVM will take the amount spent on a particular task during the time frame and tie it to the amount of work a contractor has accomplished. Then, officials will compare those figures with what program managers had planned to spend and the work contractors had promised to finish. Comparing those numbers yields earned value.

How would EVM work in a government IT setting?

To get a feel for EVM in action, consider this example offered by Quentin Fleming, an author of books about EVM and senior consultant at Primavera Systems: Suppose there is a 12-month, $1 million software project with 10 deliverables, each of which is budgeted at $100,000. At the end of the first quarter, assume the project team in charge has spent $300,000.

In a traditional planned vs. actual analysis, the project would seem to be on target. But what if the vendor had completed only two of the 10 tasks instead of three as prescribed at the project's onset? This means that $300,000 in funds was spent to accomplish $200,000 worth of work. It soon becomes obvious that this project's future, which appeared so bright at first, is now "not so good when we realize that for each dollar we spent, we got only 67 cents of value earned," Fleming said.

Although planned vs. actual analysis is standard operating procedure for most contracts, it is a practice that often lacks accountability measures, said Wayne Abba, an independent EVM consultant who used the techniques extensively in his earlier DOD career. "By just showing expenditures, you have no idea how much work has actually been performed," he said.

What are the major benefits of EVM?

More than anything, EVM is a method of imposing new levels of accountability on a project and shining a light on potential problems while there is still time to fix them, said Gary Humphreys, another former DOD official who has used EVM extensively. He is now chief executive officer of Humphreys & Associates. "This sets up an early warning system for the program," he said. "Basically, it forces you to do your homework upfront."

Further, EVM gives program managers a way to anticipate and cope with the unexpected expenditures and events that plague many projects. "One of the big things possible with EVM is management by exception," said Ruthanne Schulte, EVM software product manager at Welcom, which develops project portfolio management software. "Cost variances can be highlighted in red, for example, and officials can investigate these areas before they run out of budget."

Will government agencies buy into EVM?

Experts appear split on the technique's future in government, with no consensus on whether a significant migration to EVM will take place.

"EVM is still not widely accepted in the agencies," said Schulte, who expects that OMB management processes will push more agencies toward EVM. "New contracts will require EVM in order for the agency to receive high scoring to get all of their projects funded," she said.

Others aren't so sure. "Despite its benefits as a management tool, use of EVM will not increase significantly in the next few years," said Ray Bjorklund, senior vice president and chief knowledge officer at Federal Sources.

Bjorklund said EVM will remain strong at DOD, NASA and other agencies that build complex systems. "But there are fewer and fewer IT contracts of the scale that would warrant EVM," he added. "Similarly, there are far more fixed-price type contracts than the cost type contracts where EVM may be used."

Still, opportunities to use EVM exist. For instance, officials at U.S. Customs and Border Protection's Modernization Office incorporated EVM into the Automated Commercial Environment program, said Dave Morrell, the office's team leader for project management. "EVM is employed on cost-reimbursement task orders only," he said.

Morrell predicts wider adoption of EVM among government IT program managers. "A broader understanding of EVM and its benefits within the IT industry will further expand its use throughout the federal government," he said. "EVM is a substantial improvement over the subjective indicators often used in projects reporting past performance, and [the strategies] provide the project manager with more reliable tools with which to predict future performance."

How difficult is it to incorporate EVM into projects?

Beyond the initial challenges in setting up an EVM system, which still requires a good deal of planning, project managers should prepare for the negative reception the new methods are likely to get from staff members and contracting teams.

EVM is almost always a tough sell, and all involved are likely to balk at the level of discipline they will face once the technique is enforced, experts say. "Yes, there is going to be some resistance," Fleming said. "Some project teams will fight it."

Much of this reluctance will be tied to the tendency to avoid more disciplined work processes, but other factors could be in play, Schulte said. "I've seen some of the biggest problems with people who know they are in trouble and don't want to open the kimono," she said, adding that some contractors may fall into this category.

How can managers encourage staff to buy into EVM mandates?

To get past initial EVM resistance, program managers can walk teams through the many reasons why EVM will bolster a project's performance. Coaxing has its limits, however, so officials likely will have to drive home the fact that using EVM is not optional. It then becomes a matter of giving staff members time to adjust to the new level of discipline, experts agree.

PBGC executive managers and stakeholders began requiring standardized, EVM-compliant monthly reports to get past resistance to the new processes. "This is how we overcame the human factor of any potential noncompliance," Sandy said. "Users did not want to have reports generated from nonstandard project plans." With personnel quickly onboard, agency officials were able to accomplish a series of goals. "Project planning is standard, resource leveling is realistic, and all tasks are capturing actual hours worked," she said.

What potential pitfalls come with EVM?

Failure to properly define a project's scope and map tasks as they relate to the larger context are the quickest ways to sabotage EVM. Program managers must study all aspects of a project before work is dissected into measurable tasks. "You have to define the scope of project you are working on in order to measure the percentage of work completed," Fleming said.

It is also important not to get carried away, micromanaging every detail of a project and figuring costs down to the penny. "Resist overkill," Humphreys said. "If you can measure the status of a project at the milestone level, don't go to the 'yardstone' level. If you can do it at the 'yardstone' level, don't go to the 'footstone.'"

Managers also must be careful not to apply EVM too broadly. "It may not be right for every project," Abba said. "See how a particular program fits in a portfolio of projects that are related." Sometimes a particular effort should be given a more flexible budget, he added.

Once program officials have decided where best to apply EVM and have come up with sound baseline plans and reasonable measurements for assigned tasks, it is crucial to make expectations clear to all involved. "Make target costs open and visible," Abba said. "Let people know exactly what they will be accountable for."

Jones is a freelance writer based in Vienna, Va.

AT A GLANCE

EVM terms

Earned value management: A project management method used to evaluate a project in terms of cost and schedule by measuring and assigning value to the amount of actual work produced during a period of time compared to the amount of work promised for that same period.

Work breakdown structure: A hierarchical list of all project tasks broken down into definable product elements that will be used to create EVM reports.

Project master schedule: A detailed list of when tasks will be completed; used to track work scheduled (planned value) vs. work produced (earned value).

Schedule variance: The difference between work scheduled and work completed.

NEXT STORY: Army gets new materiel chief

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.