Categories: Risk Management
The primary capital ship of most blue-water navies is the aircraft carrier. According to Rob Stern, in U.S. Battleships in Action, Part 2 a pair of aircraft carriers can deliver around 35 tons to a target in one hour. A United States Iowa-class battleship can do the same job in 90 seconds.
The U.S. Navy has four of these battleships, but, fortunately for enemies of the United States, only one is in the reserve fleet, while the others have been converted to museums.
Why is such a clearly effective weapon not in use? It may be because of the relative ease with which aircraft carriers sank battleships during World War II, leading to the conclusion that the carriers were superior naval vessels in all respects.
In the epic struggle to advance project management capability within our organizations, I think it's important to recognize that we are in competition with other management approaches and information streams. And in this competition, we may be failing to use the most powerful weapon in our arsenal: the capability of an Earned Value Management System (EVMS) to predict the future.
Accurate prediction of the future is obviously a very useful capability. In the project management world, the key pieces of future information include: How much will this project end up costing, and how long will it take?
These twin brass rings of project management information are hotly pursued in a variety of ways--most of them incorrectly, in my opinion. The most common approach is to re-estimate the remaining costs and duration of an on-going project, and to then add that amount to cumulative costs or duration.
This method, despite being notoriously inaccurate and injecting hundreds (if not thousands) of purely subjective data elements into the mix, is often defended as the only appropriate approach.
Conversely, the best approach--calculating the estimate at completion (EAC)--is commonly derided by so-called project managers, even though it's faster, easier and demonstrably more accurate than its re-baselining counterparts.
The most familiar EAC formula, the Budget at Completion (BAC) divided by the Cost Performance Index (CPI), can be algebraically reduced to dividing the cumulative actual costs by the project's percent complete. This formula works with durations as well: Divide the cumulative duration by the percent complete, and you have an accurate idea of how long a given task will take.
With such an easy, simple and powerful weapon in our arsenal, why aren't we using it more?