The Three Deadly Sins of EVM
Earned value has emerged as an increasingly important tool for the oversight of projects, particularly in the government sector. While it has been applied as a means for acquisition oversight for projects for many years, in the past decade it has seen a growing emphasis. In the United States, for example, the application of earned value management (EVM) principles is required for all Department of Defense projects and all capital investments of agencies within the Executive Branch. Many U.K. government agencies and departments have similar requirements. With the growing visibility of EVM, it is expected that organizations will continue to adopt, utilize and adapt its principles in order to increase oversight of their projects.
Earned value as a concept is relatively simple and straightforward. It essentially asks the question: “For the work conducted to date, what was it supposed to cost?” This can be compared against actual expenditures and budgeted cash flows to be able to support understanding not only whether actual costs are in line with expectations, but whether schedule performance is in line as well. The promise of it is admittedly pretty cool: measure costs, and get a sense of not only budget but schedule performance (with an implicit understanding of scope thrown in for good measure).
While the concept is simple, there are a multiple
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