In Search of True Value

Michael R. Wood is a Business Process Improvement & IT Strategist Independent Consultant. He is creator of the business process-improvement methodology called HELIX and founder of The Natural Intelligence Group, a strategy, process improvement and technology consulting company. He is also a CPA, has served as an Adjunct Professor in Pepperdine's Management MBA program, an Associate Professor at California Lutheran University, and on the boards of numerous professional organizations. Mr. Wood is a sought after presenter of HELIX workshops and seminars in both the U.S. and Europe.

  Cost Management   Requirements Management   Schedule Management   Scheduling  

Ever wonder why stakeholder eyes roll when you try to explain why earned value is a good thing and how it works? Ever wonder why claiming partial credit for projects in progress is met with skepticism and ire? Maybe it’s time to rethink the concept of EV as a way to measure project performance and progress.

No one can argue that an objective way to measure project health and performance based on a set of consistent metrics is a good thing. And it is clear that EV offers a pragmatic and objective approach. As I see it, the problem with EV is that it is based on comparing planned work against completed work in concert with budget performance and not based on pre-agreed upon ROI value achieved within the project. These ROI Value Points (RPV) are based upon the tangible work products that the stakeholders perceive contribute to achieving the project’s ROI objectives.

In addition, EV doesn’t factor in impact on the value to the organization based on early, on-time or late delivery of the project. For instance, if a project will yield a million-dollar improvement to sales a year then for every month the project is early the organization will enjoy about $88,000 in additional sales. Likewise, for every month the project is late, expected sales will suffer by the same amount. Timeliness of deployment is often more critical than budget performance, thus any …

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