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Topics: Cost Management, Earned Value Management, Integration Management
EVM: What are the limitations or this is the best?
We knew that EVM is a tool that helps PM to measure project's performance (as discussed in PMBOK). Apparently, not all projects used EVM. Are there limitations of EVM, if any or none at all? Your thoughts...
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Joefil -

Any tool, no matter how powerful, has limitations. EVM has a number of prerequisites including:

* Discipline in defining & decomposing scope
* Financial reporting systems which can provide the level of granularity required
* Stakeholder maturity in understanding and accepting EVM analysis

It also has a couple of Achilles Heels:

1. If there are multiple parallel non-critical paths, a team could provide the illusion of being ahead by building up a lot of inventory of partially completed tasks. To avoid this, a 0/100 progress reporting rule along with inch pebble decomposition helps.

2. Like all forecasting approaches, EAC is based on a set of assumptions. If those assumptions are invalid, so is the forecast.

Hi Joefil

EVM certainly has limitations.

EVM, in its tradition form, is focused exclusively on monitoring and forecasting project cost.

1. We have parameters like SPI and SV which can be used to track the schedule performance but these are not very effective. When a project is completed (with objectives met), SPI equals 1 and SV is 0, even if there is a schedule delay. These parameters do not provide a precise picture of the project schedule performance.

2. You must have come across formulas for EAC for forecasting project cost that “include SPI as one of the parameters”. These are mathematically imprecise formulas - an attempt to roughly capture the impact of schedule delay on the overall cost. I will be very careful while using these in real life.

3. Traditional EVM frameworks has no mechanism to predict the project schedule performance.

Having said this, PMI has recently introduce Earned Schedule in PMBOK 6th edition, as an extension of EVM. This concept is likely to overcome the above limitations.

I hope this helps!

We use EVM and ESM. You can find about it inside the EVM Standard. In our case, the value is the possibility to predict with both methods.

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