Sunday, November 21, 2010

Earned value reform

Earned value management [EVM] reform is in the air--actually, it's been in the air for some time with effort in Congress to correct some of the problems, as reported by Glen Alleman and Paul Solomon.

In the Nov/Dec 10 online edition of the magazine Defense AT&L, Paul Solomon reports on initiatives to close three big gaps in the ANSI-EIA 748 standard on earned value in an article entitled "Earned Value Management Acquisition Reform"

[Note to reader: Paul Solomon is one of the co-authors of ANSI-EIA 748 and maintains a website on performance based earned value at]

By Solomon's reckoning, the gaps to be closed are these:

Quality gap: There is no explicit provision to measure quality achievement--or short comings--in the formulation of a claim for earned value by a cost account or work package manager.

Technical performance gap: Although all technical projects have some kind of a technical performance objective and most have some sort of time-phased technical performance achievement plan, again the EVM system is not required to take achievement objectives into account explicitly. 

Solomon believes that the fact that '748 is work oriented [work: the schedule] and not also product oriented [product: the WBS] leaves both quality and TPM--these more generally associated with product than work--in the shadows.

Risk management gap: Solomon says this: "The 32 guidelines in ANSI/EIA-748 fail to address the integration of risk management with EVM".  Among others, the standard provides no guidance for risk-adjusting EVM's linear equations used to calculate forecasts.

Other EVM problems

Here's the other problems, according to information quoted by Solomon: "DoD has reported that EVM, based on the earned value management standard, no longer serves its purpose", and about that standard, Solomon says: "EVM is still recognized as an international, commercial best practice, but ANSI/EIA-748 has been largely ignored by commercial companies. When there is no government mandate to use EVM, the Project Management Institute (PMI) Guide to the Project Management Body of Knowledge (PMBOK® Guide) is a widely used standard for project management."

PMBOK® Guide?

Well, the PMBOK® Guide may be the go-to for non-Defense projects that employ EVM, but it's been my experience of two decades using EVM in DoD programs and then more than a decade in commerical IT that few non-Defense projects use any version of EVM, especially backoffice IT projects.  And it's not because there's no government mandate. But if they want EVM, and if they went to the PMBOK® Guide, they'll find it's a subset of '748 that simply leaves out some of the process and reporting that weighs down '748. 

PMBOK® Guide has gaps

Solomon asserts that the PMBOK® Guide has started down the road to integrate risk, TPM, and quality with EVM.

I don't agree.

In spite of what Paul says in the article and on his website, neither the PMBOK® Guide or the companion PMI Practice Standard for Earned Value Management directly address the three gaps.  The fact that TPM, Risk Management, and Quality are all addressed under the same cover, and TPM appears as a practice in Quality Management and Risk Management does not integrate these practices with EVM. 

Indeed, in Chapter 7 on cost management where the PMBOK® Guide discusses EVM--an improvement over its earlier positioning as a communications tool buried in Chapter 10--the PMBOK® Guide says the measure of earned value is based on work completed.  There is not a hint that product quality and performance should be considered.  To be sure, in Chapter 8, work performance and quality are tied together, but it's a reach to then tie that connection to Chapter 7.

And, although there are dotted planning lines from 'cost' to 'quality' knowledge areas, there are no such to risk management. 

In short, the PMBOK® Guide is not currently the answer to the three big gaps.

Managers should step up:

When I do DoD programs, I set up a performance review board to evaluate and approve claims of EV from the WP and CA managers.  It's the job of the board to hold the EV claimants accountable for TPM, quality, and risk.  Done right, the standard can work.

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