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Making Earned Value More Valuable

PMIEarned value metrics are a way to measure actual project progress versus planned progress. Properly monitoring earned value and properly presenting what earned value means to stakeholders are two entirely different matters, but you need to accomplish both of these things if you are going to maximize earned value’s usefulness. Kevin Korterud writes a blog post pointing out specific three ways to get the most out of earned value:

  1. Qualify activities that earn value.
  2. Set standard earned value ranges.
  3. Clearly communicate earned value to project sponsors.

Including all project activities when factoring earned value often paints an unrealistically sunny outlook for a project, as you are counting the completion of basic administrative tasks as terrific accomplishments. This is akin to procrastinators feeling a sense of satisfaction from cleaning their entire apartments when what they were really supposed to be doing was filing their taxes. Only the most important tasks should really be included in quantifying earned value, with Korterud giving examples such as high-effort and high-risk activities and external dependency milestones.

Another way to not become sabotaged by your own numbers is to set standard ranges for earned values. Claiming a 99% completion sounds terrific but in almost all cases will be an inaccurate reflection of how much time and resources will really be required to work through that last 1%. Korterud recommends a conservative standard, with 75% completion indicating a deliverable is completed and the last 25% representing the approval process by the project sponsor. In cases where the sponsor is making you jump through endless hoops and you are half expecting to have to fend off a tiger at some point, maybe this standard is not so conservative at all. But this makes it all the more important that earned value is clearly communicated:

Speaking of project sponsors, one of my all-time favorite earned value moments occurred recently during the first progress status meeting. After several weeks of high expectations around earned value, the project manager stood up and said, “Our SPI is .92.” Needless to say, this abbreviated report of the schedule performance index caused a long silence, puzzled looks and furrowed brows among project sponsors. Avoid such tense moments by communicating to project sponsors, in terms they understand, what earned value can and cannot do. Add relevance and context by combining earned value with other project readout content, and tailor your communications to sponsors through visualization techniques. For example, present a graph showing the schedule of planned value against the actual earned value of these deliverables for the project.

Using earned value in the right way means the difference between a useful metric and a tool for baffling and misdirecting sponsors. Korterud’s three tips should help in finding that right way to employ the data. It might not sound as impressive when you are not always at 93 or 97% completion on all of your projects, but the practical results from using earned value the way it was intended will speak for themselves.

About John Friscia

John Friscia is the Editor of Computer Aid's Accelerating IT Success. He began working for Computer Aid, Inc. in 2013 and continues to provide graphic design support for AITS. He graduated summa cum laude from Shippensburg University with a B.A. in English.

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