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For many companies looking to improve project performance, earned value analysis (EVA) seems a logical technique to use on projects to better understand and manage performance. Procedures are written and some training provided. The project managers are then told to start using earned value, with the management expectation that project results will soon improve. Usually about a year later reality sets in. No improvement is achieved, project management costs are up and people are complaining about all of the 'extra paperwork.'
The company then either decides to drop use of earned value, or brings in a consultant to help figure out what corrective actions should be taken to get earned value 'back on track'. The author has been this consultant for companies, and this paper will cover the 'Dave Letterman' list of the top 10 pitfalls that can make the use of EVA unsuccessful, along with suggested corrective actions that can be applied to projects to counter these hazards.
This paper will first provide a review of earned value terminology, formulas and key metrics to monitor when using earned value analysis. After this review, the common errors encountered in implementing EVA and corrective actions will be covered in detail. By the end of this paper you'll hopefully realize this paper really isn't just about using earned value analysis, but really covers the more important topic of having a complete and integrated project plan in place, which is a cornerstone of earned value management.
EARNED VALUE TERMINOLOGY
Let's start out by clarifying the terminology associated with Earned Value, because many people incorrectly use the terms below interchangeably, and they are distinct and different. The terms are:
* Earned Value Analysis (EVA) - a quantitative project management technique for evaluating project performance and predicting final project results, based on comparing the progress and budget of work packages to planned work and actual costs.
* Earned Value Management (EVM) - a project management methodology for controlling a project which relies on measuring the performance of work using a Work Breakdown Structure (WBS) and includes an integrated schedule and budget based on the project WBS.
* Earned Value Management System (EVMS) - the process, procedures, tools and templates used by an organization to do earned value management.
The...