Last week, we discussed Earned Value Management (EVM) - a contentious topic in the project management world! If you missed that article, take a look here. This week, we’re going to build on that foundation and provide MustardSeed’s recommendations for assessing whether EVM is the right tool for you and your organization.
1. Non-Agile environment
While it’s technically possible to retrofit EVM to an Agile environment, our belief is that it’s rarely worth the effort. At its core, EVM is inconsistent with the principles of Agile project management. Agile represents a shift away from highly complex and intricate project management practices. EVM, on the other hand, typically relies on the development of highly prescriptive project schedules and detailed budgets. In an Agile environment, we recommend using tools more aligned with Agile methodologies, such as burndown charts for backlog and sprint management.
2. Highly complex, long-term projects
EVM is not easy to implement. If your organization manages many low-cost or quick turnaround projects with a duration of less than one year, EVM is probably not the right option for you. The return on investment (ROI) for the amount of time and effort involved in developing detailed project budgets and timelines to make EVM metrics useful is likely not there. Similarly, if the projects you typically see at your organization are relatively simple from a schedule and budget perspective (i.e., limited dependencies, narrow and clearly defined scope, a small project team fully dedicated to a single project), EVM may not be worth the hassle.
3. Personnel cost management
To work well, EVM requires comprehensive task-level project budgets against which actual costs will later be compared. If your organization typically provides high-level, back-of-the-envelope project budgets, EVM will not be terribly useful. While EVM does not explicitly require tracking of personnel costs to work, labor costs typically comprise a significant proportion of overall project costs. Inaccurate resource planning can be a source of significant cost and schedule deviations. For these reasons, MustardSeed recommends companies considering adoption of EVM have a clear process in place for budgeting and accruing both labor costs as well as other direct costs (materials, subcontractors, equipment, etc.) over time.
4. Culture of cross-functional collaboration
Implementing EVM is a cross-functional effort involving coordination and collaboration from various departments. In addition to the Project Management Office (PMO), you’ll need to involve the following teams (at minimum – it could be beneficial to bring in other departments as well, like your supply chain or contracts teams):
Finance and Accounting (for assistance with budgeting, financial planning, and tracking actual costs)
Human Resources (for support with training, workforce planning, and accurate tracking of personnel costs, labor rates, and resource allocation)
IT (to oversee the integration of EVM tools and software)
Executive Leadership (provide support and buy-in for EVM adoption and make strategic decisions based on EVM insights)
Because of its highly cross-functional nature, EVM works best in organizations with a strong bias towards inter-departmental communication and support.
5. Strong PMO
Getting started with EVM is a big lift for any organization, large or small. A strong Project Management Office (PMO) can help oversee its adoption by facilitating cross-functional collaboration, helping departments and teams manage expectations, and ensuring adequate training resources are available. EVM requires centralized management to ensure consistent practices across projects; without a strong, centralized PMO, it will be challenging to ensure successful uptake of EVM company wide.
In the end, the question of whether EVM is right for your organization is a complicated one. EVM is beneficial for some organizations and overkill for many. To succeed, EVM requires disciplined adoption of tools, strong cross-functional collaboration, and an advanced approach to budgeting and cost management. For organizations meeting the criteria described in this article, EVM can provide meaningful data to better support project delivery and risk management.
Interested in learning more about EVM? Disagree with our take? Reach out and let us know. We love connecting with folks from across the project management and life sciences industry.