Question

What do you see as strengths of earned value management (EVM)? How about weaknesses? Why?

Answer 1

The technique and method Earned Value Management is used for measuring the performance of any project and its progress in objective ways. The combined measurement takes into account factors including time, scope and costs. While it was originally devised as a tool of financial analysis and control, it is now important towards cost engineering and project managers. The important features of the implementation program of an EVM are:

a. A well-devised project plan that identifies the works/tasks that needs to be accomplished.
b. Estimation of planned value or a clear valuation of the planned work (the budgeted expenditures/cost of the work schedule).
c. Earned value estimation or the estimation of earning rules (defined beforehand) for quantifying or valuing the work that will be accomplished.

An example here can be a project that is estimated to accomplish by 50%, with 50% of expenditure in 1 year. If, after 1 year 50% of spending is done but only 25% of the tasks are accomplished the project is behind schedule. On the other hand, if 75% of tasks are accomplished with 50% of total expenditure in a year, the project is performing exceptionally well.

Strengths of EVM

An EVM approach towards project management may have several merits and strengths.
a. It is capable to keep the management and workers on their toes and makes them more accountable.
b. A single system can track performance and expenditures in multiple areas. For instance, EVM methods can track money, time and work all at the same time.
c. In time review of expenditures and performance helps organizations lower the risk, and avoid humongous losses or complete failures. It is always possible for the managers to bring the project back on track, as EVM raises the alarms at the right time.

Weaknesses of EVM Approach
a.While EVM has several strengths and advantages, it is not devoid of weaknesses.
b.The EVM approach does not take into consideration the important aspect of quality. Therefore even when the project analysis shows that everything is fine, the quality of deliverables may be below standard.
c.EVM does not take any measures for overcoming the unforeseen risks. For instance, an EVM analysis may reveal that everything is on track at any given moment. But later on, certain unforeseen risks and scenarios may cause problems and make the project off track. Because the EVM method has its baseline in the form of "planned value", the project remains exposed to certain risks.

EVM may be applied through software and the company has to incur costs towards the implementation and control of an EVM program. The analysis also requires efforts (as incurred towards obtaining data from various departments of the organization) and all of this leads to expenditures.

EVM may be best for small projects where data can be easily accessed and analyzed. For the larger and multi-tiered project, the method may have practical limitations in its implementation. Companies would also require separate quality control and assurance program as EVM will not account for this factor, being more concerned with the schedule, cost and time-related aspects of a project.