Part of a program manager’s role is to constantly seek ways to improve project performance.
This is a key challenge for program managers, who have the difficult job of managing multiple stakeholder expectations with realistic project capabilities and goals, all while endeavoring to deliver projects on time and on budget. One question often leads to more questions such as:
- “Why aren’t we meeting deliverables?”
- “Is there a better way to manage this project?”
- “How can I meet everyone’s expectations?”
Program managers can quickly become overwhelmed with project improvement plans.
So what is the solution? In a previous article, we discussed the evolution from project portfolio management to earned value management (EVM) as a natural and beneficial solution for improving performance because of the reporting and forecasting capabilities of EVM. We made the case for why using EVM makes good business sense, and how it helps program managers more successfully deliver projects on time and on budget.
Program managers who implement EVM will realize key project enhancements that will help them successfully deliver more projects.
A Valuable Performance Measurement Baseline
The core strength of EVM lies in its ability to set a project baseline that is then used to calculate the value of work completed at various stages and accurate project forecasting. When using EVM, program managers must set a realistic performance measurement baseline (PMB) that integrates the budget, schedule and scope.
The PMB captures all the work and deliverables necessary to deliver a project, and usually includes scheduled start and finish dates, planned effort, planned cost and planned revenue, says software implementation specialist and consultant Linda Russell. This defines the planned value (PV) of a project, which is the value used to gauge progress.
Creating the PMB is the most crucial step for using EVM formulas because performance measurement is only meaningful if the baseline is accurate.
Accurate Project Performance Measurement
The only way to know whether a project will be delivered on time and on budget, before actual delivery, is to regularly check project performance. EVM metrics allow for accurate measurement of project performance based on the performance management baseline.
The EVM technique provides more than just how much money was spent up to a point, and whether or not a project is on, over or under budget. Earned value management can quantify project performance by providing a value of work performed up to a certain measuring point.
And, with the right EVM software, program managers are able to gather this data in near-real time. Joe Kerins, chief defense industry strategist at Artemis, explains that with a software solution that uses one centralized database, program managers are able to run performance checks more quickly and efficiently than when they use multiple applications with multiple databases.
By using program management software with a centralized database, performance can be measured at any time during a project, allowing a program manager to gauge performance and make adjustments where necessary. Because EVM is a time-phased approach to tracking progress, the more regularly a project’s progression is checked, the more likely the success of the project.
Forecast Future Performance
Sometimes, knowing how well a project is progressing is not enough to satisfy stakeholders itching to know deliverable details. That is why being able to accurately predict future project performance is an invaluable tool for program managers. Earned value management provides such forecasting tools, which can predict the cost of work left to be completed, the estimated time it will take to complete the project and the efficiency required to achieve project goals.
And these formulas can be run relatively early in a project’s life cycle. Project manager Greg Cimmarrusti points to studies done by the U.S. Government Accountability Office that conclude that by applying EVM to projects at the 16- to 18-percent completion mark, you can forecast whether the project will meet schedule and cost goals.
Early Warning Of Scope Creep
Scope creep becomes dangerous when it controls the project manager, instead of vice versa, says project manager Ranmali Kirinde. Preventing and/or overcoming scope creep is one of the biggest challenges in any project, and earned value management provides a solution to the scope creep issue.
As a tool, EVM is capable of generating early warning signals to detect problems, giving program managers and their teams time to adjust. Program managers who use EVM metrics to identify variances are able to
- locate where a project is having problems,
- determine how critical the problem may or may not be,
- and identify what is needed to get the project back on track.
Earned value management provides this information by illustrating variances of schedule and cost. These variances provide early warnings for scope creep issues.
Greater Control And Flexibility
Projects fail when program managers lose control. But retaining control is difficult in the face of multiple stakeholder groups and changes.
When using EVM, program managers have greater control of their projects because they can accurately measure performance, predict future performance and receive early warning of issues. Program managers who have tight control of their projects can also afford to be more flexible to change. When EVM formulas indicate an issue, or a possible opportunity, program managers are able to plan for those changes.
Projects that are flexible have a higher likelihood of being delivered. Through the early warning variances, earned value management tools encourage more flexibility by creating a space for change. Change in a project is less detrimental when it becomes a change that can be planned for in advance, as opposed to a roadblock that forces a project to change directions.
The ability to conduct impact analyses during a project is a key indicator of project flexibility. Kerins notes that the ability to run multiple “what if” scenarios in the face of change is what allows program managers to make stronger, quicker decisions while still maintaining control of a project.
Improved Visibility And Accountability
Accountability is a key factor in a project’s success, and effective program managers are able to positively encourage accountability in their teams. Lisa Anderson, president of LMA Consulting Group, Inc. and senior supply chain and operations executive, posits that tracking a project’s progress is a key element in ensuring accountability. She notes that strong accountability requires tracking throughout a project lifecycle, not only during the project results time frame, which, by its very definition, is earned value management.
Using earned value management improves project accountability through visibility by clearly identifying the causes of delays and added costs. Through this identification, program managers can approach those involved and hold them accountable for their work. Knowing this, team members are more diligent in their efforts to keep projects under control and make performance adjustments as needed.
Projects are more likely to fail without the support of all stakeholder groups. Keeping stakeholders committed is a challenge because each stakeholder wants different data points on a project’s progression and likely success. Earned value management helps program managers satisfy stakeholders’ demands for information.
The value of EVM lies in useful metrics to meet different stakeholder requirements. Customers often want to know what they are getting for their money. Upper management wants to make sure resources are being used efficiently based on the expected cost and revenue. Project managers and team members may want to know if they need to speed up their processes to meet delivery goals. Earned value management provides answers for these questions.
Communicating this information regularly to stakeholders is important. A benefit of EVM is that results can be clearly shown as graphics, which makes for easier communication of metrics and a better understanding by stakeholder and project teams, notes Paul Naybour, PMP and founder of Parallel Project Training. When stakeholders can see the value in the project, they remain more committed to seeing it through to completion.
Improve Performance With Earned Value Management
One way program managers are improving project performance is through the implementation of EVM techniques. Though certainly not the only option, using EVM gives program managers the insight and control they need to lead their teams in successfully delivering projects. It removes the guesswork from measuring project performance, providing concrete data upon which to base decisions.