5 Ways To Deliver Exceptional Earned Value Analysis

Measuring objective progress and performance of a project using earned value analysis is a popular technique but often an unpopular tool due to varying success in applying the processes required to gain valuable insights.

We’ve explored the common success criteria for exceptional earned value analysis and set out 5 key themes for maximizing the benefit of earned value analysis.

Use real time data

A common concern relating to earned value analysis is the accuracy and quality of data.  It’s normally passed through various suppliers before it gets to the reporting team and often highlighting performance from several weeks previous to the reporting date.  

Where possible capturing real time data and providing access to all stakeholders significantly increases trust in the source information and mitigates the lag between data input and reporting output.

Create actionable insights

Understanding the actual cost of work performed (ACWP) against the budgeted cost is not an immediate recipe for success.  Knowing that earned value indicators are decreasing may not provide the insight required to make an effective intervention.  

Capturing the ACWP alongside other metrics such as delay details and categorisation, resource allocation and contextual commentary is essential in creating actionable insights.  Providing for this accelerated decision making bridges the gap between knowing there is a problem and solving it.

Commercially structured

Setting up for success is often overlooked as we race to start work and make progress.  Creating the right structure to monitor the budgeted cost of work performed (BCWP) is critical for ongoing data capture and earned value analysis.  Often the structure is fixed from a tender activity schedule which may not best reflect the programme or key production metrics.

The BCWP should be structured to reflect key programme activities and the critical path of productivity.  This may mean focusing on less activities where it’s recognised that those are absolutely critical to success.  Cutting out noise may help focus minds, promoting best practice in areas that are important to the success of the project and managing risk more effectively where issues arise.

Ideally the data captured on site will be structured in the same way and linked to the commercial metrics underpinning the BCWP.  Recognised methods of measurement such as RMM (Rail Method of Measurement) in the rail industry provide a framework for both developing a commercially focused programme and the appropriate structure for earned value metrics.

Focus on collaboration

Earned value analysis is often used as a “stick” rather than a “carrot”, depending on the culture of a project.  In this environment it is common that suppliers will start to manipulate data to avoid interrogation.  Ultimately this leads to nasty surprises after several months of misreporting.

A strong focus on incentivising teams to be open with data is essential to gaining maximum value from earned value analysis.  Capturing and sharing real time data helps in this process avoiding the double (or triple) handling of information.  Putting as much, or more, emphasis on higher performing areas of the project, understanding and harnessing best practice to share with others will incentivise the right behaviours.  If this is delivered alongside genuine support for poor performance, a collaborative and open culture is possible.

Engage the supply chain

Large infrastructure projects often have a Project Management Office (PMO) responsible for project controls, including the effective deployment of earned value processes.  The further a team is away from this central function typically the less they understand what is required and why it’s required.  Educating all suppliers in the value and methodology of earned value analysis improves buy-in and mitigates the risk of data being misunderstood or captured incorrectly.

Creating aligned incentives to deliver accurate, consistent and timely data for calculating the actual cost of work performed is a challenge worth exploring.  Instead of mandating processes top down it’s often beneficial to engage suppliers and understand their challenges before finalising reporting processes.

Utilsing technology to support earned value analysis is a critical success factor.  Raildiary has been developed to consistently capture real time site data.  We aspire to deliver structured commercial intelligence, working with suppliers and asset owners to set up their projects for success.

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Overall, implementing EVA requires careful planning and attention to detail. However, with the right approach, EVA can provide significant benefits to project management success, including improved communication, better cost control, and more accurate forecasting. By following the five ways outlined in this the article, a project managers can deliver exceptional EVA and achieve project success.