Magazine article PM Network

Selling Executives on the Predictive Powers of EVM

Magazine article PM Network

Selling Executives on the Predictive Powers of EVM

Article excerpt

GUEST COLUMN / PROJECT PERSPECTIVES

So often, project controls professionals receive executives' full attention one time and one time only-right after painful and embarrassing cost or schedule overruns have come to light.

It makes little difference that project controls leadership may have been passionately advocating for months for the resources and authority to roll out effective planning, controls processes and software systems. The executives tend to scrutinize right when project controls are failing to fulfill their promise.

So how can project leadership take advantage of these moments to sell to executives the power of project controls and differentiate them from the back-office, after-thefact reports coming from finance? In a word: forecasting.

BACK TO THE FUTURE

Project management personnel can take a lesson from the leading engineering, procurement and construction (EPC) contractor firms. Their businesses have long depended on how effectively they control cost and schedule and how well they forecast. These industry leaders have developed repeatable, standard rules for reporting progress by discipline and by task. Then, based upon that past performance, they can effectively forecast the projects' estimates at completion.

Throughout these projects, they are comparing work completed to work planned, as of a given date. If this sounds familiar, it's because that's a definition of earned value. EPCs may call it progress measurement, productivity reporting or tracking "earned over burned," but in essence they are applying the principles of earned value management (EVM).

And here's the remarkable, sit-up-and-take-notice observation about EVM: Empirical studies have shown when EVM is effectively deployed on a project, the project's cost performance trend is known to stabilize once a project is 20 percent complete and probably won't change by more than plus or minus 10 percent by the time it's done. …

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