Earned Value’s Ascendancy in PPM

EVM & PPM earning new respectIn the last few weeks, several vendors have made material announcements involving Earned Value (EV). Earned Value or Earned Value Management (EVM) is a key concept in project management.

EVM & PPM earning new respect

In the last few weeks, several vendors have made material announcements involving Earned Value (EV). Earned Value or Earned Value Management (EVM) is a key concept in project management. The roots of this date back to the 1960s in government contracting.

In an extremely simplified view, Earned Value provides a better measure of project reporting than a simpler percentage completion method. Several times in my career, I have heard software developers tell me, just three months into a 12 month project, that they were now 85% complete. It never ceased to amaze me how that last 15% would take an additional 15 months, if ever, to close. When percentage completion is used, the different parties involved in the project often do not share the same points of reference behind ‘completion’ and hence ill will, bad feelings and disputes often arise.

Earned Value, by contrast, places additional rigor on the definition of the work plan or work breakdown structure. Individual steps are assigned a project value and as each step is completed the project cost can be compared to the value of the accrued effort. For example, if you were building a home you might ascribe 30% of the project value to the completion of a finished concrete slab for the house’s foundation. Once completed, you can compare the contractors cost to date to the total expected costs and determined if 30% of the Earned Value achieved today matches with 30% of the project’s actual costs. If these differ, the project may already be materially ahead or behind schedule or budget.

Exceptionally large projects, like government infrastructure or defense initiatives, require a degree of discipline and cost management that is often only possible with a technique like Earned Value. Nonetheless, smaller projects benefit substantially from the same discipline and it is one that more private-sector firms should use in managing large capital and information technology initiatives.

A few weeks ago, CA (nee computer Associates) introduced a number of Earned Value enhancements to its CA Clarity PPM product line. Clarity PPM is a strong, mature project and portfolio management solution (PPM) with roots back to the Niku Software product line. CA, through internal development initiatives and via integration with other products in the CA application portfolio, has continued to build additional robustness into this product line. Their recent announcements involving EVM for the federal government bring far greater government compliance, DOD support and other capabilities to this product line.

CA sees its EVM solution as possessing these key differentiators: - Fully integrated PPM with EVM in a single platform - More cost effective than implementing legacy solutions; less labor intensive to maintain - Central repository - No synchronization issues for project cost and schedule information required for EVM calculations - Fully modernized - 100% web platform with a standard UI

NetSuite today announced a series of enhancements to its SaaS product line. These enhancements include DCAA support, the development of deeper resource management and project management capabilities, and, the support for greater Earned Value Management functionality within their product suite. NetSuite also announced tighter and deeper integration with Microsoft Project.

NetSuite is clearly staking out the professional services and project management spaces. Their acquisition of OpenAir earlier this year sent a clear signal that NetSuite wants to enable people and time-based organizations with SaaS-based PSA, PPM, CRM and Financial applications. For more on this see: http://www.netsuite.com/portal/press/releases/main.shtml

Last month, Deltek acquired the MPM division of PlanView (an Austin, Tx. PPM provider). Deltek, a PPM vendor with a long history of supplying technology solutions to government contractors, will use this acquired technology to materially enhance its solutions in the EVM government area.

Bottom Line:

All of this interest in EVM is a good thing in a tight economy. Businesses and governments alike can ill-afford to waste scarce capital on projects that are going awry. These developments in the PSA/PPM space are also encouraging as it demonstrates continued investments in the furtherance of better business practices and solutions in the service sector.

For more on EVM, click here for this solid Wikipedia entry