How Companies can Follow Basic EVMS Principles
There are a few Earned Value Management System (EVMS) principles that should be followed to sustain any serious EV reporting.
1) Define the project. All the activities and related costs to complete the project must be estimated. The development of the Work Breakdown Structure is very important at this stage and is required by EVMS critierion 1 for good reason.
Each level of the WBS can be broken down into lower level tasks until the plan is adequately detailed for efficient management. At this point the project budget should be authorised. This is a requirement of criterion 9.
Defining and detailing the scope and cost of the project is the first and absolute necessary principle of EVMS.
2) Work Assignment
Work scope must be detailed to a level that can be assigned to a person, an organisation area or an outside party. The assigned party is responsible for timely and accurate progress reporting. It is at this detailed level of the WBS that control accounts should be established.
3) Performance Measurement Baseline
This is a scheduling phase. At this stage the WBS duration and relationships must be determined in a project network. Once the project network is created, ensure that indicators or milestones are included so that progress can be measured accurately. EVMS criterion 7 requires these indicators. Once the baseline has been established, any changes should be incorporated only if they are authorised.
4) Calculate the EV Metrics
EVMS Criteria 16 & 19 requires the recording of direct and indirect costs in a formal system. Recording the project’s actual costs is necessary in order to compare them with the planned costs (PV) and calculate the EV.
5) Use the information
The information generated from the first four principles can be used by management to decide whether the project should continue without changes or whether more resources should be added. Also, it will improve project planning and performance.