Earned Value Management: A Global and Cross-Industry Perspective on Current EVM Practice

Earned Value Management: A Global and Cross-Industry Perspective on Current EVM Practice

ISBN: 978-1-935589-06-8

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Project Management Institute

EARNED VALUE MANAGEMENT

A GLOBAL AND CROSS-INDUSTRY PERSPECTIVE ON CURRENT EVM PRACTICE

Lingguang Song, PhD

Table of Contents

Executive Summary

Acknowledgement

Chapter 1   Introduction

1.1 Background

1.2 Problem Statement

1.3 Objectives and Scope

1.4 Methodology

1.5 Survey Design and Data Collection

1.6 Report Outline

Chapter 2   Literature Review

2.1 Origin and History of EVM

2.2 Related Studies

Chapter 3   An Overview of Current EVM Practice

3.1 EVM in U.S. Government Agencies

3.2 EVM in Private Industry

3.3 EVM in Other Countries

Chapter 4   EVM Usage in Different Industries And Countries

4.1 Sample Characteristics

4.2 EVM User Classification

4.3 EVM Usage

4.4 EVM Implementation and Maturity

Chapter 5   EVM Practice Standards And Service Market

5.1 EVM Practice Standards

5.2 Survey Results on EVM Standards

5.3 Service Market Overview

5.4 Survey Results on EVM Service Market

Chapter 6   EVM Contributions and Usage Improvement

6.1 EVM Contributions

6.2 Barriers for Improving EVM Adoption and Usage

6.3 Critical Success Factors for EVM Implementation

Chapter 7   Conclusions

7.1 Overview

7.2 Major Findings

7.3 Limitations

References

Appendix A

Appendix B

List of Figures

Figure 1-1.   Research Strategy

Figure 1-2.   System Model for EVM Practice

Figure 4-1.   Primary Job Functions

Figure 4-2.   Project Management Experience

Figure 4-3.   Organizations by Country (≥10 Responses)

Figure 4-4.   U.S. Organizations by State (≥10 Responses)

Figure 4-5.   Organizations by Industry Sectors ≥10 Responses)

Figure 4-6.   Organization Role in a Typical Project

Figure 4-7.   Future Plans of Non-Users

Figure 4-8.   EVM Usage by Industry Sector

Figure 4-9.   EVM Usage by Motivation

Figure 4-10. EVM Usage by World Regions

Figure 4-11. Motivation of EVM Usage by World Region

Figure 4-12. History of an Established Project-Control System

Figure 4-13. History of EVM in a Formal Project-Control System

Figure 4-14. Four Additional Criteria for EVM Maturity Measurement

Figure 4-15. Distribution of the Maturity Index

Figure 4-16. Boxplot of EVM Maturity by World Regions

Figure 4-17. Boxplot of EVM Maturity by Country

Figure 4-18. Boxplot of EVM Maturity by Industry

Figure 5-1.   Different Approaches to EVM Practice Standards

Figure 5-2.   Industry Sector/Motivation and Practice Standards

Figure 5-3.   EVM Standard Usage by World Regions

Figure 5-4.   EVM System Certification by Industry Sector

Figure 5-5.   EVM System Certification by World Regions

Figure 5-6.   EVM Software Usage Strategy

Figure 5-7.   Software Usage by World Regions

Figure 5-8.   Consulting Service Usage by World Regions

List of Tables

Table 1-2. Category of Survey Variables

Table 4-1. EVM User Group Classification

Table 4-2. Level of EVM Usage Definition

Table 4-3. EVM Applicability by User Classification

Table 4-4. EVM Implementation Strategy

Table 4-5. Future Plan Regarding EVM Implementation

Table 4-6. A Simplified EVM Maturity Model

Table 4-7. EVM Maturity by User Classification

Table 6-1. EVM Contribution to Project Outcomes

Table 6-2. EVM Contribution by World Regions

Table 6-3. Barriers for EVM Adoption

Table 6-4. Barriers for Improving EVM Level of Usage

Table 6-5. Critical Success Factors for EVM Implementation

Executive Summary

Earned value management is an integrated planning and control methodology that combines the measurement of cost, schedule, and technical performance. It enables early detection of performance issues and allows corrective actions to be implemented in a timely fashion. The objective of this study is to provide an understanding of the current practice of EVM usage, practice standards, and related professional services across different industry sectors and geographic regions. This is in response to the truly remarkable growth of EVM as a best practice for performance management in both government agencies and private industries. The study is intended to help project management practitioners, professional associations, and service providers involved in EVM to better comprehend and gauge the current level of EVM practice and its user base. To achieve this goal, this study relies on two complementary research methods, which are literature review and survey research. The literature review collected the basic facts about what EVM was, what it is today, and what has been done to establish a better understanding of its current practice. This is further augmented with a survey study that provided a cross-sectional view of the most current EVM practice, based on the experience and knowledge of more than 600 project management practitioners who participated in the study.

To provide practical and meaningful comparison of EVM practice, the vast number of EVM users were classified according to their industry sector, motivation for EVM usage, organization role, and geographic location. These classifications make the subsequent comparative analysis more meaningful and relevant to industry practitioners. The EVM practice of these user groups were compared using a rather broad view of EVM practice. This view included the business environment surrounding EVM application, its implementation and usage, and its contributions to project outcomes, as well as barriers that hinder its use. The user classification scheme and the broader review of EVM practice are expected to provide practitioners with a holistic view of the current status of EVM practice.

The literature review and the survey study resulted in a better understanding of the current EVM practice, practice standards, and service market. The findings can be summarized and grouped into the following eight principle points:

(1) EVM has received worldwide attention. Survey respondents and the organizations they represented showed a remarkable coverage of different countries and industries. A total of 61 countries, 36 U.S. states, and 17 different industry sectors were represented in the survey. Outside the U.S., this attention is particularly pronounced in the Middle East, South Asia, Canada, and Europe. In terms of industry sectors, this attention goes beyond the traditional defense/military and government community to include a number of private-industry sectors, ranging from IT, construction, energy, and power to manufacturing.

(2) The practice of EVM varies greatly with the highly diversified user profile. The differences of EVM practice may be attributed to numerous influencing factors. A large variation of EVM practice was observed in the survey. The level of EVM usage and maturity varies from one organization to another and from project to project.

(3) Industry sector and motivation for EVM usage are the most discerning factors to differentiate among EVM practices. This study considered four system-level grouping factors that are expected to group users with similar practice together, and maximize the difference between various user groups. The survey shows that in terms of EVM practice, the industry sector is by far the most important discerning factor.

(4) The decision regarding whether EVM is applicable to a particular project is affected by many factors, and budget size appears to be the most important decision factor.

(5) The ANSI/EIA 748 standard and the PMI EVM practice standard are the most widely used international industry standards. While the ANSI standard is primarily dominant in the defense/government sector, the PMI standard is highly associated with EVM usage in the private sector. Based on this wide distribution of their usage at a global level, it can be said that the ANSI/EIA 748 standard and the PMI EVM standard have emerged as the de facto international standards in their respective industry sectors.

(6) EVM's contributions and cost effectiveness are widely recognized by all users regardless of their industry sector, motivation, country, etc. EVM users in general agree to strongly agree with EVM's contributions in providing early warning, helping to achieve cost goals, improving communication, helping to achieve schedule goals, and improving scope management. EVM's contribution to cost performance is ranked higher than that of schedule performance, and the difference is statistically significant.

(7) Lack of motivation and lack of expertise are perceived by both EVM users and non-users as the top barriers for them to enhance their level of EVM usage. The problem of motivation is a more complex issue and appears to be a result of a combination of other factors. EVM appears to be applicable and cost effective in certain types of projects, but not all projects. To make EVM universally applicable in