Lewis Fowler Principal Consultant Scott Brunton presented this deck at the 2015 Houston PMI Conference & Expo. Scott explores the historical roots of EVM and offers practical advice for implementing EVM practices to maximize the business value of projects.

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Using Earned Value Management Concepts to
Improve Commercial Project Performance
R. Scott Brunton, PMP, PMI-RMP/SP, EVP
Principal Solutions Consultant
Lewis Fowler, LLC – www.lewisfowler.com
Welcome to the PMI Houston Conference & Expo and Annual Job Fair 2015
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• Q&A will be taken at the close of this presentation
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2. EV Within PMI®
2
Project Cost Management Knowledge Area
Controlling and Monitoring Process Group
Reference: PMI PMBOK and PMI

3. EV Within PM Methodology
• As an analytical technique for assessing
progress of technical maturity through cost
and schedule Performance Measurement
3Reference: PMI PMBOK

4. Capabilities of EV Management
• Objective, measurable metrics
• Informs the organization decision
making process
• Supports project controls to enable
successful project execution through
Performance Measurement
• Relevant to internally driven business
efficiency requirements for commercial
programs 4

5. Why EV Was Developed
• Late 1800s
– Optimize performance of factories
• 1950s and 1960s
– Navy developed into PERT/Cost techniques
– Cost/Schedule Control Systems Criteria (C/SCSC)
• 1998
– 32 guidelines in ANSI/EIA-748 by NDIA
• Performance Measurement as a means to
make better business decisions5

6. What’s In A Name
• Historically driven and mandated
within the defense industry
• Perception of being operationally
burdensome
• “Uncomfortable”
– Involves “a priori” planning and periodic reporting
– Requires root cause analysis and mitigation
– Drives accountability and active management
6
Earned Value
M
anagement
Reference: Earning Value from Earned Value
Glen Alleman, Aug 2013

7. What EV Isn’t or Won’t Do
• Performance Measurement
– Will not ensure project success by itself
– Is not a one size fits all strategy
– Does not make up for a bad plan, incomplete
requirements, or poor project management
– Is not just a government reporting requirement
• Performance Measurement is not a solution
as much as it is an efficiency enabling
methodology
7

8. Here’s The Value
• Success enabler
– Element of PM fundamentals
– Disciplined project controls and performance
monitoring
• Performance Measurement enhances program
management capability through insight
• Increase the probability of program success
• Equally applicable in commercial business
8

9. Cost of EVM Process
9Reference: The Costs and Benefits of the EVM Process
D. Christensen, Fall 1998
Author (Year) Source of Estimate Cost Range
Kouts
(1978)
Survey of Industry 0.5% to 5%
MITRE Corp.
(1982)
Survey of Industry 0.1% to 0.2%
DOD IG
(1984)
Survey of DoD Experts 5.0%
Decision Planning Corp.
(c1992)
Industry Cost Estimating Model 0.6% to 1.0%
Humphreys and Assoc.
(c1992)
Consultant Experience 0.5% to 4.0%
Lampkin
(1992)
Average of Five Studies Above 0.4% to 1.63%

10. Program Customer Satisfaction
10
Best
Worst
Minimal
Capability
Composite
World Class
Qualified
Performer
Program Management Capability
Reference: DCMC Conference, March 2000

11. When to Consider EV
• High value programs
• Long duration programs
• Progress payment programs
• Contract types: Firm Fixed, Cost Plus, T&M
• In support of broader corporate mission to
drive efficiency and effectiveness in program
execution and utility of organizational
resources
11

12. Performance Measurement
• In support of objective technical maturity
• Objectively validated and measured time-
phased cost and schedule performance
• Alerts program to potential execution problems
– Absolute or trend measures
• Enables problem diagnosis by variance analysis
that leads to active program risk management
12

13. Why Measure Performance?
• To further increase the probability of program
success through:
– Risk and opportunity management
– Program governance and controls
• Answer the questions
– Is the program performing according to plan?
– Are there performance trends emerging?
– How does this program relate to corporate success?
13

14. Concepts
• Validate the technical scope
• Establish ‘The Plan’
– What scope, by when, for how much
• Measure performance and assess variance
• Analyze to reveal root cause
• Implement corrective actions
• Inform the organization
– Project and Portfolio levels
14

15. Portfolio Dashboard
Performance
Measurement/Analysis
Scope
Schedule
Cost /
Resources
Concept as a System
15
Earned Value
Management
System
• Performance Analysis
• Root Cause Determination
• Corrective Action Planning
Cost and Schedule Performance
Data Collection
Program
Funding

16. Performance Measures
• Cost Measures: CV = EV – AC ; CPI = EV / AC
• Schedule Measures: SV = EV – PV ; SPI = EV / PV
• Estimate-at-Complete (EAC): Various
• Estimate-to-Complete (ETC): ETC = EAC - AC
16Reference: PMI PMBOK, Table 7-1

17. Establish the Plan
• Plan what you know in objective terms
– Entire plan, Rolling Wave
• “Don’t create variances during planning”
17

18. Measure Performance
• Collect cost and schedule data based on
predefined, objective, measureable criteria
• Scope management through governance
18

19. Assess Variance
• Mechanical process of determining
performance as compared to ‘The Plan’
• Provides visibility in objective terms
• Focus on primary drivers of plan variance
– Absolute and relative measures
19

20. Root Cause
• Meaningful level of detail
• Ask ‘Why’ more than once
• Recommend and
implement solutions
• Capture in risk action register
• Informs the program of risks and opportunities
20

21. Implement Corrective Action
• Supports the program controls function
• Assess cost and schedule impacts
• Baseline program governance
• Log, track, and report
• Archive
21

22. Broader Context
• Risk and opportunity management
• Dashboard reporting
• Project portfolio management
– Projects | Programs | Portfolios
• Supportive of enterprise strategic objectives
and “Value Chain” of the organization
22

23. Deploy Incrementally
• Reconcile objective sources of performance
information for cost and/or schedule
• Measure performance period-over-period
• Allow the variance analysis to inform next
steps in evolving measurement maturity
– Rigorous management of baseline plan
– Reveal need for scope management
through governance
23

24. • ANSI/EIA 748: Compliant versus Certified
• Begin with cost or schedule performance
Tailored Solution
24Reference: Earning Value from Earned Value
Glen Alleman, Aug 2013

25. Overhead Burdens
• Training and education
– Stakeholders, PMO Team,
Project Managers
• Supporting IT infrastructure
– Cost and schedule information collection
– Excel spreadsheets to enterprise solutions
• Reporting and analysis time
• In comparison to value of improved
performance and project delivery25

26. Frame the Conversation
• Speak in terms of
Performance Measures
• Recognize the value of
performance insight
• Recognize performance data as a corporate asset
• Value of improved probability of program
success outweighs organizational cost factors
• Improved internal/external customer satisfaction
• Align to corporate objectives26

27. Prepare for Implementation
• Shared vision of what
success looks like
• Stakeholder alignment
and visible support
• Project identity and organizational brand
• Motivated, capable, and visionary team
• Integrated governance, change management
• Build open cross functional relationships
27

28. Company Return On Sales
28
+15%
Minimal
Capability
Composite
World Class
Qualified
Performer
Program Management Capability
Reference: DCMC Conference, March 2000
+10%
+5%
-15%
-10%
-5%
0%

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Using Earned Value Management Concepts to
Improve Commercial Project Performance
R. Scott Brunton, PMP, PMI-RMP/SP, EVP
Principal Solutions Consultant
Lewis Fowler
383 Inverness Parkway, Suite 475
Englewood, CO 80112
www.lewisfowler.com
Phone: 719.339.0748
E-mail: sbrunton@lewisfowler.com
LinkedIn: www.linkedin.com/in/sbrunton

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