There are two books that describe how to manage projects with Earned Value. You can read about EV in a variety of places, but the principles are many time missing from these sources. Here are three books that not only provide the principles, they also define the practices.
Mario Vanhoucke provides detailed insight into managing projects with Earned Value. The key understanding for all successful Earned Value implementations is time is not money. The units of measure in Earned Value is money. Only money. OK, maybe some other simple unit like hours. But both time and money are not used together in Earned Value. This is both a problem and not a problem. It is not a problem, because the role of Earned Value to to show progress to plan in a stable unit of measures. It is a problem, because it is hard to speak about performance of the schedule, when we say we're $129,000 behind schedule. What is a dollar worth in time? It depends of course on the labor rate.
The main purpose of Earned Value Management, or any performance management system, is to provide actionable information to the decision makers early enough to actually take action to avoid unpleasant outcomes.
This is where Walter's book comes in. Dr. Vanhoucke provides insight into Earned Schedule as well, but Walter's book is the companion to Mario's. Earned Schedule is an approach to Earned Value - using the same data developed for Earned Value - to forecast the schedule performance of the project.
Both are needed, one is official in the US Government, guided by ANSI-748B.
The Earned Schedule metrics are time based they augment the Earned Value metrics (which are also time based in proper implementations). The detailed schedule analysis is the result. With the Earned Schedule Analysis, improvements in the fidelity of the performance forecast is possible in ways not found in Earned Value alone.
Why is it Important to Read Books Like This?
There are many opinions about the application of Earned Value and its cousin Earned Schedule. Most good, some just OK, some simply misinformed. Earned Value management is both simple and complex. Simple in that the measures of performance are just that simple:
- What did I budget for this work?
- What percent complete did I achieve at the time I planned to achieve it?
- What did I actually spend to achieve the work I actually achieved at the time I planned to achieve it?
That's it in a nutshell. Plan the work and the budget for that work. Execute to plan. Measure the percent complete with some tangible evidence, record how much it costs to produce that percentage of the work at the time I measured the performance.
The hard part comes from controlled the baseline for the work. It does no good to change the baseline for the budget, since that allows the percent complete measure to be stretched. Rubber Banding the Baseline is the term we use. The next hard thing is to define the budget for the planned work. If you don't what work you will be performing in the future, than you can't know the budget for the work.
But if you don't know the work you will be performing in the future, you've got a bigger problem. You don't know what DONE looks like. And if you don't know what done looks like, than you can't manage the project in any meaningful way. The only way you can management it is with the passage of time and the consumption of money. That means when you run out of time and or run out of money, the project is complete. That definition of DONE doesn't sound very pleasant when you spending someone eles money.