Saturday, April 9, 2011

Earned Value Measurement Techniques / Methods

In my opinion, there is a natural tendency of humans to change the progress measurement criteria during the execution. Normally, the change increases the importance of what we have done and decreases the importance of what we have to do. This behavior generates a very common consequence in the projects performance, that is, we dedicate 80% of time finishing the last 20% of the project. A Key Practice of Earned Value Management is selecting the technique of measurement of Earned Value during project planning and avoid doing that after the project planning. This simple rule helps a lot in avoiding the 80/20 problem.

A second Key Practice related with Earned Value Measurement is to select an appropriate method according with the type of effort. It’s possible to assign different methods to different activities, depending on the nature of the work. There are discrete methods, apportioned methods and LOE (Level Of Effort) methods. Key attributes of work are: the duration and the tangibility of product. The following are a few and probably the most known methods.

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Fixed Formula

The most common measurement method is the 50/50 formula. The first number, from left to right, is the percent of progress that is accredited when the activity has started, regardless how much of the progress has actually been accomplished. The second number is the remaining percent progress that is accredited when the activity has been finished. Other common rules are 25/75 and 0/100. The beauty of this method is that it is very easy to measure and very objective.

Weighted Milestone

This technique divides the work into a finite number of pieces and assigns a weight to each piece. It’s common to use percents and the sum of weights is 100%. The weight is the percent of progress that is accredited when the piece is accomplished. It’s important that each piece is related to an observable milestone.

Percent Complete

This technique accredits a percent of progress according to a predefined rule that is directly related to an observable characteristic of the work. Let’s take the example of the construction of a wall planned to have a height of 100. The Percent Complete Method could consist in accredit a percent of progress equal to the accomplished height of the wall.

Apportioned Effort

This technique accredits a percent of progress according to the progress of other unit of work. The most common application is the Project Management. If we divide the scope of the project in two Work Packages: 1) Project Execution and 2) Project Management, then we would accredit the progress of the Project Management according with the progress of the Project Execution. In this example, we say that the method is Apportioned To Project Execution.

Level of Effort

This technique divides the Total Planned Value in a unit of Planned Value to each measurement period. The Planned Value is automatically accredited at the end of the period. It’s impossible to have a Schedule Variance with this method, but it is possible to have a Cost Variance. This method is used when it’s almost impossible to have a good measurement of tangible outcomes or when there is not plan for those outcomes.

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