Earned Value Management Applied to Small Projects Basic Model (Part 1)

Earned Value Management Applied to Small Projects Basic Model (Part 1)

Commonly EVM has seen a very good acceptance in projects of very big dimension (usually called multi-million dollar projects) and unfortunately it’s also been a general practice to disregard the use of EVM in small projects (up to 4 Full Time Equivalent in a 6 to 12 month period) due to the benefit perceived of using it doesn’t compensate the effort/cost associated. This is particularly true in the IT area.

The aim of this article is to demonstrate that the usage of EVM for small projects is feasible and the benefit provided by EVM largely compensates the effort/cost of applying it when using a practical approach. This paper will describe the usage of EVM in those situations and will finish with a case study.

The project life-cycle for small project is of great importance, since it enables the analysis of the EVM values at a higher level providing more meaningful information and more stable indicators. Because the project life-cycle phases groups’ tasks of the same nature, this provides a very good basis for considering each phase the best level in the WBS to perform analysis of the indicators and generating cost and schedule predictions.
To track progress I use the 50/50 rule. This is a fast and easy way of tracking progress if the tasks don’t exceed a reporting period (usually one week). The advantage of this method is that team members only have to report hours and task closure (the start of the task is implied by entering the first set of ours) not interfering in the quick pace of small projects.

If the task does exceed several reporting periods than I recommend using an apportioned relationship to other discrete work packages or a combination of percent-complete estimates with milestones used as gates.

For small projects or big ones one of the main issues is that when looking only at the accounting variance (PV-AC) this doesn’t reflect the health of the project and problems are not identified early, forcing the project team to develop workaround plans to handle situations that could have been avoided.

So the main question is how to identify potential problems and when to act.

When analyzing the EVM indexes one might acknowledge degradation on the performance of the project or maybe a trend that could lead to a decrease of the performance of the project. But the main question remains: is it time to act? If so what to do?

The model that I use associates activation limits to the EVM indexes. For example if CPI or SPI:

For better control graphical markers were assigned to the specific index thresholds (bright green, green, yellow and red).

In each review period (usually one week) the indexes at the phase level must be analyzed and eventual problems should be looked at following a couple of rules:

  • If this deviation is a risk trigger or expected as part of a response to a risk activate the proper response (could be do nothing)
  • If the deviation is not explained by the identified risks than search for the cause (In small teams this is usually done quite fast due to the reduced number of communication channels therefore lower complexity – analysing CV and SV of the lower level tasks) and identify the risks that could happen due to the identified cause. Next plan for a proper response.

Risk Identification and Response

As much as possible during risk identification the risk thresholds should use the EVM indexes to enable association of actions to specific values of the indexes.

Predicting Future Project Outcome

To predict future project performance Estimated Cost At Completion was calculated in it’s optimistic form, ECAC Likely and EDAC were also used (If the progress is bigger than 15% otherwise the previsions should be equal to the baseline):

  • Estimated Cost At Completion Optimistic (ECAC Optimistic): Planned Cost/CPI. This assumes that the resources productivity will be constant.
  • Estimated Cost At Completion Likely (ECAC Likely): AC+(Total Planned Cost – EV)/(CPIxSPI). If SPI between 0 and 1. This assumes that if a task is late than the productivity will be affected and is equal to CPI x SPI for the remaining work (Planned Cost-EV). Otherwise ECAC Likely=ECAC Optimistic.
  • To predict future project duration Estimated Duration At Completion (EDAC) as used and is equal to Planned Duration/SPI.

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