Earned Value Management: Enemy of Efficient Execution
Earned Value Management (EVM) is about requiring organizations to provide accurate effort estimates in planning and achieve them in execution. With such good planning and execution, projects are bound to be on schedule and on budget. Seemingly logical, but not true!
Unfortunately, EVM measurements ignore a simple fact that projects are full of uncertainties. What it means is that if you want to be an on-target manager, you better bake a lot of safety into your estimates. And we all know what will happen to such hidden safeties in execution - Student Syndrome and Parkinson's Law will consume them all. Thus, your projects will take too long and cost too much.
Another problem is that EVM measurements encourage execution of easy tasks that do no lie on the critical path, rather than the ones that are critical but difficult. They can also lead to poor quality by inducing project participants to do tasks out of sequence. Projects can thus "earn value" and show progress comfortably in the beginning, until they run out of easy tasks - and then they come to a screeching halt. That is how projects become overdue and go over budget, over and over again.
Finally EV causes project participants to multitask. When resources experience difficulties in execution, the EV pressure forces them to open new tasks instead of solving the problems on current ones. As these open tasks begin to pile up, managerial and problem-solving bottlenecks begin to form and bog the entire project down.
Successful organizations realize that in projects, time is money. The longer a project takes, the more it will cost – not just in terms of lost opportunity but also in expenses. Therefore they focus first on schedule and then on costs. They also realize that the best way to achieve control and efficiency in the uncertain world of projects is through buffer management. And if they have to report EV to comply with their customers’ requirements, they keep it faaaar away from their execution management system.
Wrong Measurements, Poor Priorities and High WIP are the biggest reasons for project waste. EVM does not solve these problems, it reinforces them.
And that's the Execution Management Minute for this week. |
