Lame Excuses From Smart People: PMI's Earned Value Standard

By Shawn Nisenboim, PMP
(published in the March 2005 issue of PM Boulevard and the Winter 2005 issue of Project Times Magazine)

“You cannot achieve what you don’t measure.” It is a well-known axiom, so why don’t we use it to make our projects more successful?

Everyone wants projects to be completed within budget and on schedule. Many studies have shown that performance on most projects can be improved and most people involved in the implementation of projects will tell you, that improving budget and schedule performance is a high priority. Yet few people actually measure progress against plan. Why?

If you know the answer, please send me an e-mail immediately. If you think you know the answer, please read on, and then send me an e-mail. The most common answers will follow. But first, let’s be clear about what measuring progress against plan really is.

We all want to achieve project completion within budget and schedule, but remember the axiom, “You cannot achieve what you don’t measure.” Many of us think we are measuring progress against plan by regularly taking measurements of the percent of budget and/or schedule consumed and the percent of work completed. The problem is, that unless these measures are compared against what the plan says they should be at the time you measure them, they produce a misleading and overly optimistic perception of project status.

The solution is the earned value standard of the Project Management Institute (PMI®) which includes performance indexes that compare work completed with what the work is worth (for budget performance) and how much work was planned (for schedule performance). The question, is why do so few use these indexes to measure project status?

The most common answers are:

“Plans change, how can you measure against a moving target?”

“I’ve never heard of earned value.”

“We have neither the time nor resources to collect the performance data.”

“We don’t have the expertise to calculate earned value metrics.”

“Everyone knows that you can’t get the project team to report percent complete accurately.”

If you look at these answers closely, you see that they don’t really explain why few measure performance against plan. Let’s have a closer look.

“Plans change, how can you measure against a moving target?”

Plans do change and a moving target is more difficult to hit than a static one—all the more reason to measure performance against it. Sure, there is extra effort associated with maintaining and updating plans that change frequently, but as long as you have a plan that is up to date, measuring progress against it is no different than measuring progress against a static plan.

“I’ve never heard of earned value”

It is true that among those who are involved in managing projects, relatively few have heard of earned value, and if they have, they do not know what it is. When you explain the technique and then show them how to calculate and interpret the performance indexes, most people say, “Wow, that’s pretty powerful, I want to try it on my next project.” But they usually don’t, for one of the other reasons given above.

“We have neither the time nor resources to collect the performance data”

Among those who are aware of earned value and its benefits, this is the most common reason given for not using it. To calculate performance, all that is needed are time and cost estimates for the project’s major deliverables and a weekly report from the team indicating the percent complete for each deliverable and how much time was worked by each person. There are excellent software tools that make it very easy and inexpensive to capture this data. If you have a problem with the time and resources needed, ask yourself whether less time and resources are likely to be consumed in the end, after the project gets out of control (and there is no doubt it will, if you don’t have a plan and you don’t know how much time you’re spending on it).

“We don’t have the expertise to calculate earned value metrics”

This is just a variation of the previous excuse. Those who use it are saying they have neither the time nor resources to acquire the expertise.

“Everyone knows that you can’t get the project team to report percent complete accurately”

This excuse has some legitimacy because, on most projects, estimating percent completed is a subjective exercise open to abuse by the optimistic and unscrupulous. However, the project manager who says it’s not worth estimating performance because you can’t get an accurate measure of percent complete, is like the carpenter on a desert island who says it’s not worth measuring where to cut, because the only measuring tool you have, is a stick that is five feet long. The carpenter can use the stick to approximate where to cut, and doing so will yield a much better result than not using it.

It is true that getting an accurate measure of percent complete may be an impossible task on some projects and people are optimistic. Some may even try to manipulate the numbers to cover up problems. But an estimate is much better than nothing, because when viewed over time, trends emerge quickly (trends that would appear far too late to take corrective action otherwise). If percent complete reporting is optimistic, a drop in performance will appear very quickly. This should trigger an investigation which will quickly reveal the reason for the performance drop, whether it’s optimistic or manipulative reporting or a legitimate project issue. The point is, that unless you have the time to personally audit the progress of each and every task on all of your projects, if you’re not collecting data on percent complete (inaccurate as it may be), you are not likely to even know there is a problem until it’s too late.

There is another reason why collecting an inaccurate value of percent complete is better than not collecting at all. Your team members are more likely to think harder about the true status of the tasks they are reporting on, if they know you have a very easy and objective method of analyzing the accuracy of what they report. They will learn this very quickly after the first few status meetings, when you ask about disturbing trends in the percent of work completed.

So, tell me, why don’t more of us measure the status of our projects against their plans?

Copyright © 2004, Shawn Nisenboim, PMP. All rights reserved.

Shawn Nisenboim is a principal consultant at ParaTeck Market Development, a Toronto based consulting firm with expertise in project management, process improvement, and market research. He developed and implemented a simplified form of earned value while working as a senior project manager for an IT systems integrator. His approach has been integrated into a time and project tracking software solution called TimeTiger. Shawn can be reached at snisenboim@parateck.com.