Earned Value Behaviors

In companies that use traditional ‘plan-driven’ methodologies to execute their projects there is usually a check and balance system put in place with the intention of providing independent review of project status and progress. Called the Program Management Office (PMO), this group becomes the most influential force in the organization with respect to both the execution of programs and the approach by which they are undertaken. In the classical sense of you-are-what-you-measure, when the PMO requests that the Project Manager come to the review prepared to discuss budget, progress, and work performed to date – the essential variables for earned value calculations – PMs begin to focus their work and their teams on these measures. These critical aspects thus get passed on down to the team and so everyone begins to worry about where they are as versus where they anticipated being. Interesting as well, this course of measurement only represents lagging indicators, telling the team how well they have done, not leading indicators, suggesting where they will end up. Ultimately, the result of this is we can tell the business how well or poor we performed to date, but we can not accurately tell them how things will turn out.

This lack of leading indicators for the project force us to continuously rely upon the original plan for guidance as to where we want to end up, progress-wise. As the project itself wears on, deviation from the plan tends to increase and the use of the original plan as a barometer becomes more and more invalid. Stepping aside from this deficiency to forecast, projects tend to get graded on how close to the plan their progress to date lies. In an Earned Value environment, the significant measure is BCWP or budgeted cost of work performed. As it states, this is a measure of how close to the planned cost you were able to execute the work completed. Note several things, however:

1. The project is seen as successful as long as it is meeting the plan’s budget, regardless as to whether or not the plan is viable
2. Since the measurements of task completion and their costs are asynchronous, partially completed tasks tend to be viewed as proportionally complete to their elapsed time to date (in other words, a task is 70% done if its team has billed 70% of the task’s estimated effort).

These two realizations produce a set of behaviors in the Project Manager and subsequently in the team. Basically, since team all wants to be seen as successful (even more so than they want the project to succeed), there is a desire to meet the plan and to be able to correlate work completed to budgeted costs. As long as these objectives are somewhat ambiguous, then clearly the teams can claim success – producing another behavior, one of obfuscation of completion status.

All in all, the age old complaint is that the teams and the team’s management end up finding ways to ‘game’ the system and even though the PMO goes through these monthly evaluations to assess progress, even they know it is a sham. Only once delivery milestones are met or missed does the business really understand the entirety of the situation. This ultimately ends up as to why we continuously hear of projects being canceled after significant funds have already been spent with no clear path to success .