Over the past nine years, I've been studying earned value management (EVM) and its application to IT projects. According to PMI's Project Management Body of Knowledge, EVM is an "objective method to measure project performance in terms of scope, time and cost." If you're unfamiliar with EVM, read my overview before proceeding with EVM metrics in Microsoft Project.
EVM metrics are easy to calculate, as it only requires simple math. According to industry research, there are 40 critical success factors to successfully implement EVM in an organization. One of those critical success factors is the project management team can develop a project schedule and track against a project baseline. A properly developed Microsoft Project Schedule is critical in calculating EVM metrics when using Microsoft Project. A poorly defined Project Schedule will result in poor EVM metrics.
The following is a quick checklist to confirm your Microsoft Project Schedule is ready for EVM.
- Confirm the Work Breakdown Structure (WBS) has been correctly defined with the appropriate work packages Meaningful earned value metrics are only as relevant as the tasks they represent. If you've built a poorly defined WBS, earned value can't help you.
- Confirm the work resources have the appropriate hourly rates in the Resource Sheet view Microsoft Project determines the work package's budget based on each assigned work resource's hourly rate. If you don't have a defined cost for each resource, your budget will be zero.
- Confirm all tasks have resources assigned at the lowest level in the WBS A task establishes its baseline budget and planned value (PV) based on the resource costs assigned to the task. By ensuring resources are assigned to the lowest level in each work package, the cost will roll up appropriately.
- Confirm no resources are over allocated Despite our desire to give 110%, a realistic schedule has resources only allocated 100% of the time.
- Confirm the total costs for each work package match contractual agreements Microsoft Project builds a time-phased budget for each task and allocates planned work and costs according to the project calendar. If your project contracted for $100,000, the total cost in the WBS should reflect $100,000.
- Confirm the project has a project baseline The project baseline establishes the time-phased budget for the project and allows PV to be calculated. If you don't baseline the project, you can't measure what you're trying to manage.
- Confirm the project management staff understands the procedures to record actual start, finish, duration, and costs data for the project schedule As the project progresses, it is important that anyone updating the project schedule follows a consistent procedure to record start dates and actual costs. If teams use inconsistent practices, your earned value results may be off.
- Confirm the project status date is set in Microsoft Project before examining EVM metrics If you don't specify the project status date, Microsoft Project will assume the current date is the date used for calculating the earned value metrics. Since status reporting usually follows the prior week, you'll want to set the project status date each week to calculate accurate metrics.
There are 39 other critical success factors that organizations should consider before implementing EVM across an organization.
For more information about how to use earned value with Microsoft Project, read my tutorial, How to Calculate EVA in Microsoft Project.
Related TechRepublic resources
- Use Earned Value Management (EVM) to determine project status
- Project Metrics: Tips for doing Earned Value Analysis
- White paper: Earned Value Lite -- Making Earned Value Management Work for Every Project