Earned Value - a simplified approach for Product Based Planners

Earned Value Management (EVM) is a technique for objective measurement of Project progress and performance. However, it is a technique which has divided views within some in the Project Management community. Some people I have met believe it is an essential measure to be implemented within all Projects. Others suggest that the effort and rigour necessary to measure properly can outweigh the benefit depending on the scale of the Project or Programme.

However, if you utilise the Product Based Planning approach suggested by PRINCE2, I believe there is an opportunity to produce some simplified Earned Value measurements with a little extra effort which can be helpful for Monitoring and Control in most projects. Let me take you through a step by step approach which I have tried in a couple of Projects.

Earned Value concepts recap (simplified)

Earned Value allows a combined measurement of Scope, Time and Cost, key elements that a Project Manager should be Monitoring and Controlling.

The two key measures are:

Planned Value (PV) - a valuation of work planned. It is also known by EV purists as Budgeted Cost of Work Scheduled (BCWS)
Earned Value (EV) - a valuation of work which has taken place. It is also known as Budgeted Cost of Work Performed (BCWP)

You plan PV in line with your baseline project plans and budgets and then monitor EV against the PV baseline during the execution life-cycle. The full technique shows the progress of a project taking into account the work complete, the time taken and the costs incurred to complete that work

The simplified approach detailed in this post doesn't directly consider costs but uses an intuitive relative value based on the importance of particular Products.

Product Based Planning recap

Product Based Planning is a useful PRINCE2 planning concept where you focus on the artefacts to be delivered rather than the activities - I covered the approach in this post. The Products should be listed in a "Product inventory" spreadsheet as part of your quality planning as I covered in this post.

Step 1 - Produce your Product Quality Plan Inventory

This is standard planning and Estimating around the Product Based Planning technique:

Identify the Products
Produce Product Flow Diagram if necessary
Estimate the effort to produce and quality assure
Build your plan & schedule
Produce your Project Quality Plan Inventory. Key points:

Don't forget non Document based Products

For documents you record the planned date for production of a good draft version and the date you plan to be baselining the document following the quality process and any modifications

For non document Products you need to do a similar process, with the "draft" date and "fully quality assured" date captured

Step 2 - Add 3 columns PV, EV% and EV

Now add 3 columns to the spreadsheet and populate as follow:

Weighted Planned Value (PV) - this needs a bit of thought and I suggest a relative "weighted" value with 1.0 as a default, lower values for less important Products (e.g. maybe some Management products are less valuable than some Technical products?) and higher values for particularly important Products (e.g. in IT Projects, a Requirements catalogue, Design document etc might be deemed higher value than a Training plan?)

Earned Value % (EV%) - Percentage of the total value earned. So 100% would be the particular Product having gone through all quality assurance processes and deemed fit for purpose and baselined. I give further guidance in the next step.

Earned Value (EV) - This is simply PV * EV% at the individual Product level - so when EV% is 100% the earnt value of the Product in question will be the weighted Planned Value

Step 3 - logic to calculate EV% from Product Status

Add some logic (VLOOKUPs) to calculate EV% from the Product status such as the following which work for Documents but need some thought for non Document Products:

Not Started = 0%

Being drafted = 20%

Draft Issued into Quality review process = 50%

Partially approved = 70% (i.e. at least one of the designated approvers has signed off the document but not all of them in line with the Quality Plan)

Fully approved = 100%

As per the picture taken from a real Project example, the PV sum (for all Products in the Inventory) is the target final Earned Value state at the end of the Project while the EV sum (for all Products in the Inventory) is the actual total at the point in time. So for the example, the final Earned Value for the Project is 33.9 while the current Earned Value for the point in time is 11.4.

These are somewhat meaningless relative values so in the next step I suggest we move to a percentage of total value over time view e.g. 100% of Project value is when we achieve the absolute value of 33.9

Project Earned Value from Product Planning - Product Inventory

Step 4 - Create the plan of total Earned Value against time

You need to create the plan of how you expect the Earned Value to accumulate over time which I do in a separate sheet within the same workbook. This uses the baseline Draft Issued and Fully Approved dates as follows:

Get all products, baseline date for draft and amount of PV introduced
Get all products, baseline date for fully approved and amount of extra PV added (don't forget you have accounted for the draft value)
Sort by ascending date
Add a cumulative column
Remove duplicates dates if they exist
Add column PV% to represent the relative values as % of total Planned Value progressing over time (divide by 33.9 in the example)
Add columns to periodically enter the current "total EV" as you update your Product Inventory (see Step 5) and the representation of this as a %

Here is an example from a real Project where I tested the approach

Project Earned Value from Product Planning - Table of PV and EV

Step 5 - Periodically update the current Total EV

In your Monitoring and Control phase, as you update your Project inventory with the status of each Product, the current Total EV is shown (at the top of the EV column in the example). At (or near) a date in the Earned Value against time plan, read off the current Total EV from the inventory and enter it into the separate sheet as per the example above.