The Earned Value Management approach

Charbel El Hakim
The region now shows an appetite for best practice project management tools. Earned value management is one of the best ways to monitor construction project performance.

There’s been a growing interest in best practice project management as the Middle East built environment industries have matured. The project management profession itself is a relatively new concept in the region, and an understanding of the benefits of an independent project management function, not tied to the contractor or architect, is even more recent.

As the project management discipline has become more embedded, clients have become more accustomed to discussions of which methodologies and tools are most appropriate for their project. Where all stakeholders have an understanding of the process, the project is likely to progress more smoothly.

Earned Value Management (EVM) is one of the project management methodologies now utilised more frequently in the region. It’s a best practice approach used for the planning, management and control of projects and programmes. Many project management standards (e.g. the Project Management Institute, the Association for Project Management) have described and utilised EVM, and at Faithful+Gould we find that clients benefit from the rigour of this approach.

The earned value concept improves upon the traditional comparison of budget versus actual cost, which lacks an adequate indicator of progress. Earned value is a value assigned to work which was accomplished during a particular time period. This value can be stated in any appropriate measurable unit such as hours or dollars.  

EVM offers significant advantages over rival project monitoring and control tools (e.g. Gantt charts, CPM, PERT, and PRINCE2). It integrates cost, schedule and performance to monitor projects and allows for the calculation of cost and schedule variances, performance indices and forecast project cost and duration. It also highlights the need for corrective action. This helps in the development of duration and cost estimation performance measures, enabling all stakeholders to review and evaluate the effectiveness of their planned costs and scheduled durations throughout the project.

EVM performance measures help answer critical questions such as:

  • Are we ahead or behind schedule?
  • How efficiently are we using our time?
  • When is the project likely to be completed?
  • Are we currently under or over budget?
  • How efficiently are we using our resources?
  • What is the remaining work likely to cost?
  • What is the entire project likely to cost?
  • How much will we be under or over budget at the end?

Project management office (PMO) has become the mainstream organisational structure for standardising the practices of companies delivering large capital projects and programmes. Middle East government entities are increasingly embedding these global best practices into their delivery, effecting successful change management and continuous improvement. Within these structures, EVM can be an important tool for successful programme and project delivery.

At Faithful+Gould, our project management team recommends the most suitable tools and processes, identifying those which best fit our clients’ goals. Where we are supporting clients with the establishment of PMOs, the selection of appropriate management and frameworks systems is an integral factor.

 

 

Written by