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Collaborating for Successful Evm: Five Fundamental Roles COLLABORATING FOR SUCCESSFUL EVM: FIVE FUNDAMENTAL ROLES ESI INTERNATIONAL | WHITE PAPER COLLABORATING FOR SUCCESSFUL EVM: FIVE FUNDAMENTAL ROLES 1 ABSTRACT 14 EMBRACING EVM BASICS AND INCREASING COLLABORATION 2 INTRODUCTION 15 NEXT STEPS 3 DEFINING SKILL AREAS 15 REFERENCES 4 PLANNING FOR COLLABORATION: FIVE ROLES 16 IMPORTANT EVM DEFINITIONS AND 4 1. Responsibilities at the Executive Level ABBREVIATIONS 6 2. Responsibilities in Project Management 17 THE ESI SOLUTION 9 3. Responsibilities in Contract Management 11 4. Responsibilities in Requirements Management 13 5. Responsibilities in Finance and Accounting © ESI International, Inc. All rights reserved. ESI INTERNATIONAL | WHITE PAPER ABSTRACT Planning, measurement and control have always been the basic tenets of successful project management. Unfortunately, for many organizations, these principles can be difficult to put into action. In the U.S. federal government, the Office of Management and Budget (OMB) has mandated the use of Earned Value Management (EVM)—a highly collaborative approach to progress measurement—as a method of tracking project performance to help agencies meet their project goals. The commercial world has also begun to adopt EVM practices toward that same end, and in hopes of improving the project management maturity level of organizations. While the concept itself is fairly straight forward and has been in use for some time now, successful EVM requires action and cooperation from virtually every person who touches the project. This paper outlines the five key areas of responsibility in EVM and examines the need for these roles to work together and, ultimately, utilize the process for its true purpose—helping projects succeed. Over 30 years of successfully helping Government Organizations improve project and contract management through innovative training solutions. For more information call +1 (703) 558-3177, email [email protected], or visit www.esi-intl.com. 1 COLLABORTING FOR SUCCESSFUL EVM: FIVE FUNDAMENTAL ROLES INTRODUCTION With an aim of detecting performance problems early and saving substantial time and money, Earned Value Management (EVM) is the measurement of value earned within a project as work progresses. In other words, EVM measures the value of work completed in terms of the original cost estimate, or in the simplest terms, performance against plan. It requires detailed, defined plans for all work and constant evaluation and analysis as the work is completed. EVM success rests on the integration of a combination of skills and the sharing of knowledge and information. This, unfortunately, has made successful implementation difficult to accomplish for many organizations. In order for a project to be successful, the project team must skillfully define requirements, estimate effort and cost, schedule the project, manage risk and control quality. In a well-run project, the triple constraints of time, cost and scope are clearly defined at the beginning of implementation, and the project manager and team then monitor and control activities against that clear definition (baseline). The project team needs to consider multiple factors in exercising control, including spending and productivity, the status of the critical path, the risk situation, change requests and the business case. Typically, great emphasis is placed on tracking the budget and overall work progress—enter EVM. EVM has consistently helped organizations produce better projects and save money. However, the EVM process can be a difficult one to master. Two of the biggest reasons that EVM is not working— or not working as it should—are: 1) The absence of sound execution of project management and other fundamental organizational practices, including time and expense tracking and prompt financial reporting 2) A lack of collaboration between the people in roles responsible for project management and other fundamental organizational practices This paper provides you with an in-depth look at the inter-related organizational functions that must cooperate effectively in order to achieve EVM success. EVM implementation requires organizations to examine these functions in a new way, as well as ensure that everyone filling a key role has the proper skills. Organizations must also ensure that their practices and appropriate systems and tools are in synch. You’ll learn how to create, maintain or redefine these roles in your own organization, ultimately turning EVM into a time and money saving process, rather than the impractical system with which so many companies struggle. In late 2005, the OMB embraced the EVM methodology as standard practice across every U.S. federal government agency. With the mandated use of EVM, a government project is considered successful only if reports show no more than a 10 percent variance from the projected cost and schedule (Perera). Over 30 years of successfully helping Government Organizations improve project and contract management through 2 innovative training solutions. For more information call +1 (703) 558-3177, email [email protected], or visit www.esi-intl.com. ESI INTERNATIONAL | WHITE PAPER DEFINING SKILL AREAS Every organization is unique, and titles within each can vary significantly. A short list of possible titles for those involved in the EVM process might include:Project managers • Functional managers • Financial analysts Need to learn the EVM language? Find an EVM glossary on page 17 Accounting specialists • of this white paper. • Business analysts • Management analysts • Acquisition managers • Planners and schedulers • Integrated project team members • Contracting officers • Software developers • Systems engineers This list is by no means exhaustive. While it illustrates the wide variety of positions involved in the EVM process, it is important to keep in mind that titles are not the linchpin for success. In the EVM process, what matters most are the key skill and responsibility areas (roles). In any project employing EVM, five key roles must be successfully performed: • Executive support • Project management • Contract management • Requirements management • Financial management These skill and responsibility areas are essential to successful EVM implementation in an organization. Unfortunately, they are often lacking or working in isolation. Knowledge is not being shared. Measurement and analysis are, thus, limited and incomplete. Improving the collaboration of these key areas will improve project performance and turn EVM into what it’s designed to be—a means for more successful projects. Over 30 years of successfully helping Government Organizations improve project and contract management through innovative training solutions. For more information call +1 (703) 558-3177, email [email protected], or visit www.esi-intl.com. 3 COLLABORTING FOR SUCCESSFUL EVM: FIVE FUNDAMENTAL ROLES PLANNING FOR COLLABORATION Ask anyone to summarize their ideal project in one word and this is what you will likely hear: Predictable. Planning and predictability are the foundation of the discipline of project management—and of solid business practices in general. EVM seeks to reinforce and strengthen this foundation. As an example, consider a hypothetical organization working to develop and implement a new human resources (HR) software application in their HR department. The current software lacks reporting capabilities as well as several other crucial features—causing this department’s productivity to suffer. They’ve been using the same antiquated system for 10 years and it doesn’t have the capabilities to serve the organization any longer. The Vice President of HR determines the need for new software, then assigns a project manager to the task. In turn, the project manager must find individuals (or a team) to manage requirements and contracts for the project. Using sound project management practices supported by clear organizational standards, each individual piece of work is assigned to a team member and given a schedule and budget allowance. Then, using EVM, work progress in both cost and schedule terms are measured against plan. It is in this way that the team can ensure predictability and, ultimately, success. At each point in the implementation of the project above, the EVM process requires that the following data be collected and analyzed: 1) An accurate itemization of work performed to date (a view of schedule performance) 2) The planned cost of the work performed (a view of the budget for the work performed) 3) The actual cost of the work performed (a basis for determining cost variance from plan) The EVM reporting and assessment process is conceptually the same at all levels of an organization. Only the level of granularity in reported information varies (Lambert and Lambert). Everyone from project managers to agency directors and C-level (i.e. CEO, CIO) executives needs to understand how to respond to the implications of these reports—it truly needs to be a team effort. 1. RESPONSIBILITIES AT THE EXECUTIVE LEVEL Top management commitment is key in EVM. The commitment of senior management should be written and well publicized as a method of encouraging and supporting the process. If an organization perceives EVM as a complicated process that causes a great deal of “extra” work, the chances of successful implementation are greatly reduced. It is up to those at The commitment of senior management the executive level to assure should be written and well publicized as a their teams that this is not the method of encouraging and supporting the case—and that
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