Overcoming Resistance to
Earned Value Management
October 11, 2022
As reliable and popular as earned value management (EVM) is within the construction industry, there remains some resistance to adopting it as a project performance tracking method. Some of this hesitancy is rooted in several common misunderstandings about EVM.
Why does this matter? Because such resistance can prevent realizing vital insights into a project’s financial and timeline health that rely on up-to-the-minute, objective data. And, somewhat ironically, as this hesitancy persists, many construction companies do acknowledge having insufficient real-time data that would allow them to identify and mitigate emerging risks.
If your company has been on the fence about the efficacy or rationale behind adopting EVM, it can be helpful to address some of the common misunderstandings surrounding this performance metric while also surfacing the reasons why they are largely unfounded.
False assumptions about EVM adoption and their counterpoints
Assumption: EVM is nothing more than a software program.
While software is one part of what goes into adopting EVM, the right software is what matters. And of course, appropriate training should be part of it as well. But it’s more than that; it’s a process that measures project performance.
Put simply, the performance data the software produces shows whether a project is ahead, behind or on schedule, and above, below or on budget. The calculations that go into EVM may seem complicated to learn at first, but in reality, the software does the computing for you, generating a single numeric value for each of its metrics. These metrics include schedule performance index (SPI) and cost performance index (CPI), each of which are expressed as a percentage. Then we have schedule variance (SV) and cost variance (CV), each expressed as a dollar figure. These figures serve as at-a-glance indicators of how to interpret project progress.
Being armed with this evolving information actually gives you more control over how you plan your projects and how to avoid and navigate through risk events and situations that will inevitably surface. So really, it’s more than merely learning software. It’s learning how to understand the health and direction of your projects at any given moment so you can better manage them.
Assumption: EVM data will reveal when something is veering off course, thus making the construction company look ineffective.
You can’t manage what you can’t see. Intentionally withholding or concealing what might be deemed “negative” data would be considered strategic misrepresentation. The whole point of EVM is to show when things are humming along and to surface developing risks so there’s time to determine their potential effect on costs or timelines and address them appropriately before they worsen.
Assumption: EVM is too expensive, especially during high inflation, spiking material prices and a supply chain still in recovery.
Everything comes with a price tag. But offset the cost of EVM with what is likely untracked time and effort doing things using manual methods; or what it’s currently costing you by losing out on projects that require EVM. It requires a shift in mindset that it’s more of an investment, rather than a cost, in the ability to measurably improve planning and real-time risk management as well as profitability.
Assumption: EVM is just too difficult to learn and too intimidating to use.
Any company not currently using EVM will naturally be unfamiliar with what different terms mean and the calculations that go into producing the performance metrics. And as with anything new, there will be a natural learning curve. The software used to track EVM, however, should simplify how the metrics are presented by using dashboards that condense all the data into easy-to-grasp visual formats and graphics.
The Staying Power of EVM
When adopting EVM, what are you really getting? It helps to think of it as a tool that enhances rather than convolutes existing project management efforts. EVM shouldn’t be treated as separate from all the other project management tasks and processes either, but rather as an integral part of them.
That means EVM isn’t something that you implement and then move on from. One of the best things about EVM is that it’s dynamic — its metrics change as your project changes. That means as work progresses, so does EVM data collection. So, from that data you’re getting real-time insights into how costs and schedules are working together.
However, EVM is no one-trick pony that merely measures timeline and cost progress. It has far more value than that. For large-scale projects with lots of moving parts, EVM adoption is about making that data actionable. And where that can have a noticeable impact is on managing the risks that commonly threaten schedules and costs.
Think of how many times you wished you knew about a risk sooner so you could have prevented or at least mitigated the resulting delay or incurred cost. While adopting EVM doesn’t prevent such a risk from happening all together, it does act as a highly reliable alert system when the performance data veers outside of its acceptable range. As risks are detected, they can be addressed in enough time to mitigate them before they get worse, triggering delays and overruns.
Embracing EVM adoption
For companies still using outdated project management methods, leaving behind some of what has been familiar for so long can feel uncomfortable. Other companies have overcome this, recognizing that adopting EVM and the technology that supports it represents not so much a challenge, but an opportunity to improve project outcomes as well as the survivability of their own business.
Schedule a consultation to learn more about how an option like InEight Earned Value Management can help your construction organization take better control of project outcomes now.
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