A Global and Cross Industry Perspective on Earned Value Management Practice and Future Trends Survey Summary Report

Lingguang Song and Hema Shalini1 University of Houston February, 2009

Abstract Earned value management is an integrated planning and control methodology that combines the measurement of cost, schedule, and technical performance. It enables early detection of performance issues and allows corrective actions to be implemented timely. The objective of this survey is to understand the current practice and future trend of EVM usage, practice standards, and related professional services in different industry sectors and geographic regions. This objective is achieved through extensive literature review, survey, and survey data analysis. This report provides a summary of the survey results as of February 2009 based on descriptive statistics. Further data analysis will be conducted and the final summary report will be available in May 2009. This study is funded by the College of Performance Management (CPM) of the Project Management Institute (PMI).

1. Introduction Earned Value Management (EVM) provides an integrated control methodology that combines the measurement of technical, schedule and cost performance and provides early warnings of performance problems for timely corrective actions. Since its introduction in 1960s, EVM has been successfully applied to a wide variety of projects of different sizes and complexities around the world. Once a technique only available within the US Department of Defense (US DoD), EVM has now been formally adopted by many government and public agencies and it has also been voluntarily used widely in many commercial industry sectors, such as Information Technology, infrastructure, energy, and aerospace.

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In recent years, the ever increasing level of globalization and cross-industry collaboration in a project environment generates a great need for a clear understanding of current EVM practice and standards across geographic and industry boundaries. However, there has been little synthetic work in analyzing the current EVM practice with an objective to further enhance the level of EVM acceptance and usage.

2. Survey Objectives and Scope The objective of this project is to understand the current practice and future trends of EVM usage, standards, and professional services across different industry sectors and geographic regions. Specifically, the objectives of this survey on EVM are to:

1. Compare the current EVM practice in different industry sectors and regions. More specifically, EVM users are classified in terms of industry sectors, regions, project sizes, and contract types. They are compared in terms of the level of acceptance and usage, business input and environment, and technical implementation; 2. Identify industry needs to improve EVM acceptance and usage. For business entities in which EVM is not currently adopted, the survey is to identify industry needs for enhancing EVM acceptance. For business entities in which EVM has been implemented, it is necessary to identify industry needs for further enhancing EVM practice to a new level; 3. Understand the relationship between EVM practice and project success; 4. Identify critical success factors for EVM implementation.

To achieve these objectives, a group of factors are identified through literature review and they are classified into five categories, as described below. Figure 1 shows how these five categories are related in an EVM system model.

1. EVM user: describes the surveyee (e.g. experience and qualification) and his/her employer (e.g. industry sector, location, and EVM experience). 2. EVM usage: describes the acceptance and usage of EVM considering both organization and project characteristics.

3. EVM implementation: describes the motivation, business inputs, technical implementation, and the maturity of an EVM system. 4. Industry needs: describes industry needs for further improving EVM acceptance and usage. 5. Project success: measures the contributions of EVM to project success and identifies the factors that contribute to successful EVM implementation.

2 Project Environment
Organization Plan, schedule & budget

EVM usage/Maturity

Government/Ind ustry knowledge & motivation

National/internat ional EVM Standards

Enterprise Environment

5
Project Success

EVM market goods & services

Accounting & reporting Analysis & data maintenance

Motivation & Inputs

EVM Implementation

Outcomes

1 EVM users

4 Industry needs

Figure 1. EVM system model

3.

Survey Data Collection The initial survey questionnaire was designed by the research team and the

questionnaire was then validated by a group of selected EVM practitioners. Sixty-seven individuals with diverse backgrounds were identified through an intensive literature review and they represent several different industries, such as government agencies, military, aerospace, IT, construction, and academia. The comments collected from the experts were reviewed and the survey questionnaire was revised accordingly. The validated questionnaire was published in an online survey hosting website. Invitations for participation in the survey was made through personal contact, PMI-CPM email list, PMI chapters and special interest groups, as well as posting at the PMI

Research website, EVM interest groups, project management-related websites and blogs around the world. As of February 2009, the survey has received 646 responses from practitioners around the world with 490 fully completed the survey. This represents a completion rate of 75.9%. The research team wishes to thank all the participants in this survey for sharing information about their EVM practice.

4. Preliminary Survey Results The following sections provide a summary of the preliminary survey results as of February 2009 based on descriptive statistics. The official closing date of the survey is March 31, 2009. Further statistical data analysis will be conducted and the final summary report will be available in May 2009. 4.1 EVM user Questions in the EVM user category describe the surveyee (e.g. experience and qualification) and his/her employer (e.g. industry sector, location, and EVM experience). The majority of the respondents, or 91.1%, are EVM practitioners (e.g. manager, scheduler, and consultant) with the rest of participants come from academia and other unspecified fields. As the geographic location of the respondents is concerned, it is found that 19% of them are from US and the remaining 81% are from other countries such as UK, Australia, Canada, India, UAE, Portuguese, and Sweden. As the respondents experience is concerned, 89% of them have more than 5 years of project management experience. These participants work in diverse industry sectors. It is found that 16.6% are from the Information Technology sector, followed by construction with 14.5% of the participants. The rest of respondents represent many other industry sectors, such as professional service (e.g. banking and consulting), aerospace, Design-ProcurementConstruction (DPC), energy and power, engineering, government/public works, and military.

a. What best describes your primary job function? Primary job function
Other Academia Consultant 1.0% 9.7% 2.4% 7.9% 1.0% 1.0% 0.5% 40.8% 13.1% 14.7% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 7.9%

EV specialist
Scheduler/Controller Estimator Financial management Procurement manager Project manager Program manager Executive/senior management

Figure 2. Primary job functions b. Your years of project management experience. Project Management Experience
More than 15 years 29% Less than 5 years 21%

5 to 15 years 50%

Figure 3. Project management experience c. Where is your organization located? Organization Location
USA 19%

Others 81%

Figure 4. Organization location

d. What best describes the role of your organization in a typical project? Organization role
Others Academia Consultant Contractor Client (private sector) Client (public sector) 0.0% 5.0% 10.0% 15.0% 15.0% 20.0% 25.0% 30.0% 1.6% 23.8% 27.5% 25.2% 7.1%

Figure 5. Organization role e. What best describes the industry your organization work in? Industry sector of the Organization
Telecom Utility & infrastructure Shipbuilding Software development Professional service Pharmaceutical Mining Military or defense Manufacturing Information technology Healthcare Government/public works Engineering Energy and power DPC Construction Aerospace 0.0% 2.0% 3.7% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 1.9% 7.0% 7.4% 8.1% 8.8% 14.5% 1.4% 0.9% 3.5% 6.8% 16.6% 0.5% 3.0% 10.2% 1.8% 4.0%

Figure 6. Industry sector of the organization 4.2 EVM usage Questions in the EVM usage category describe the acceptance and usage of EVM. As far as the EVM acceptance is concerned, it is found that the majority of respondents, or 61.3%, use EVM and 38.7% has not used EVM for which the reasons are presented in the later section of this report. In terms of EVM usage, in regards to project type, 21.7% of the respondents indicate that EVM is used only for large and critical projects while

19.9% of the respondents believe that their organization has used EVM as an organization-wide standard for project control. As to the motivation of EVM implementation, 77% of the respondents have implemented EVM voluntarily for better progress reporting and project control. a. How widely EVM is used to manage your organizations projects? EVM Usage
Used as a organization-wide standard for all project control Used for large and critical projects 19.9%

21.7%

Used only for few pilot projects

19.7%

Not used

38.7%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Figure 7. EVM Usage b. What is the primary motivation of your organization in implementing and using EVM? Motivation for EVM Implementation
Others Voluntary use for better project control and reporting Client requirement Government mandate 0% 11.8% 10.3% 20% 40% 60% 80% 100% 0.9% 77.0%

Figure 8. Motivation for EVM Implementation c. What best describes the type of contracts when EVM was applied?

Type of contracts for EVM application

Not sure

9.1% 65.3%

Regardless of contract type

Unit price only Fixed-price only 0%

5.7%
19.9%
10% 20% 30% 40% 50% 60% 70%

Figure 9. Type of contracts for EVM application 4.3 EVM Implementation Questions in the EVM implementation category describe business inputs, technical implementation, and maturity of EVM. Among the respondents who have adopted EVM practice standards, 44.5% of them use PMI EVM practice standard and 13.8% adopts the ANSI/EIA 748 standard. Other standards include DOD CSCSC, UK EVM Guide, Canada PPMS and AS4817 etc. a. Which of the following EVM practice standard has been adopted by your organization? EVM Practice standard
Others Standard Australia AS4817 Canadian PPMS Canadian C/SPMS PMI EVM UK EVM Guide ANSI/EIA 748 DOD C/SCSC No standard used 2.5% 33.9% 1.1% 13.8% 0.7% 1.4% 1.1% 1.1% 44.5%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

Figure 10. EVM Practice standard The survey also explored the market services available for EVM implementation, such as software tools, EVM system accreditation, training, and external consulting services for EVM system development and maintenance. As to the software usage, almost 80% of the respondents mentioned that some forms of computerized tools were used. Specifically, 34.3% are using commercial software, followed by 28.3% are using

both in-house and commercial software, and 17.3% have developed their own software package for EVM usage. Taking a glance at the future trend, about 63% of the respondents with no current software usage have a plan to acquire a software tool in the near future. With EVM accreditation, the majority of the respondents is not accredited and has no plan to get accreditation in the near future. Also, the majority of the respondents has not used any external consultants for implementing their EVM system. The survey also shows that with the organizations using EVM, 38.2% have made their EVM implementation flexible for different levels of projects, programs and organizations, while 36.7% have chosen a simplified approach for EVM Implementation. b. Please indicate your usage of software tools in supporting EVM implementation (e.g. scheduling and EV analysis). Software tools for EVM Implementation
No plan to use any software No software used currently, but plan to use in the future Both in-house and commercial software Use internally developed software Use commercial software packages 0% 5% 10% 15% 20% 25% 30% 17.3% 34.3% 35% 40% 7.1% 13.1% 28.3%

Figure 11. Software tools for EVM Implementation c. What best describe your organizations EVM system accreditation status? EVMS accreditation
No plan to have accreditation No EVM system accreditation but review through IBR Not accredited yet, but plan to acquire accreditation in the future Accredited by other 3rd party agency Accredited by DCMA 0% 3.2% 8.5% 10% 20% 30% 40% 50% 60% 13.8% 25.1%

49.5%

Figure 12. EVMS accreditation d. In what ways have external consulting services helped you to establish an EVM system in your organization?

Consulting services to establish EVMS

EVM-related software development Employee EVM training EVM system assessment and improvement EVM accreditation consulting EVM system design and implementation 0%

23.7%
33.6% 19.4% 13.1% 24.7%

59.0%
54.4% 67.1% 66.4% 60.8%

17.3%
12.0% 13.4% 20.5% 14.5% 100% 120%

20% 40% 60% 80% Yes No Not Sure

Figure 13. Consulting services to establish EVMS e. What best describes your organizations strategy used in developing its EVM system? EVM system development
Others EVM implementation is made flexible at different levels in a project, program, or organization 1.1% 38.2% 23.3%

Scale EVM applications from simple to advanced implementations as appropriate for a given project context
Apply EVM in a simplified approach and grow a robust system over time Develop a full-fledged EVM system to meet a specific EVM standard 0% 5% 16.6%

36.7%

10% 15% 20% 25% 30% 35% 40% 45%

Figure 14. EVM system developments

With the EVM system improvement, majority of the respondents, or 44.2%, have chosen to expand EVM usage to all types of projects among other improvements, such as establishing an organization wide support team for continuous monitoring of EVM system, establishing a library of historical projects EVM data for future project planning, integrating computer software and components for effective EVM implementation and acquiring a formal EVM accreditation which has seemed to receive less attention amongst other strategic plans.

f. What best describes the organizations future strategic plan regarding EVM implementation? Future strategic plan regarding EVM Implementation
Others Establish a library of historical project EVM data for future project planning Integrate computer software systems and components for EVM Establish a organization-level support team to continuously improve EVM Acquire a formal EVM accreditation Expand EVM usage to all types of projects 7.8% 44.2% 22.6% 30.7% 1.1% 31.4%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Figure 15. Future strategic plans regarding EVM Implementation 4.4 Industry Needs This category of questions describes the industry problems/barriers that hinder the acceptance and usage of EVM. For cases in which EVM has been implemented, when analyzing the factors that prevent further improvement of EVM usage to all types of projects, it was found that the lack of EVM knowledge and experience as a major limiting factor and this is followed by the lack of motivation and support from the top management. Nevertheless, it is also shown that EVM is not implemented in some projects simply because the clients do not require it. a. What are the major factors that prevent further improving EVM usage to all types of projects or at a more detail level of a project?

Limiting factors for EVM improvement

Others Lack of computer and software infrastructure Lack of suitable EVM industry standard Lack of support from subcontractors 1.8% 15.0% 18.3% 20.5% 25.6%

Lack of interests of the project team

Complicated and tedious reporting procedure Tedious data collection procedure Lack of EVM knowledge and experience Lack of financial resources to implement Lack of motivation and top management support Not cost-effective to implement EVM is not suitable for all projects Not required by clients 0.0% 10.0% 20.0% 14.7% 18.3%

11.4%
19.4% 50.5% 40.3% 31.5% 40.7% 30.0% 40.0% 50.0% 60.0%

Figure 16. Limiting factors for EVM Improvement For cases in which EVM is not implemented, the survey shows that the primary concerns are related to the lack of EVM knowledge, the lack of top management support, and the lack of interests from the project clients. As a result, only 18% of these respondents indicate an interest to implement EVM in the near future. b. If EVM is not implemented, what are the major barriers? EVM Implementation
Others EVM pilot study failed to show its value Lack of computer and software infrastructure 2.8%

1.4%
10.4% 14.2% 9.0% 28.4% 8.5% 14.7% 12.3% 55.9% 49.8% 5.7% 17.1% 9.5% 40.3% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

Lack of suitable industry EVM standard

Too many jargons and requirements to learn and Lack of interests of the project team High cost/time commitment Tedious data collection and reporting procedure Lack of financial resources to implement

Lack of EVM expertise and experience

Lack of top management support Not cost-effective to implement Current project control system works Not suitable for your industry/type of projects Not required by clients

Figure 17. Barriers for EVM Implementation c. If EVM is not implemented, does the organization have a plan to implement it?

EVM Implementation
Not sure 40% In 5 years 15% In next 6-10 years 3%

No plan to implement 42%

Figure 18. Future plans to implement EVM 4.5. Project success This section measures the contributions of EVM to project success. The survey shows that the majority of respondents are in agreement on the value of EVM to project success. More than 80% of the respondents believe that EVM has helped them identify performance issues timely, achieve schedule and cost goals, improve team communication, and keep the focus on progress, Furthermore, EVM is perceived to be a cost-effective tool for performance management. a. What best describes your level of agreement with the following statements: Level of agreement regarding EVM
Overall, EVM is a cost-effective tool for performance management EVM contributes to achieving project cost objectives EVM contributes to achieving project schedule objectives EVM allows people to communicate objective progress to stakeholders, and keep the project team focused on achieving progress EVM contributes to improving project scope definition and prevents scope creep EVM provides early warning of performance problems 0% 37.9% 47.6% 12.6% 1.1% 0.7% 0.7% 8.6% 0.4% 14.9% 3.7% 0.4% 13.8% 2.2% 0.4% 21.6% 10.4%

36.1%

54.3%

28.3%

52.8%

33.8%

49.8%

23.8%

43.9%

0.4%

52.0%

43.5%

1.1% 3.0% 0.4% 80% Disagree 100% 120%

20%

40% Agree

60% Neutral

Strongly agree

Strongly Disagree

Figure 19. Level of agreement regarding EVM

The following figure shows the relative importance of a group of factors in relation to EVM implementation. Top management support and adequate EVM training are ranked the top two priorities for a successful EVM implementation. In fact, this finding is in correspondence with the concerns indentified earlier that hinder the acceptance and usage of EVM. b. Please evaluate the relative importance of the following factors to successful EVM implementation: Success factors for EVM Implemetation
Supports provided by external EVM consultants 7.4% Rewards and reinforcement of EVM usage Usage of EVM software tools Teamwork environment and open communication Project management staffs knowledge and experience Buy-in of EVM by the project management staff 14.1% 16.0% 26.0% 35.3% 42.8% 40.5% 37.5% 27.1% 20.4%

26.8%
41.3% 40.9%

30.9%

30.5%
31.6% 30.9% 27.9%

4.5% 10.8% 2.2% 11.5% 0.7% 7.4% 1.1%

37.5% 40.5% 32.7% 35.7% 43.1% 42.4% 45.0%

21.6% 1.9% 0.7% 18.2% 5.2% 1.1% 20.8% 1.9% 1.1% 16.0% 3.0% 0.4% 26.4% 3.7% 0.4% 26.4% 6.7% 1.5%

Culture of the organization and management leadership

Maturity of the organizations project management system Simplification of EVM procedures to improve acceptance and usage Flexible EVM implementation strategy at different organization levels Adoption of EVM industry standards Funding and time allowance for EVM usage EVM training Top management support and leadership

17.1%
26.8% 47.6%

38.3%
42.0%

32.7%

11.5% 0.4%

26.8% 4.1% 0.4% 36.1% 13.8% 2.2% 0.4% 22.7% 1.1% 0.4% 5.9%

69.9%

Very significant

0.0% Significant

20.0% 40.0% Fairly significant

60.0% 80.0% Not significant

100.0% 120.0% Not applicable

Figure 20. Success factors for EVM Implementation

Acknowledgement We would like to thank the College of Performance Management (CPM) of the Project Management Institute (PMI) for providing the research funding and assistance during the survey. We greatly appreciate and thank all participants for their valuable contribution to this survey. Due to the nature of this study, it was necessary to contact a wide-range of organizations for assistance and information. We express our sincere appreciation and gratitude to all organizations who have formally or informally agreed to distribute the survey to their members. These organizations include but not limited to the following 2.
Chartered Institute of Building (CIOB) Eastern Centre, UK. CIOB Pembroke Centre, UK. CIOB Yorkshire Branch, UK. International Association of Project and Program Management (IAPPM) PMI Alaska Chapter, U.S. PMI Arabian Gulf Chapter PMI Belgium Chapter, Belgium PMI Buenos Aires Chapter, Argentina PMI Chennai Chapter, India PMI Chicagoland Chapter, U.S. PMI College of Performance Management (CPM) PMI Education and Training SIG PMI France Sud Chapter, France PMI Gdansk Chapter, Poland PMI Global Operations Center PMI Heartland Chapter, U.S. PMI Islamabad Pakistan Chapter, Pakistan PMI Karachi Pakistan chapter, Pakistan PMI Kentucky Bluegrass Chapter, U.S. PMI Levis Chapter, Canada PMI Montreal Chapter, Canada PMI Mumbai Chapter, India PMI New Product Development SIG PMI New Zealand Chapter, New Zealand PMI Norway Oslo Chapter, Norway PMI Palmetto Chapter, U.S. PMI Panama Chapter, Panama PMI Pearl City, Hyderabad Chapter, India PMI Peru Chapter, Peru PMI Pikes Peak Regional Chapter, U.S. PMI Recife, Pernambuco Chapter, Brazil PMI Risk Management SIG PMI Sao Paulo Chapter, Brazil PMI Southern Italy Chapter, Italy PMI United Kingdom Chapter, UK. PMI Western Australia Chapter, Australia

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