LETTER TO THE EDITOR
Date: 15 September 2022
Dear David,
Having read The Origins and History of Earned Value Management: “A Contractor’s Perspective”, by Dr. Paul D. Giammalvo, I find it both confusing and disappointing that Paul seems incapable of appreciating the difference between financial management, cost engineering, and earned value management. Notwithstanding this fundamental issue, as a starting point, I fully agree with Paul’s views on the poor delivery outcomes from the current generally applied methods of managing projects and the lack of improvement over time. I also agree Earned Value Management has very limited use in the contracting industries referenced by Paul, and is therefore not likely to be a contributor to these well-established failure rates.
Where Paul seems to be confused, or simply ill-informed, is in respect to the distinct differences between financial management, cost engineering, and earned value management. These terms are not, and never have been, synonymous. For most project management professionals, the terms have the following meanings:
Financial management: the practice of handling a company’s finances in a way that allows it to be successful. This generally includes various accounting functions, supported by contract administration and purchasing. Managing the organizations cashflows by claiming payments correctly, getting paid, and in turn properly paying workers, suppliers, and contractors is critically important to any businesses’ survival and has been for centuries.
Cost engineering: evolved in the early part of the 20th century to provide solutions to a number of limitations apparent in traditional financial management and accounting. The Association for the Advancement of Cost Engineering International (AACEi) defines cost engineering as the application of scientific principles and techniques to problems of estimation; cost control; business planning and management science; profitability analysis; project management; and planning and scheduling. A discussion on the history of cost accounting and cost engineering is in my paper The Origins and History of Cost Engineering[1]…
More…
Patrick Weaver FAICD, FCIOB, PMP, PMI-SP.
Managing Director
Mosaic Project Services Pty Ltd.
Melbourne, Australia
To read entire Letter to the Editor, click here
How to cite this work: Weaver, P. (2022). On the History of Earned Value Management, Letter to the Editor, PM World Journal, Vol. XI, Issue X, October. Available online at https://pmworldlibrary.net/wp-content/uploads/2022/10/pmwj122-Oct2022-Weaver-on-the-history-of-EVM-Letter-to-Editor.pdf
[1] Originally published in PMWJ in Vol. XI, Issue III – March 2022. An augmented version of The Origins and History of Cost Engineering, incorporating information received after publication can be downloaded from: https://mosaicprojects.com.au/PMKI-ZSY-020.php#Process1
