On the Subject of Earned Value



By Dr. Paul Giammalvo

Jakarta, Indonesia



Ref:  PMWJ article by Dr. Ken Smith titled “ADDING VALUE TO EARNED VALUE: The PISA P (PI) Chart for Monitoring Project Implementation.”

Dear Editor

As a follow up to Dr. Ken Smith’s article in the December edition of the PM World Journal entitled “ADDING VALUE TO EARNED VALUE: The PISA P (PI) Chart for Monitoring Project Implementation,” https://pmworldjournal.com/article/adding-value-to-earned-value, as another of the “old-time” earned value subject matter experts, I wanted to elaborate and expand on what my esteemed friend and professional colleague published and show how those of us in the private sector, “hard money” (firm fixed price) construction market have been using this same weekly or monthly SPI and CPI information as the basis to validate these three quality metrics that apply to both our cost and time estimates:

  • Accuracy- How close the actual time or costs are vs. what was estimated or budgeted.
  • Reliability- How good are the numbers to use as the basis to forecast.
  • Precision- How closely grouped are the readings to the baseline time/cost estimates.

Figure 1- Giammalvo, Paul D Course Materials as published in the Guild of Project Controls Compendium Figure 9 http://www.planningplanet.com/guild/gpccar/assessing-interpreting-progress-data

As it seems there are fewer of us around who have actually used earned value on projects where our own money was on the line if the projects “succeed” or “fail,” it is important to try to convince PMI, AACE and other professional societies to follow the lead of the Guild of Project Controls and not only show how the US DoD and other government agencies use earned value but also how the private sector has been using earned value since it evolved from the factory floors of the 17th and 18th Century industrial revolution as an “incentive” or “pay for performance” scheme, as documented in Halbert Powers Gillette, Richard Turner Dana’s 1909 book “Cost Keeping and Management Engineering: A Treatise for Engineers, Contractors and Superintendents Engaged in the Management of Engineering Construction” https://books.google.co.id/books?redir_esc=y&id=zO-ADudj-R8C&focus

With PMI rewriting their PMBOK Guide 7th Edition, now is a good time for both PMI and AACE (and any other professional society advocating the use of earned value) to conduct the research necessary to accurately portray the evolution of Earned Value not only how the US and other governments use it, but more importantly, how the private sector uses it.


To read entire Letter to the Editor, click here