LETTER TO THE EDITOR
By Dr. Paul D. Giammalvo
Jakarta, Indonesia
In Response to Pat Weaver’s Letter to the Editor in the October edition of the PM World Journal, related to Ms. Bertille Hu’s paper on the History of EVM in the September PMWJ
19 September 2019
Dear Editor,
Dr Paul Giammalvo [PDG]. As the supervising professor of Ms. Bertille Hu’s paper, I would like to respond to the challenges raised by Pat Weaver.
The article ‘The History of Earned Value Management Through Incentives Plans’ in the September edition of PM World Journal, is fundamentally flawed. The paper’s title has no relationship to the conclusions, and the material, as presented, fails to support the presumption implied in the title.
Earned value management has three fundamental components:
- All of the resources and work planned and used in the course of a project is reduced to a single metric (usually money), this includes labor, materials, suppliers, subcontractors and overheads.
- The work is planned, and progress measured based on the ‘metric’ to derive the planned, earned and actual ‘values’, for the entire scope of work required to complete the project.
- As work progresses, the current difference between planned and actual performance (as measured by the metric) is used to forecast future outcomes.
The incentive schemes and piece rate payments described in the paper fail to achieve any of these fundamental objectives, and the issues discussed around ‘project failure’ while significant in themselves, have little relevance to either earned value or incentivization.
[PDG] An investigation of the various incentive plans that the author has shown in Figure 9 when combined with the timeline shown in Figure 8, shows a clear evolutionary relationship between incentive payment or “payment for performance” and the formalized growth of earned value management. They evolved TOGETHER and for good and valid reasons.
The fundamental problem ignored by the author is that incentive schemes focus on a very limited aspect of the work of a project (or manufacturing organization). The only aspect incentivized is that portion of the total scope of work undertaken by a team or an individual where predetermined performance targets can be set. There is always a lot of ‘other work’ for which incentive rates have not or cannot be set.
[PDG] I disagree that the author ignored the fact that incentive schemes focus ONLY on specific elements (tasks) and not the “big picture”.
More (much more)…
To read entire Letter to the Editor, click here
How to cite this article: Giammalvo, P.D. (2019). On the Subject of the History of EVM. Letter to the Editor. PM World Journal, Vol. VIII, Issue X, November. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/11/pmwj87-Nov2019-Giammalvo-Letter-to-Editor-on-the-history-of-evm.pdf
