Once More on Earned Value

A Third Dimension

COMMENTARY

By Dr. Kenneth Smith, PMP

Honolulu, Hawaii

& Manila, The Philippines

I read Patrick Weaver’s History of Earned Value ^[1] and Paul Giammalvo’s follow-up ^[2] ‘Treatise’ in the recent issues of the PMWJ with great interest, as they filled in some voids regarding Earned Value’s genesis, evolution, issues & applications that arose during my early project management career and after I left the US Defense Department (DOD) establishment; as well as from different perspectives.  I initially learned PERT/CPM – the Program Evaluation & Review Technique / Critical Path Method – on the job as a Management Intern in the U.S. Navy’s Special Projects Office (the Polaris Project) during the early 1960’s.  Later I had further exposure as a Management Analyst in the Navy Management Office (NMO), and subsequently was a full time practitioner & faculty member of DOD’s PERT Orientation & Training Center (POTC) under the direction of Guy Best – promulgating both PERT/CPM & PERT/COST as “Best’s Practices” as well as assisting contractors in their application.  I left DOD in December 1965 to apply Critical Path methodology for the US Agency for International Development (USAID) on a variety of international infrastructure, economic and social/humanitarian development type projects, worldwide.

Patrick and Paul viewed and reviewed Earned Value Methodology (EVM) from two different vantage points in the Commercial sector; Patrick primarily as an Owner-manager, and Paul as a hands-on Contractor manager to Owners; but nevertheless, both as engineering professionals applying EVM to infrastructure projects.  Therefore, I’d like to add to their observations a couple of comments from my perspective — as a generalist (i.e. non-engineer) planner and more ‘remote control’ manager, monitor & evaluator as a representative for Government Owners.

First, as Patrick pointed out, although schedules and costs were intended to be aggregated in Work Packages for analysis, they were widely estimated – and attempted to be monitored — at the Activity level.  That was simply because – wherever feasible — ‘bottom-up’ estimating by those closest to — and more knowledgeable about — the work environment was preferable to broad brush ‘top-down’ guesstimates.

For well-established activities in various trades, reasonable time and cost approximations could be made with ‘rules-of-thumb’ based on the materials to be used, skills to be applied and level-of-effort required.  However, reporting that level of detail to the government ‘Owner’ was excessive!

Regarding the lack of Standards that Patrick noted, other than the foregoing well-defined types of activities, it simply was not feasible to establish standards for many other activities. Although contract objectives – particularly for R&D type contracts – could be well defined, and process phases & stages articulated, the details were inherently subjective and obscure, giving rise to imprecision in both duration and cost for execution.  A weighted PERT formula:

optimistic time + 4(Most Likely time) + pessimistic time
6

was the recommended pseudo-scientific approach for estimating such subjective activity ‘expected time’ durations; although on the job I encountered several other intuitive variations – such as Forrester’s function (best guess x 3), and Murphy’s magnitude (best guess x 10)– used to factor-in risk impact from predictable but uncontrollable dynamic negative feedback loops, as well as unpredictable events; each presenting a wide range for ‘ceiling’ estimating. We did our best in DOD relying on concurrent separate in-house ‘should take’ (duration) and ‘should cost’ technical estimates, as well as comparative macro-analysis of time & cost estimates in contractors competitive proposals; but it was a far cry from objective standard setting.

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How to cite this article: Smith, K. F.  (2022).  Once More on Earned Value: A Third Dimension, Commentary article, PM World Journal, Vol. XI, Issue X, October. Available online at https://pmworldlibrary.net/wp-content/uploads/2022/10/pmwj122-Oct2022-Smith-once-more-on-earned-value.pdf

About the Author

Dr. Kenneth Smith

Honolulu, Hawaii
& Manila, The Philippines

 Initially a US Civil Service Management Intern, then a management analyst & systems specialist with the US Defense Department, Ken subsequently had a career as a senior foreign service officer — management & evaluation specialist, project manager, and in-house facilitator/trainer — with the US Agency for International Development (USAID).  Ken assisted host country governments in many countries to plan, monitor and evaluate projects in various technical sectors; working ‘hands-on’ with their officers as well as other USAID personnel, contractors and NGOs.  Intermittently, he was also a team leader &/or team member to conduct project, program & and country-level portfolio analyses and evaluations.

Concurrently, Ken had an active dual career as Air Force ready-reservist in Asia (Japan, Korea, Vietnam, Thailand, Indonesia, Philippines) as well as the Washington D.C. area; was Chairman of a Congressional Services Academy Advisory Board (SAAB); and had additional duties as an Air Force Academy Liaison Officer.  He retired as a ‘bird’ colonel.

After retirement from USAID, Ken was a project management consultant for ADB, the World Bank, UNDP and USAID.

He earned his DPA (Doctor of Public Administration) from the George Mason University (GMU) in Virginia, his MS from Massachusetts Institute of Technology (MIT Systems Analysis Fellow, Center for Advanced Engineering Study), and BA & MA degrees in Government & International Relations from the University of Connecticut (UCONN).  A long-time member of the Project Management Institute (PMI) and IPMA-USA, Ken is a Certified Project Management Professional (PMP®) and a member of the PMI®-Honolulu and Philippines Chapters.

Ken’s book — Project Management PRAXIS (available from Amazon) — includes many innovative project management tools & techniques; and describes a “Toolkit” of related templates available directly from him at kenfsmith@aol.com on proof of purchase of PRAXIS.

To view other works by Ken Smith, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/dr-kenneth-smith/

[1] Weaver, P. (2022). The Origins and History of Earned Value Management; PM World Journal, Vol. XI, Issue VIII, August. Available online at https://pmworldlibrary.net/wp-content/uploads/2022/08/pmwj120-Aug2022-Weaver-origins-and-history-of-earned-value-management.pdf

[2] Giammalvo, P. D. (2022). The Origins and History of Earned Value Management – “A Contractor’s Perspective”; featured paper, PM World Journal, Vol. XI, Issue IX, September. Available online at https://pmworldlibrary.net/wp-content/uploads/2022/09/pmwj121-Sep2022-Giammalvo-origins-and-history-of-evm-a-contractors-perspective.pdf