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The Origins and History of Earned Value Management

 

“A Contractor’s Perspective”

 

FEATURED PAPER

By Dr. Paul D. Giammalvo

Jakarta, Indonesia


INTRODUCTION

This is a follow-up article to Pat Weaver’s paper of a similar name from the August issue of the PMWJ[1] that offers a different perspective through the eyes of a successful “hard money” contractor.

As much as I respect Pat Weaver’s work as a researcher, for the life of me, I am unable to comprehend why he (and also PMI and AACE) continue to refuse to include the published work of Halbert Powers Gillette and Richard Turner Dana from their 1909 book,Cost Keeping and Management Engineering: A Treatise for Engineers, Contractors, and Superintendents Engaged in the Management of Engineering Construction” in his usually well-researched papers? Or in PMI or AACE Standards?

Speaking as a lifelong construction CONTRACTOR, the teachings of Gillette & Dana was the basis for how I was taught about Earned Value Management back in the early 1970s by the late Marvin Gates, P.E., Adjunct Professor at Worcester Polytechnic Institute. (WPI) and for the past 50+ years, formed the basis for how we manage our own companies using Earned Value Management as a “pay for performance” and “cash-flow management” system, both as PROPERTY DEVELOPERS (OWNERS) and GENERAL CONTRACTORS.

Figure 1- Key Elements from Gillette & Dana

The biggest concern is if we correlate the timing of the work of Gillette & Dana with the work of Gantt, Taylor, and Priestman, or more importantly, Halsey, Rowan, Emerson & Bedeaux, you can see clearly that Earned Value as we know it today probably originated from the 16th Century English Guilds. It evolved, matured, and became institutionalized on the factory floors of the 18th Century Industrial Revolution as a “pay for performance” or “incentive payment” system that is still in common practice today in nearly all production factories (in the form of what is known as “piecework”) and in many of today’s construction contractors and subcontractors who bid, bill and are paid on a “unit in place” basis, including dirt work (Civil), pipelines, paving, roofing, drywall, painting, and flooring, to name a few.

Figure 2- Common Incentive Plans from the Late 1800s-Early 1900s Still Being Used Today.

Even more relevant, given that many of these incentives were based on “Earned Time,” they refute the claims of Walt Lipske and PMI that “earned schedule” or “earned time” originated with the USAF.  “Earned Time” or “Earned Schedule” has been an integral part of EVM for as long as I have used it. (50+ years) Not sure where Wayne Abba is these days, but he and I have both maintained that what Walt/PMI claimed was not true. That Earned Time/Earned Schedule (ET/ES) was always integral to EVM. It took me years of research before I found the “smoking gun” to prove it with Gillette & Dana. (Thanks to John Hollmann, P.E.)

Even more IRONIC, unlike most contractors (and many owners) who complain about EVM as being “too bureaucratic,” we INSIST on using EVM as the basis for payment in all our contracts, not as the US Government, PMI, or AACE advocate it, but as it evolved during the 18th Century as a “prompt payment” or “payment for

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To read entire article, click here

How to cite this paper: 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


About the Author


Dr. Paul D. Giammalvo, CDT, CCE, MScPM, MRICS

Jakarta, Indonesia

 

Dr. Paul D. Giammalvo, CDT, CCE (#1240), MScPM, MRICS, is a Senior Technical Advisor (Project Management) to PT Mitratata Citragraha. (PTMC), Jakarta, Indonesia. www.build-project-management-competency.com. He is noted for the development and delivery of graduate level, blended learning curricula designed for the mid-career path, English as Second Language (ESL) professionals to develop competency in the local practitioner and build capacity for the local organizations. For 25+ years, he has been developing and delivering Project Management training and consulting throughout South and Eastern Asia Pacific, the Middle East, West Africa, and Europe.

He is also active in the Global Project Management Community, by playing a “thought leadership” role for the Association for the Advancement of Cost Engineering International, (AACEI) http://www.aacei.org/ since 1991; He has also been active in two IPMA member organizations: The Green Project Management Association (GPM) http://www.greenprojectmanagement.org/ where he served on the Certification Board of Directors for two years and the American Society for the Advancement of Project Management http://www.asapm.org/ for which he served for four years on the BoD as Director of Marketing. He also sat on the Board of Directors of the Global Alliance for Project Performance Standards (GAPPS), www.globalpmstandards.org, Sydney, Australia and is active as a regional leader. Currently, he is a compensated consultant to the International Guild of Project Controls. http://www.planningplanet.com/guild as the primary author of their “Compendium and Reference” as well as the chief architect of their competency-based credentialing program. http://www.planningplanet.com/guild/certification

He has spent 35 of the last 50 years working on large, highly technical international projects, including such prestigious projects as the Alyeska Pipeline and the Distant Early Warning Site (DEW Line), upgrades in Alaska and the Negev Airbase Constructors, Ovda, Israel and the Minas Oil Field in Rumbai, Sumatra. His current client list includes Fortune 500 major telecommunications, oil, gas and mining companies plus the UN Projects Office and many other multi-national companies, NGO organizations and Indonesian Government Agencies.

In addition to 45+ years of hands-on field experience, Dr. Giammalvo holds an undergraduate degree in Construction Management, his Master of Science in Project Management through the George Washington University and was awarded his PhD in Project and Program Management through the Institute Superieur De Gestion Industrielle (ISGI) and Ecole Superieure De Commerce De Lille (ESC-Lille) under the supervision of Professor Christophe Bredillet.  “Dr. PDG” can be contacted at pauldgphd@gmail.com.

To view other original work by Paul Giammalvo, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/dr-paul-d-giammalvo/

[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

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