A historical approach to scheduling and incentive schemes
FEATURED PAPER
By Sophie Geneste
SKEMA Business School
Paris, France
ABSTRACT
Earned Value Management has become a source of divisions. From the interpretation of its origins to its suitable applications, project managers seem to fail to reach consensus. While the private sector most often adopts it in Firm-Fixed Price contracts, this is precisely where US Defence Acquisition University discourages the method. Besides, if this technique is ordinarily said to have emerged in the 1960s, it actually arises from a lengthy evolution of both scheduling and incentive schemes. In fact, the very basis underlying EVM consists in paying for performance, a concept that appeared and developed concomitantly with the scheduling evolution and traces back to centuries AC.
Through the display of the evolution of scheduling and incentive schemes over time, and the presentation of the definition and functioning of EVM, this paper will expose the underlying roots of earned value and thus clarify its very merits in both project management and performance appraisal.
Key words: Earned Value Management, History of EVM, Evolution of Scheduling, History of Scheduling, History of Project Management, Evolution of EVM, Earned Value Origins
INTRODUCTION
Earned Value Management has become the “elephant in the room”[1] that everyone is aware of, but so few are willing to discuss, and even less implement. One could even claim the EVM has become analogous to the 6 Blind Men of Hindustan, trying to describe an Elephant for which everyone has their own interpretation of the origins, and the appropriate employments it can be put to. For instance, Earned Value is not used on firm fixed price contracts in the U.S government. In fact, the US Defence Acquisition University’s EVM Gold Card (Appendix 1) states the method is discouraged on Firm-Fixed Price[2], although this is precisely where it is the most often adopted in the private sector, not only in construction -with the milestone payments- but also in our daily transactions.
Professionals responsible for project performance are likely aware of Earned Value Management (EVM). This project management technique integrates the three related components of project performance: scope, schedule, and cost. By means of a few rates, the current status of the project can be established, enabling the manager to explore not only past history of the project but more importantly the current trends, forecast, and eventually improve performance. The use of EVM is notably promoted by the the US Governments Accountability Office (GAO) and the Office of Management and Budget (OMB), and practiced in a variety of industries, educational institutions and consulting firms. Some of the most renowned organisations adhering to the methodology include NASA, Project Management Institute (PMI), Defence Acquisition University, or again Acquisition Management (UK). However, it is not understood that EVM stands as a valuable tool for any project manager. Even though EVM has been adopted by a fair amount of countries especially since the 1980s[3], outside of some government agencies and construction industry, earned value is not extensively used[4], most certainly due to scarce understanding of its range of application.
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Editor’s note: This paper was prepared for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development. http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director paul.gardiner@skema.edu.
How to cite this paper: Geneste, S. (2019). The True Origins of EVM: A historical approach to scheduling and incentive schemes, PM World Journal, Vol. VIII, Issue IX, October. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/10/pmwj86-Oct2019-Geneste-the-true-origins-of-evm.pdf
About the Author
Sophie Geneste
Paris, France
Sophie Geneste is a trilingual Project Management and Business Development Masters student at SKEMA Business School, Paris. Born in Burgundy, France, she first studied translation and international relations before entering SKEMA, in 2016.
In 2017 she was president of a 30-student organization, which created an Oratory Contest opened to 500 students (Prix Cicéron), opened a Model United Nations (MUN) delegation and directed a printed press review.
She spent her first internship as a project manager assistant in a social enterprise incubator based in Clermont-Ferrand, France. She studied in Australia and Great Britain, and spent her last internship in Santiago, Chile as a marketing project assistant at TOTAL.
Since late 2018, she is a PMI France volunteer (Région Globale). She works as a student coordinator, and communication facilitator for the anglophone PMI Chapters (in Canada, France, Africa and Middle East).
Passionate about drama, she is also a journalist and partnership representative at THÉÂTRES ET SPECTACLES DE PARIS, a Parisian drama review distributed at 120 000 copies. Sophie speaks the following languages: French (Native), English (Fluent), Spanish (Fluent)
Sophie currently lives in Paris, France and can be contacted at sophie.geneste@skema.edu
LinkedIn profile: linkedin.com/in/sophie-geneste
[1] Martin, G. (n.d.). ‘The elephant in the room’ – the meaning and origin of this phrase. Retrieved November, 2018, from https://www.phrases.org.uk/meanings/elephant-in-the-room.html
[2] Defense Acquisition University. (2018, September). Earned Value Gold Card. Retrieved from https://www.dau.mil/tools/Lists/DAUTools/Attachments/19/20180904-gold%20card%201%20sided.pdf
[3] Humphreys, G. C. (2016, January). EVMS – AFTER THE EVOLUTION: THE LONG SLOW ROAD. Retrieved October, 2018, from http://www.earnedschedule.com/Docs/EVMS – After the Evolution.pdf
[4] The perceived value and potential contribution of project management practices to project success. (2006). Retrieved November, 2018, from https://www.pmi.org/learning/library/perceived-value-potential-contribution-project-management-8031
