Understanding & Applying Earned Value

A ‘Quick & Easy’ Approach for Monitoring Project Implementation



By Kenneth F. Smith

Hawaii, USA



This article demystifies the Earned Value Methodology (EVM), and provides several practical innovative techniques to monitor, analyze and report accurate integrated project schedule & cost performance status.

Earned Value Methodology (EVM) has been around since the 1960’s and during project implementation is the iconic ‘Best Practice’ for effectively monitoring, measuring, analyzing & forecasting integrated schedule and cost performance status.  However — from my experience as a practitioner, trainer, consultant and itinerant observer — EVM is the most misunderstood, and probably least-utilized technique in the project manager’s arsenal.    At numerous project management meetings which I have attended, I get predominantly negative feedback to my inquiries regarding other participants’ grasp &/or on-the-job application of EV.

It seems as though even after being exposed to earned value concepts during preparation for exams — such as the Project Management Professional (PMP) of the Project Management Institute (PMI) – subsequent application of earned value is shunned.  One major barrier seems to be the multiple measurements (18 at last count) of which EVM consists — replete with acronymic variables, indicators & equations.[1]  After initial exposure, long-term retention is fleeting and — somewhat like calculus — atrophies for many.  The other major factor is that EVM is both radically different from – as well as largely unknown by — professional accounting, financial management & auditing practices and practitioners.

This is regrettable, because without applying earned value analysis, invalid cost performance assessments are usually made, which – unless successfully rebutted by the project manager – result in inappropriate recommendations, triggering incorrect executive management decisions and action!

Comparing the Actual Work Completed vs. the Baseline Work Schedule during each reporting period – as shown in Figure 1 — is a logical and valid practice for monitoring physical work performance.

FIGURE 1– Work vs. Schedule

However, although perhaps useful for cash flow analysis and other financial management purposes, comparing the Actual Cost vs. the Baseline Budget Schedule for each time period (as shown in Figure 2) is insufficient, as it is not relevant and mostly erroneous – for assessing project Cost Performance.


To read entire article, click here


How to cite this article: Smith, K. F. (2019).  Understanding & Applying Earned Value: A ‘Quick & Easy’ Approach for Monitoring Project Implementation, PM World Journal, Vol. VIII, Issue V, June. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/06/pmwj82-Jun2019-Smith-Understanding-and-Applying-Earned-Value.pdf



About the Author

Dr. Kenneth F. Smith

Hawaii, USA



Dr. Kenneth Smith, PMP is a member of PMI and IPMA-USA, with many years of experience as a practitioner, researcher-evaluator, advisor, consultant and instructor/facilitator in project management.  He was formerly a management systems specialist with the US Department of Defense; later a manager / advisor / evaluator on various sector projects — world-wide — as a representative of the US Government and the international development donor community — i.e. the U.S. Agency for International Development (USAID), the World Bank Group, African Development Bank, the UN, and the Asian Development Bank.  Dr. Smith now conducts workshop-seminars in various aspects of project management, monitoring and evaluation for PMI as well as other government, academic, and private sector organizations.  [These and other analytical techniques for project planning, monitoring and evaluation are contained and available in his recently published book Project Management PRAXIS, available from Amazon.]

For further information, contact Dr. Smith at kenfsmith@aol.com.


[1] Of which several indicators in this ‘formula fog’ – IMO – are exhaustively, but pedantically trivial.  Furthermore, some indicators are frighteningly complex – or deceptively simple – amalgamations of indicators with variables derived from other equations, and at least one is counter-intuitively formulated with the negative resultant being a positive outcome, and vice versaBut I digress . . . !


Estimation in Story Points



By Ajay Shenoy

Bangalore, India



Agile Projects integrate numerous techniques that will not work in waterfall for estimation. One such technique is estimating the size of user stories with abstract measures of effort and use of story points to define effort of work, which can be completed in a sprint.

Scrum Project Teams can implement a set of features, which are broken down into stories, which can be completed by the scrum team in short sprints. User Stories would be broadly pulled in from the Product backlog, which would be in the priority order set by the Product Owner. The Scrum team may not be able to implement all stories present in the product backlog in a single sprint, so there could be different stories, which could be pulled up from the product backlog. The number of stories depends on the amount of effort it takes to fully implement each story.

Sprint Planning

One of the ceremonies in Scrum is Sprint planning meeting where the team would estimate out all the tasks associated with each user story and in the Sprint Backlog. All the required resources needed to complete all the tasks for each sprint is considered during effort estimation. A shared task list is created to estimate the duration and effort of each user story in Sprint backlog. This practices the shared responsibility among agile teams, which results in common estimation process, which is consistent.

How to Scrum Team Estimate?

The most commonly used technique in Scrum is the usage of Story points to represent the relative effort of user story or task. Although estimating in hours is very common in traditional waterfall projects but is rarely used in agile. A common approach used is usage of story points to estimate the relative complexity while implementing a user story. You can set any value to a story point that a scrum team decides upon. Each scrum team will have their own scale of Story point. There would be no set value defined to a story point. Although the value needs to be consistent across the team. The scale of story point may not be the same scale, which another scrum may use.

Story points are typically based on modified Fibonacci series, which is a number sequence. The sequence goes like 0, 1, 2, 3, 5, 8, 13, 20, 40, and 100. For Example, the team might have decided that value of a story point is 1 day, and so 5-story point will have a value of 5 days. If team has picked User Story A and assigned 1 story point. If team picks Story B and think it will take twice the effort to implement, team would assign 2 story points to user story B. There is no per-define formula about use of 1 or 2 story points. Another scrum team might assign this same two story 8 & 16 respectively depending on the scale they have agreed upon.


To read entire article, click here


How to cite this article:  Shenoy, A. (2019). Estimation in Story Points, PM World Journal, Volume VIII, Issue V, June. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/06/pmwj82-Jun2019-Shenoy-estimation-in-story-points.pdf



About the Author

Ajay Shenoy

Bangalore, India



Ajay Shenoy, a certified Scrum Professional and Agile Coach, has been involved in Technology Solutioning since 2007. He started working as a Solution Engineer and slowly incorporated into a technical program manager. He is a Certified Scrum Professional and has good knowledge on Prince2, Agile, Lean, Scrum, Kanban and SAFe frameworks. Along with expertise in Project management, he has deep interest in Technology side. With these skills, Ajay can help people understand process as well as Agile. Ajay has a perfect blend of project management with technical skills and business acumen.

Ajay started his Agile journey in 2012, as part of engineering teams. He practiced scrum and other agile frameworks in delivering successful products within limited time frames. Ajay is proficient in Engineering practices such as Scrum, Lean Software development, and Kanban and has designed several solutions and market rollouts working with product/services companies. He believes in following key agile practices like Just In Time, Value Stream mapping, Refactoring, Improving lead and cycle time.

He single handedly built a group comprised of 700 employees with different skills/roles. He indulges in several meets/ conferences and sharing knowledge on public platforms like linkedin with reference to agile. Ajay has coached/trained several teams in different organizations; he was part of an agile team to improve an existing framework.

He has a Master’s degree in IT & Finance and is currently based out of Bangalore. You can reach him on his email @ shenoyajay82@yahoo.com.



Playing with Ratios



By Anil Seth

Fluor India

Gurgaon, India



Ratios will tell the full measure of meaning, if you have enough of them.

~ Unknown


In any of your Project, have you ever experienced that applying right ratio at right time provides right understanding and this is always taken as a welcome step. However the ratios can also create misunderstandings,

How to handle ratios to estimate the Project?

Many of us live on thumb rules or create certain rules like what I found in one of the interesting student paper by Janette Chea 1.The ratios are there to make our self ,comfortable, these are always to be backed by findings or working logic. E.g. if we are working for EPC (Engineering, Procurement & Construction) lump sum estimate, the general goby is –

E: P: C ~10:60:30.

Some of you may react that this is not always true. Well, these are thumb rules getting converted in to real scenarios after execution and eventually coming as Work Break down Structure in Tenders to bid. This Engineering “10” can also be broken down into other goals like:

  1. Engineering: Project Support~70:30
  2. Project Engineering~10-12%

Process Engineering~5-7%

Mechanical Engineering ~8-13%

Electrical Engineering ~7-9%

Instrumentation Engineering ~7-10%

Piping Engineering ~20-28%

Civil /Structural/Arch Engineering ~20-26%

Is this right! …..Again it’s an oil & gas perception based on scope of work.

Another interesting way of utilizing the ratios is the engineering bottoms up approach. This follows a logical methodology wherein the primary discipline calculates the efforts and rest is bottoms roll up:

  1. Identify the primary discipline.
  2. Workout the estimate based on certain factors (like Plant capacity/Equipment Count/Area footprint etc.).
  3. Divide the estimate with universal ratio (derived and modified to use through historical database) to arrive at overall estimate required.
  4. Modify the overall as per RISK reviewed i.e. addition /deletion due to event/estimate contingency.

Those in engineering services are very much familiar with Front-End Loading [FEL2 or FEL3], in the majority of projects for FEL2 estimation needs many Project Managers factor their engineering from total installed cost (TIC). Incase somebody requires a mature understanding a 2paper by Melissa C. Matthews is a good read, the focus of this paper is to look at specific practices that are used to create FEL 2 estimates and determine the benefits and tradeoffs of using detailed information and techniques.


To read entire article, click here


How to cite this article:  How to cite this article: Seth, A. (2019). Playing with Ratios. PM World Journal, Vol. VIII, Issue IV (May). Available online at https://pmworldlibrary.net/wp-content/uploads/2019/05/pmwj81-May2019-Seth-Playing-with-Ratios-advisory.pdf



About the Author


Anil Seth

Gurgaon, India



Mr. Anil Seth is working as Project Manager in Fluor’s Indian office at Gurgaon. Fluor Daniel India Private Limited (Fluor India) provides a full range of engineering, design, procurement, and construction management services to Indian and overseas clients. Fluor India is an established quality provider of engineering, procurement, construction management (EPC) and project management services for Fluor’s energy and chemicals, power, mining, and industrial projects, and is a key support office for Fluor facilities located in North America, Africa, the Middle East, Europe, and Asia Pacific

Earlier to Fluor, was in Larsen & Toubro Ltd. at Faridabad, India and managing the Project Engineering Manager Portfolio for hydrocarbon projects. Before joining Larsen & Toubro Engineering and construction division he has worked for Indian Petrochemicals Corporation Limited. He holds B.E. degree with Honors in CHEMICAL Engineering from Panjab University Chandigarh India and has also done Diploma in Environmental Management. He is certified for Harvard Manage Mentor and specializes in Building High Performance cross functional Task Force as well as Converting Breakeven Projects to Profitable scenario. He can be reached at anilshivani99@gmail.com or Anil.Seth@Fluor.com

To see other works by Anil Seth, visit his author showcase in the PM World Library at http://pmworldlibrary.net/authors/mr-anil-seth/


About the Company

Fluor Corporation (NYSE: FLR) is a global engineering and construction firm that designs and builds some of the world’s most complex projects. The company creates and delivers innovative solutions for its clients in engineering, procurement, fabrication, construction, maintenance and project management on a global basis. For more than a century, Fluor has served clients in the energy, chemicals, government, industrial, infrastructure, mining and power market sectors. Headquartered in Irving, Texas, Fluor ranks 110 on the FORTUNE 500 list. With more than 40,000 employees worldwide, the company’s revenue for 2013 was $27.4 billion. For more information, visit www.fluor.com



Build up your Future



By Alfonso Bucero

Madrid, Spain



I always enjoy professional Congresses and Seminars as speaker but also as an attendee. When I joined PMI twenty-six years ago, I never thought how my professional career as a project manager would be positively affected by attending to professional Congresses worldwide.

Most of my professional life I worked for multinational companies that requested me to do performance evaluations every year. One of the results from those evaluations was my development plan. I was lucky because one of the things my managers did was give me the freedom of choosing the activities that I needed to do to accomplish my objectives. When I discovered PMI in 1992 a big window was opened for me. I can remember that I asked my manager to go to my first Project Management Congress. At the beginning his response was negative, and also he asked me why I wanted to travel so far away. I prepared my arguments and offered him to prepare a report with a summary of my lessons learned in the Congress.

I achieved my goal and I went to my first PMI Congress. It was the beginning a never end story about learning and developing my professional career. In my particular case I met several professionals at PMI Congresses that were key for my career development. More and more every year I prepared my paper submission to contribute and have the opportunity to come back again and again and again. Now after 25 years of PMI membership and almost 20 years as volunteer in different PMI roles I need to say that joining PMI was key for my career success. One of my lessons learned is that “you need to build up your future”. If you do not do it, nobody will. In my first Congress I met a great professional who gave the opportunity to learn from him, who encouraged me to write articles, with whom I have 20 years of friendship and I coauthored four books (Randall L. Englund).

I would like to share with you some best practices that worked for me well building up my future:

  1. Personal Vision: At the end of every year spend some type thinking and writing your PERSONAL VISION, work on what is your vision personally, professionally, socially. Then you will move through your mission and objectives, finalizing with your action plan.
  2. Chose a mentor: You need to choose a mentor. Think about somebody who you are confident with. Somebody who may orient you in your career, somebody ready to listen to you. He or she will not give you all the solutions but will be a great help in your development.
  3. Use your courage: If you want to develop yourself, you need to try to do things you are not still ready to do. Try to do some activities that will allow you to grow as a person but also as a professional.


To read entire article, click here


How to cite this article: Bucero, A. (2019).  Build up your Future, PM World Journal, Vol. VIII, Issue III (April). Available online at: https://pmworldlibrary.net/wp-content/uploads/2019/03/pmwj80-Apr2019-Bucero-build-up-your-future.pdf



About the Author

Alfonso Bucero

Madrid, Spain



Alfonso Bucero, MSc, CPS, PMP, PMI-RMP, PfMP, PMI Fellow, is an International Correspondent and Contributing Editor for the PM World Journal in Madrid, Spain. Mr. Bucero is also founder and Managing Partner of BUCERO PM Consulting.  Alfonso was the founder, sponsor and president of the PMI Barcelona Chapter until April 2005, and belongs to PMI’s LIAG (Leadership Institute Advisory Group).  He was the past President of the PMI Madrid Spain Chapter, and then nominated as a PMI EMEA Region 8 Component Mentor. Now he is a member of the PMIEF Engagement Committee. Alfonso has a Computer Science Engineering degree from Universidad Politécnica in Madrid and is studying for his Ph.D. in Project Management. He has 32 years of practical experience and is actively engaged in advancing the PM profession in Spain and throughout Europe. He received the PMI Distinguished Contribution Award on October 9th, 2010, the PMI Fellow Award on October 22nd 2011 and the PMI Eric Jenett Excellence Award on October 28th, 2017.

Mr. Bucero can be contacted at alfonso.bucero@abucero.com.

To see other works by Alfonso Bucero, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/alfonso-bucero/



Managing Risk to Raise Project Performance



By Evan Piekara

Washington, DC, USA




Risk comes in many forms and not all risks are created equal. Organizational leadership and project managers can increase project performance by identifying risks across relevant stakeholders and eleven common risk categories. Once organizational leaders have identified potential risks, they can qualify risks based on their risk appetite and what they perceive to be the likelihood and impact of the risk. This enables the project team to plan for the risk and develop mitigation approaches to address risk. Risk management is a continuous process and taking an enterprise approach to managing risk enables the organization to communicate, prioritize, and allocate resources to adapt to a changing environment.

Identify Risk to Understand the Operating Environment

Risk comes in many forms and it may only take mis-identifying or mis-calculating once to leave your project in complete disarray. Taking a holistic enterprise approach to identifying and managing risk can not only enable your team to alleviate risks, it will also enable your team to anticipate and scenario plan for prospective challenges. Enterprise Risk Management (ERM) is a holistic and continuous process that, when done effectively, entails identifying, qualifying, and planning for risks across the organization.

Fundamentally, risks come in eleven forms[1]:

  1. Compliance Risk: This is the organizations’ ability to follow applicable laws, regulations, and ensure accountability.
  2. Credit Program Risk: This is the organizations’ reliance on a borrower or financial counterparty to meet obligations and fully repay debt or interest on time. For instance, if an organization is funding a project through invoice payments from another project and if those invoices are not paid on time, this could slow or halt the project or cause the organization to borrow in the short-term, which could raise expenses.
  3. Cyber Information Risk: This is the organizations’ or projects’ potential for vulnerabilities that compromise processed, stored, or transmitted information.  For instance, cyber threats have caused many organizations and projects to re-think their security and factor in the risks that come with managing sensitive data. This consideration may require organizations altering their project timeline or adding security expenses to ensure information and controls are protected.
  4. Financial Risk: This is the projects’ financial impact to the organization such as the potential for loss of funds, increased expenses, or waste.
  5. Legal Risk: This aligns with compliance risk and is the organizations’ ability to meet contractual agreements or ethical requirements.


To read entire article, click here


How to cite this article: Piekara, E. (2019).  Managing Risk to Raise Project Performance, PM World Journal, Vol. VIII, Issue III (April). Available online at https://pmworldlibrary.net/wp-content/uploads/2019/03/pmwj80-Apr2019-Piekara-managing-risks-to-raise-project-performance.pdf



About the Author

Evan Piekara

Washington, DC, USA



Evan Piekara currently works in management consulting as a Senior Manager for BDO Public Sector. Evan supported the launch of BDO’s Public Sector Management Consulting Practice by helping government and nonprofit organizations develop strategic plans, establish and analyze performance metrics, and manage change efforts. In this capacity, Evan has collaborated with a range of executive leaders and managed diverse, cross-functional teams to deliver solutions to complex challenges under tight timelines. Evan currently holds professional certifications in Project Management (PMP), Change Management, Conflict Management, Lean Six Sigma, Total Quality Management, Strategic Organizational Leadership, and Continuous Process Improvement. He recently published Case In Point: Government and Nonprofit, a guide for those entering public sector consulting.

Evan can be contacted at epiekara@bdo.com


[1] https://cfo.gov/wp-content/uploads/2016/07/FINAL-ERM-Playbook.pdf


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