Earned value in project management

Citation

(2003), "Earned value in project management", Work Study, Vol. 52 No. 7. https://doi.org/10.1108/ws.2003.07952gaf.006

Earned value in project management

Earned value in project management

Earned value is a technique designed to show whether you are getting value for money and is a useful component of project management. Its use is mandated in the USA and Australia and it is being used more and more in the UK. The technique essentially identifies the value of the useful work done, at any given point in time, in all areas and at all levels within the project. By comparison with the original plan, earned value can be used to identify other parameters such as time to completion, cost to completion and expected final costs. It also enables project managers to identify those areas of the project that are proceeding well, those that are in trouble and enables percentage progress and performance indices to be calculated.

Earned value can be used in most project situations and in most project environments. It can be used on all sizes of projects – and on both simple and complex projects in any market sector.

Good project management will generally produce good earned value data. Similarly, and not surprisingly, poor project management will produce poor earned value data. To ensure project success, this data should be interpreted and applied appropriately.

Earned value shows, simply, how much of the forecast work has actually been done, how much has been earned for every pound spent and how much it is costing to earn a pound. Unsurprisingly, it rarely costs just a pound to earn a pound and quite often costs several. For some reason most projects do not have this information, or, as in the case of quantity surveyors in the UK construction industry, they have this information but do not use the information to manage with.

It is also more often than not the case, that the last person that the supplier would wish to share project information with is his customer. The best projects have crossed this’Rubicon and treat earned value information as commonly shared data, which’is used to manage the project from both sides. The success of the project then becomes the central issue, rather than how much can be earned or saved, to the detriment of the other.

A common problem with small or non-project-oriented organisations, is that they do not have internal mechanisms that can collect effort and costs to individual projects, or parts of projects. Other problems may be associated with the culture of the organisation, such as it not being used to reporting meaningful progress information.

Historically, earned value was developed for, and used on, large-scale projects, particularly in defence. This has created the perception that it is hugely complicated, far too complicated for the rest of us, and far too costly.

These criticisms are not valid. Earned value provides simple but powerful answers to many questions:

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  How much is it really costing us to earn each unit of forecast value?

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  How much is it going to cost by the finish?

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  When is it going to finish?

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  Where exactly are we now?

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  Where are our problem areas?

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  How does this compare with other projects?

If these questions are answered there is a better chance that the project will be successful. However, at the end of the day, only people can make that happen.

For more information on earned value, see: www.acq.osd.mil/pm/

Finding the next generation of leaders

The Improvement and Development Agency (IDeA) believes that the quality of today's leadership and, perhaps more importantly, the quality of the next generation of leaders, is a critical factor in the ability of UK local authorities to improve. As part of this belief, the IDeA and Employers' Organisation are taking forward the development of a national strategy and framework for leadership development in local government. This is also a critical response to the White Paper "Strong Local Leadership, Quality Public Services", which raised issues around leadership and capacity building.

These issues were the starting point for a groundbreaking meeting between Local Authority Chief Executives, Directors of Human Resources, Society of Local Authority Chief Executives, Society of Chief Personnel Officers, IDeA, Employers' Organisation, Office of the Deputy Prime Minister, Local Government Association and the Institute of Employment Studies. In all, some 30 people attended the first meeting of a national group to establish a Leadership Development Commission (LDC) for local government.

The meeting established that there is a major leadership challenge facing local government and key to the success of the initiative will be three main areas of work:

1. 1.

   Establishing a national leadership development strategy.

2. 2.

   Finding new ways of better meeting the challenge of leadership facing local government.

3. 3.

   Producing a sector-wide response to a wider public services leadership debate.

The range of challenges facing local government which are raising concern include:

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  improvement;

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  modernisation;

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  comprehensive performance assessments;

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  peer review;

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  organisations in transition;

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  partnerships;

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  funding; and

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  community relationships.

The meeting felt that it was critical to embrace the whole of the leadership arena, including political, managerial and community leadership. The LDC will seek to spark a national and local debate about the leadership needs of local government, the best way of meeting those needs and the best ways of growing tomorrow's leaders.

Following the overwhelming support for this initiative, the group will be promoting the project nationally at a series of road shows. A strategy will then be developed around a number of themes including:

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  Finding and spreading leadership knowledge.

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  Supply and demand information for leadership development.

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  How to learn from other sectors.

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  How to create the right climate and conditions to enable leaders to come forward and prosper.

The LDC initiative has to be put in perspective; it will not be a "one size fits all" solution but a common framework and language to help local authorities. We aim to make authorities an attractive place to work for career development, as well as helping to retain good people and, importantly, finding those excellent leaders of the future. It was felt by the meeting that the outcomes of the LDC should be an expression of "the best we know so far". It has to be about celebrating success and the sharing of learning. This is an opportunity for local government to get ahead of the game and set the agenda for leadership development rather than reacting to someone else's agenda.

The situation today can be very ad hoc for staff trying to reach the top of their authority. It can be linked to seniority in their chosen profession, rather than development of their skills as effective managers and leaders. However, organisations are starting to recognise the need for effective management’and leadership learning as a pre-requisite for future leadership roles. The difference is about blending professional, technical or occupational development with’a’commitment and proactive approach’to’developing more generic leadership ability.

Over the past few years, research has pointed to the differences between leadership and management and encouraged employers and academic institutions to review their development goals and programmes. Many studies have indicated the critical importance of effective leadership in achieving improvements in service.

In Scotland, the public services as a whole supported the establishment of the Scottish Leadership Foundation. The Scottish experience found that there was a real need for a different approach to senior staff development which would move people out of their separate organisations and provide entrepreneurial and value-based approaches to leadership development.

The LDC will have to take into account the increasing need to work with other parts of the public sector and to tackle cross-cutting issues in partnership. The White Paper has made explicit the need to develop leadership in individuals, the organisation and the community.

For effective leadership in local government, the challenges require leaders who can inspire and motivate staff, while leading successful change initiatives. We must develop strategic direction within a political context, together with creating internal and external partnerships to address current and future challenges and achieve better outcomes, faster. In addition, opportunities offered by new technology have to be maximised. Leaders will have to involve the public as individuals and communities, while’delivering cross-cutting solutions to complex problems. Finally, they will have to manage the media and better connect with both their organisations and their communities.

Those who aspire to leadership positions will have to demonstrate utter integrity, be excellent at managing people, processes, operations and stakeholders. They will be publicly accountable, open to scrutiny and possess excellent communications skills to inspire, influence and persuade.

Other parts of the public service have, for some time, recognised the need for systematic training and development in management and leadership, starting from the graduate intake level to the highest positions in their organisations. The vision for local government must therefore be to develop strategies and programmes that will develop’the leaders it needs, who can deliver the results to this increasingly challenging agenda.

Past assumptions that people will automatically rise to the top of their profession and take on leadership roles are no longer valid. The development of leaders must be undertaken on a far more systematic basis, working within a national framework, but with the implementation at local level, to ensure success.

The LDC will review the development strategies and programmes for leadership in other sectors, including the private sector, in’order to steer the design of a national strategy and make recommendations for’national or central programmes. It will’debate the research information collected’and’adapt it for a local government situation.

Recommendations will then be put forward for a national strategy for leadership development in local government and for the development of any support tools or programmes for leadership development.

For more information, see: www.idea.gov.uk