Real-world applications: How to apply EVM in project management

Learn how to apply EVM (Earned Value Management) in project management by following a set of best practices.

Why you should apply the best practices of EVM in project management

It is not uncommon for construction project teams to experience a set of challenges during the execution of a construction project. What makes any project team stand out for excellence is their ability to learn from these challenges to boost project performance and outcomes for future projects.

A 4 PM survey revealed that most organizations have a project failure rate of 70%, with the main cause being attributed to poor project management. Another study by PricewaterhouseCoopers (PwC) which reviewed 10,640 projects from 200 companies across 30 countries revealed that only 2.5% of these companies completed 100% of their projects.

To overcome these challenges, project teams should leverage the best practices of earned value management in a real-world context. This allows them to apply their newfound knowledge to execute construction projects seamlessly.

Some of the best practices for implementing EVM in construction projects

  • Setting realistic performance measurement baseline (PMB): A realistic PMB serves as a baseline for measuring project performance and helps stakeholders make informed decisions. This ensures that projects are aligned with client and stakeholder expectations.
  • Using earned value analysis (EVA): This quantitative technique used to evaluate project performance is put into practice by analyzing schedule and cost variances. They help to identify potential issues and enable proactive measures to mitigate risks.
  • Integrating cost, schedule, and performance metrics: EVM provides a comprehensive overview of project performance. This helps project managers track costs, schedule progress, and technical performance simultaneously, ensuring on-time delivery of projects.
  • Emphasizing precision in EV calculations: Maintaining precision in EV calculations is critical for EVM implementation. Project managers must ensure that all EV calculations are accurate and reliable, providing a clear understanding of project performance.

 The benefits of leveraging the best practices of EVM in project management

Here are four ways your construction company can benefit from these best practices when you apply them to your construction projects:

cost variation control

Lower margins and improved cost variation control

EVM makes cost estimation and tracking more structured compared to traditional estimations. This allows project managers to look at the possibilities of cost overruns before they occur and deal with them effectively before they escalate into more complex issues. Based on the cost, schedule, and performance metrics, EVM assists project managers in making better decisions regarding the distribution of resources as well as minimization of costs.

Ensure the sufficiency of funding

EVM gives a good snapshot of project costs and the impact that it has on its finances. Budget variance refers to comparing the actual costs required for the project and the amount allocated, thus indicating if they either need to adjust their project scope or if they require additional funding. This minimizes the chances of project delays as resource allocation such as adequate funds, is optimized to meet their construction project demands.

sufficiency of funding

Track project status against any project baseline

By using EVM methodologies, a construction project manager can track the progression and performance of a project against a selected project baseline. EVM provides the project managers and their team members with data on variances between the actual costs against the planned budget. With this information, project managers are then able to take corrective measures to address the gap between the actual and the expected baseline for the project.

Track project status

Provide clients and communities with better outcomes

The use of EVM provides improved outcomes to clients and communities. They ensure that projects are completed to fit their specifications. When integrated with stakeholder requirements in the project plan, EVM assists project managers in achieving the right objectives of the project to meet the needs of the client and the community. This leads to enhanced project performance and enhanced satisfaction both from the clients and communities.

Cost management

Leverage EVM in project management with Compass Consult

Project teams often aim to deliver optimized project outcomes, meet set deadlines, and stay within budget. However, they often fall short of these expectations.

Compass Consult is here to help you navigate these hurdles. Our team of experienced professionals specializes in teaching project teams how to leverage EVM. We also offer comprehensive support for the implementation of Primavera P6 project management software, provide expert consultations, and conduct training sessions.

Contact Compass Consult today to leverage our expertise in earned value management systems and enhance your project management capabilities.

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How does EVM compare to other project management methodologies?

EVM provides a more quantitative approach to project performance compared to traditional methods that rely heavily on experience and intuition.

Who typically uses EVM when it comes to project management?

EVM is typically used by project managers and their team members. That said, other stakeholders like project sponsors, clients, and control specialists can also benefit from EVM reports and insights.

How can I get started with implementing EVM in project management?

Here is a step-by-step process for how you can get started with implementing EVM into your construction projects:

  • Step 1: Learn the basic concepts and calculations.
  • Step 2: Select the appropriate software that suits your project needs.
  • Step 3: Develop a project baseline
  • Step 4: Gather accurate data
  • Step 5: Analyze and interpret data
  • Step 6: Implement corrective actions.

Eager to explore more about the benefits of leveraging EVM in construction projects?  Contact Compass Consult today

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