“What the heck happened?” is a common question that is asked at the end of many projects. In my career, I can’t even count the number of times where I, a colleague, or someone on my staff found ourselves wondering this. After all, we all felt that we were tracking our job well, managing risk, and addressing all of the projects’ challenges. Yet somehow in the last few weeks, the project went grossly over budget.
Historically, project managers track their projects by evaluating budget against percent complete and burn rate. For example, if the budget was $200,000, the project was 50% complete and the cost burn was $100,000, you would naturally assume you are on target – right? That may not be the case.
Through the implementation of Earned Value Management (EVM) at our ad agency, we have been able to evaluate these projects more holistically, and we are able to see more than meets the eye when it comes to our projects’ overall performance.
How, you ask? Let me explain.
What Is EVM?
Simply put, EVM is a systematic and objective project management technique used to evaluate timelines and implement cost controls. EVM isn’t used often, because it’s seen as an extremely complicated and overwhelming process. In the past, I tended to see it that way and had simply considered EVM to be a difficult set of formulas that I needed to know in order to pass the Project Management Professional (PMP) certification exam. Recently, it resurfaced as a robust reporting feature within Microsoft Project that would be incredibly beneficial for our digital advertising team.
Promoting up-front project planning, increasing project accountability, and being able to anticipate project problems early on are just a few of EVM’s many benefits. The thought of not having stressed-out project teams and upset clients really piqued my interest. So, we started to talk about how we could implement this technique.
How to Implement EVM
The Standish Group has found that 46% of IT projects come in over budget and overdue while 28% fail altogether. Knowing this, companies have invested in teams and tools that help ensure project success. Our project management team already utilized Microsoft Project for our high-level tasks, hours and costs. The Ghant, task and task usage views that come standard to Microsoft Project seem to be the most popular, but what many don’t know is that a custom EVM view can be created with the standard EVM calculation columns included. This type of project tracking works wonders for larger scale and/or highly-complex initiatives, which is why it’s ideal for website design, website development and online advertising environments.
In its simplest form, it allows companies and their clients to evaluate project budgets from both a planned and earned value perspective. That is to say, it allows us to determine if the project is making money as expected and if any cost overruns are occurring. EVM even gives insight into where the initiative will land in regard to schedule and cost at the end of the project.
Sounds Easy, Right?
Here are some things for you to consider, including the good, the bad and the ugly aspects that my team experiences daily.
The best part of running EVM is that it gives you timely data which you can actually react to. It allows you to course correct early enough in the project to make positive impacts on your project performance and costs. Overall, we found the EVM view in Microsoft Project was easy to generate, the EVM formulas are already baked in, and the EVM view provides real working information about your project.
In order to effectively run EVM, a project manager creates the schedule with all costs associated, sets a baseline, and enters in actual hours by task and resource weekly—easy. Not quite.
First, Microsoft Project can and will automatically make adjustments to ‘Work’ when you are entering in the ‘Actual’ hours. The ‘Work’ column is your baseline hours. So it’s basically adjusting your hours budgeted without you wanting it to change. It takes lots of patience and perseverance to ensure accuracy along the way.
Secondly, EVM formulas are complicated and not necessarily intuitive. It takes a lot of practice and repetition to understand what “good” numbers are and what are not when it comes to reading your EVM results holistically. Thirdly, it is extremely difficult to enter actual hours to exact tasks, unless your company’s time tracking system manages your employee’s time to that level. If your company does have a time-tracking system, how good is everyone at entering their hours on a weekly basis? Are those hours in on time for you to run your EVM? If your co-workers struggle with getting their time in, you will struggle getting your EVM completed.
As we started implementing EVM and began collecting this valuable information, we quickly realized we were unclear as to how we would share this information. The data that was coming to fruition brought up conversations both internally and with our clients that a typical digital agency is not used to having. We found ourselves asking each other, “How do we communicate this information within our organization?” and even worse, “How do we talk about it with our clients?”, especially if the results are not in our favor. We decided we would give it a try. If a project began to have negative results, the team immediately reviewed the project to determine where it went off track and collectively decided how to bring it back on track.
As difficult as it is to implement and rollout, I have personally seen EVM in action on a recent CMS project. The initiative was challenged from the beginning by constant scope changes and content management issues. The project manager implemented EVM early. As a result, the team was able to control costs from the beginning to keep the negative impact at a minimum. The EVM data that was provided allowed the team to discuss proactive solutions along the way in order to minimize costs and associated timeline slippages. These corrective actions gave leadership as well as their clients confidence that the project was being monitored and controlled properly.
As digital marketing agencies continue to wonder why their projects are underperforming, and as they also continue to evaluate which scheduling and/or reporting tool to use, project managers are indeed making headway for their clients every day. I am thrilled with the efforts put forth and the accomplishments we have made on this subject at my Detroit digital agency. It’s a first for me and for the others on my team and at our company. I am pleased to say that by implementing EVM, Detroit agencies like Embark Digital are able to provide more robust risk management through planning ahead, thus providing team accountability and catching project issues early on.