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The strangest of bedfellows: earned value and portfolio management?

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In the summer, I presented on the overlap between the organisational needs of portfolio and earned value (EV) management at EVA16.

My points were:

  • We can be parochial setting up EV procedures by project, but if the organisation is coordinated to use common tools, data sources and reports,  the EV process and analysis should be more reliable and ‘cheaper’. However – while some organisations have taken the plunge to set up well, many do not buy into the benefit for the cost / difficulty and shun the techniques.
  • The proposition I made was that for effective portfolio management, we need good data from common tools and processes, with roles to provide scrutiny / oversight, thought leadership, technical support and governance - to ensure organisations operate the right way.

The core elements of earned value and portfolio management are nearly the same. If we attract senior level sponsorship for ‘proper’ portfolio management, can we hook in EVA as an added bonus for little extra effort?

Can better controls at the project level and better steering at the business level overall, make a better case for each, or should these strange bedfellows never be put together?


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  1. David Dunning
    David Dunning 17 January 2012, 04:29 PM

    All,my point was that some of the the fundamentals for both effective portfolio management and earned value management are the same - namely some kind of corporate database, common standards / processes, support / governance regime and reporting tools.If you see the benefits of one discipline, perhaps collaborating with supporters of the other will enable a better business case to be made for implementing both - rather than have to cope with neither?Regards,David 

  2. David Shannon
    David Shannon 17 January 2012, 02:48 PM

    I agree with much of what both Patrick and Carol have said.  Governance of project management is primarily the responsibiility of the Board or equivalent, see Priniple No. 1 in Directing Change.  However, most of this responsibility is delegated for action.   EV is a valuable tool, with limits to its applicability.  It can be used in governance, as can Risk Management, Benefit Management, Programme management, Portfolio Management, People Management and all other parts of project management.  Indeed good governance determines the importance of each such part of our discipline to the organisation, its priority and its application, see Question PM2 in the updated version of Directing Change.Good to see Carol, one of our Governance SIG members, is active still on this topic.  It would be good to see Patrick participating in our Governance SIG also, come on-board!   PS  The link at the bottom of Patrick's blog did not work.  I was twice rerouted back to the main APM site.

  3. Patrick Weaver
    Patrick Weaver 16 January 2012, 05:46 AM

    Im not sure quite where David is coming from. Portfolio Management is a part of the overall corporate governance processes.  Corporate governance boards certainly needs to know accurately how their projects and programs that are in progress are actually going and EV is one useful technique that can provide valuable data to assist in this but all EV is, is a performance management system. Governance is a process that is totally set and exclusively the responsibility of the governing board, Department Secretary or their equivalents the very top layer of the management cake.   One element of governance that is devolved to the portfolio management team is choosing which projects and programs to start, which should continue and which should be rejected or terminated. These decisions are based primarily of achieving the organisations long, medium and short term strategy constrained by the available resources and capabilities the organisation has. For more on Portfolio Management see: If the organisation is not focused on this aspect of governance (and many clearly are not preferring to simply wast their organisations resources and assets based on unscientific whims), adding some technical mumbo jumbo like EV into the discussion is likely to be totally counter productive.  If the organisation is focused on efficient governance then EV is likely to be in play anyway (or at least in consideration), as a clearly demonstrated best practice. For more on Corporate Governance see: . The challenge is making the top level Boards and executive committees interested in proactively governing their projects and programs. APM has a number of excellent publications aimed at this level of the organisation, but it is impossible to implement culture change from below.  Until the organisations owners and regulatory authorities start sacking the odd Dept. Secretary for failing to have implemented effective governance procedures and/or the regulatory authorities fine a few more corporations for failing to disclose project issues at a time they should have been known if effective governance system were in place not much is likely to happen.  The processes for PPP Governance are fairly well defined, see:, they are simply not being well used in far too many organisations in both the public and private sector. Without the right culture in place first asking the right questions complex processes are more of a hindrance than help. The overall subject of governance has had quite a bit of airplay recently, for more posts on the topic see:  We certainly need to keep the pressure on the top layers of executive management to lift their game but to be listened to, the options need to start easy and effective with short term wins (the same as any change initiative), only after the value of governance has been accepted can you even start to think about more sophisticated systems like EV.

  4. Carol Long
    Carol Long 13 January 2012, 05:29 PM

    At risk of being provocative to EVA/EVM fans: Completed products do not deliver value only allow us to be definitive about the costs expended in their delivery. Even for most saleable and tangible, products are only costs until they are moved to a saleable position or where they can realise benefits. In the worst case, part finished goods are sometimes worth less than the raw material that made them -  when measured the value should be negative but EVM sees it as all positive. That makes Earned Value a misnomer. That confusion being introduced at portfolio level where the business value of proposed projects and benefits realised is discussed could actually make decision making harder for senior management (especially if the EVA expert insists that part delivery adds value and doesn't see the commercial reality).However, there are advantages in being able to have a consistent measure of project progress and product completeness. Having a consistent way to monitor and compare performance indicators for the PMO, quality team or anyone else who needs it makes a lot of sense. As this is relatively easy to understand and can be adapted (there is the full blooded method and the "lite" approximations) for all sorts of projects where product based planning takes place, it would provide a level playing field between different types of project and different content or context.There is one condition for the use of EVA/EVM that we must not overlook. It is that it is based on the assumption that there is a waterfall (plan everything first) approach. Some agile methods are more concerned with the delivery of business requirements than what the initial plan says is needed or evolve with regular refactoring of plans and products as the context or risk is better understood with time. That means there is much more uncertainty in the "value" of a work package than EVM would suggest. (So, EVM/EVA may need to measure something other than product completeness or activities done.)I would also caution against one of the approaches in many EVM manuals (including the APM's own EVM Guidelines): the focus on activity planning (based on OBS and WBS identified work packages) rather than product based planning methods (like PRINCE2). Activity is not so easily established to be complete. Product based planning could give EVM an advantage; a product is either complete and quality approved, or not. However, that can open the can of worms that has been quoted as "everything is 95% complete for approximately 80% of its elapsed development time". (I wish I knew who said that first!)To make it clear, I'm neither a committed follower of EVM or an EVM hater (and I have used it). I'm not entirely convinced with David's proposition but it does offer a solution to some problems in monitoring progress or comparing performance consistently. It might work for some organisations but be careful about the methods in use and the language used and remember that a big part of portfolio management happens before there is any work being done or detailed plans to measure against.