The Origins + History of Earned Value Management

The publication of The Origins and History of Earned Value Management in the August edition of PM World Journal (Vol. XI, Issue VIII) marks the end (almost) of a long journey.

This paper looks at the creation of earned value management (EVM) in the 1960s and its development and evolution through to the 2020s. However, the concept of EVM did not suddenly appear, the foundations of EVM were laid by previous generations, this paper demonstrates EVM is a synthesis of ideas and concepts some of which are hundreds of years old. The four precursors to EVM are the use of computers to calculate time schedules (CPM and PERT), sophisticated engineering cost controls, the use of breakdown structures to aid management, and the emergence of the concept of modern project management.   

The use of computers to analyze project schedules in the late 1950s brought science to the management of time. There was a strong desire in the US Government for similar levels of sophistication to be applied to cost management on defense projects. This was the catalyst for the development of EVM in the early 1960s. The development of scheduling is traced in the papers listed in The History of Scheduling.

The discipline of engineering cost management was well established in the early part of the 20th century and its roots are much older. The limitation was the process of cost control using paper based manual systems tended to be retrospective. The development of cost engineering is traced in The History Cost Controls.  

The idea of using breakdown structures to define, and then control, work also has a very long history. The Work Breakdown Structure (WBS) is at the heart of EVM. The development of the WBS is described in The Origin of Work Breakdown Structures (WBS)

Finally, a project controls system needs a defined project to control. The concept of modern project management is relatively new, although again its roots are very deep. Its development is traced in Origins, and trends in, modern project management

When these different strands of development were brought together in the USA in the 1960s, EVM emerged. Tracing each of the histories outlined above has been a fascinating journey.  The papers and many of the source materials are freely available to download from the history section of the Mosaic website: https://mosaicprojects.com.au/PMKI-ZSY.php.

The problem with studying history is every time you look at something, there’s other interesting facets to analyze and research. I have identified two areas where I’m likely to go next (but not for a few months):
–  Documenting the early mainframe computer software that was used for CPM, PERT and EVM.
–  In March 2023 Earned Schedule will be 20 years old, its development and the challenges will make an interesting story.

In the meantime download and enjoy The Origins and History of Earned Value Management: https://mosaicprojects.com.au/PDF_Papers/P207_EVM_History.pdf

And…. If you find any errors, or have additional information let me know. I routinely update these papers as new information comes to light. 

Everything old is new again – especially when there is a $ to be made………..

Following on from a post by Raphael M Dua (Raf) in LinkedIn, the number of people posting about their ‘new’ way to solve project scheduling and controls issues seems to be expanding.  The problem is most of their claims are false and misleading.

Some of the most frequent claims are around lean construction management the advocates claim they can solve your project scheduling problems (for a fee) because:

  • Lean construction management has introduced the concept of using input from the first line supervisors to plan the work. While this is a really good idea it is far from ‘new’….  Go back to 2009 and the concept of ‘last planner’ was floating around (and making the same claims), see The Last Planner and other Old Ideas.  Go back even further to the 1970s and major construction companies such as Bechtel and Fluor were applying schedule levels. The Level 5 schedules were short-term ‘look-ahead’ schedules developed every couple of weeks that considered in detail the work for the next month.  These schedules were developed by the foremen and subcontractors responsible for the work, based on the resources available on site to do the work. See more on Schedule Levels.
  • Lean construction management considers resource availability and CPM cannot analyze resources. This is a blatant lie. Every CPM scheduling tool from Microsoft Project to Primavera has the capability to analyze resource. Most have multiple options for scheduling activities against resource availabilities. The image is from a Primavera (P6) training course.  The simple fact is CPM scheduling tools have included resource levelling since the mainframe scheduling tools of the early 1960s.

I’m not sure if the proponents of lean construction making these claims are simply ignorant of the existing capabilities, or making dishonest claims for commercial gain.  But the problems they are claiming to solve are significant and won’t be helped by this type of false narrative.  The core issues appear to be:

  1. A large number of CPM schedules don’t include resources and the projects fail (the USA GAO is addressing this by demanding a resource loaded schedule on all government projects above a defined size). The root causes are untrained schedulers (being taught how to run software is not the same as teaching people how to be effective schedulers….) and the contractor’s management being unwilling to invest in developing the skills and allocate the time and resources needed to develop a comprehensive resource loaded schedule.
     
  2. The inability of main/head contractors to rely on subcontractors supplying adequate levels of resource at the time needed. This is a price and supply chain issues that has been around for decades – see the Latham report from 1994.
    .
  3. The lack of improvement in resource management techniques for the last 40+ years – there are better options than CPM scheduling, see Resource Optimization at: https://mosaicprojects.com.au/PMKI-SCH-013.php#Process5

Until people actually address these core issues spending money on another fad solution won’t change anything.

I cannot do much to solve the cultural issues outlined above, but my Book Easy CPM goes a long way towards providing the knowledge framework needed to develop a skilled scheduler after they have learned to drive a scheduling tool: https://mosaicprojects.com.au/shop-easy-cpm.php   

Finding Information – The art of Indexing

We now live in an age where Google search is ubiquitous, and the ‘find’ function in Word and PDF documents is almost instantaneous, but this was not always the case. This article traces the development of indexing from its start some 800 years ago in the 13th century, through to modern times as well as and providing links to a number of specialized search engines that are free to use.

Download Finding Information – The art of Indexing: https://mosaicprojects.com.au/Mag_Articles/AA023_Finding_Information-Indexing.pdf   

Critical Path Scheduling – 4 Things People Don’t Get

Over the last few weeks, I’ve seen more rubbish published about CPM from supposed experts than usual.  The false assertions range from statement claiming CPM does not include resource analysis to ones confusing basic resource scheduling processes.

So here are a few supported facts:

  1. The Critical Path Method (CPM), and PERT (Program Evaluation and Review Technique) both started out as ‘activity-on-arrow’ networks in 1957. The Precedence Diagramming Method (PDM) uses an activity-on-node’ notation, and was published in 1962 as a manual technique but was quickly applied to both PERT and CPM networks by the computer companies developing CPM and PERT software (by 1965 everything had merged into ‘all encompassing’ software packages). See: https://mosaicprojects.com.au/PMKI-ZSY-030.php
  2. The two fundamental differences between CPM and PERT are:
    1. CPM uses a single deterministic duration estimate, PERT uses three duration estimates and is used to assess the probability of achieving a milestone.
    2. CPM was built to resolve resourcing issues on plant shutdowns for Du Pont, PERT/Time did not include resources until the introduction of PERT/Cost in 1961. PERT/Cost used a single resource estimate. See: https://mosaicprojects.com.au/PMKI-ZSY-020.php#EVM
  3. Resource analysis uses time analysis calculations as a basis for its resource calculations:
    1. Aggregation: sums the resource requirements per day based on time analysis dates (usually early start)
    2. Smoothing: levels resource demand by using the available float. Some resource overloads will be reduced or eliminated by using float to shift non-critical activities back in time. The project end date and other constraints do not change, which means in some situations resource overloading may still occur.
    3. Leveling: delays critical tasks and the project completion to avoid overloading. See:
      https://mosaicprojects.com.au/PMKI-SCH-013.php#Process5

The ‘lean construction’ salesmen promoting the lie CPM does not include resources are simply wrong. What is true are a lot of schedulers develop schedules without resources, resource balancing in a CPM schedule is difficult, and there are now better options for resource optimization available in some tools. But many contracts and the USA GAO require resource loaded schedules.  Similarly, there are a number of ‘experts’ confusing resource smoothing and levelling (there seems to be quite a few). To correct their error, all they need to do is simply read a standard – the PMBOK® Guide (6th Ed.) is a good starting point and is consistent with all other credible authorities for the last 50+ years.

  • The purpose of a CPM schedule is also confused by many experts. Every schedule is a simple model of how work on a project may unfold in the future. This means the schedule cannot be completely accurate:
    • The schedule is a simplified representation, it contains a few hundred, or thousand activities that summarize the millions of actions that the project team will actually do to complete the work.
    • Every duration and resource estimate is an assessment of what may happen in the future. The unknown is the degree of error in each estimate, and overall.
    • The project team may, or may not, follow the planned sequence of work.

So, what’s the point of developing a schedule?  As Prof. George Box pointed out in “Time Series Analysis – Forecasting and Control” (page 285): “All models are approximations, and no model form can ever represent the truth absolutely. Given sufficient data, statistical tests can discredit models that could nevertheless be entirely adequate for the purpose at hand. Alternatively, tests can fail to indicate serious departures from assumptions because of small sample sizes or because these tests are insensitive to the types of discrepancies that occur. The best policy is to devise the most sensitive statistical procedures possible but be prepared to employ models that exhibit slight lack of fit. If diagnostic checks, which have been thoughtfully devised, are applied to a model fitted to a reasonably large body of data and fail to show serious discrepancies, then we should feel comfortable using that model.”  This and a number of similar quotes by him are often paraphrased as ‘All models are wrong, but some are useful’. A well-constructed CPM schedule can be extremely useful if it is used to:

  • Obtain agreement from the project team and resource suppliers on how the work will be done,
  • For assessing risk and identifying issues early,
  • Measuring performance against the plan and identifying variances,
  • Testing options to overcome negative variances and then obtaining buy-in to implement the recovery action.

But the CPM schedule will only be useful, if it is used by the project team to communicate, agree, and coordinate their work. The bigger the project, the more important this communication, agreement, and buy-in becomes. This is a dynamic, adaptive, agile, process. Focusing on what was thought to be a good idea last year embedded in a fossilized ‘contact program’ that does not change may keep claims consultants in a job, but it won’t help finish the project on time. If the schedule is not working on your project, it is a management and skills issue, changing to a different tool will not solve either of these factors.

One of my objectives in publishing Easy CPM was to make a low cost, easy-to-read resource available to schedulers who want to lift their skills – fixing management is a more interesting challenge. For more on Easy CPM see: https://mosaicprojects.com.au/shop-easy-cpm.php.

Finally, to answer the last question, borrowing from Group Captain Sir Douglas Bader: “Schedules are for the guidance of wise people and the obedience of fools!”  They provide insight, not control, and can be extremely useful if they are used!

The Planning Paradox – How much detail is too much?

Traditional views tend to favor a management approach built on the assumption that more detail is better – and to a point, this is undoubtedly correct. Insufficient detail in a plan of any type is a sure way to fail; ‘just do it’ at the overall project level does not help. But, finessing project plans to present useful information at the right level of detail is not easy – decisions have to be made!

Balancing the factors shown in this diagram helps make the right decision. As the risk environment increases, the project controls need to be more rigorous. The risk environment is influenced by the size or significance of the identified risks, and the overall degree of uncertainty associated with the work. As either (or both) of these factors increase, the controls systems need to be more rigorous.

The two factors that influence the degree of rigour in the controls system are the amount of detail included (granularity) and the frequency of the monitoring, reviewing and updating of the plans. But, as suggested above, too much detail will increase costs and reduce efficiency and effectiveness.

There’s no right answer to this paradox, our latest article The Planning Paradox – How much detail is too much? offers some useful guidelines to consider (download the article).

For more on Schedule Strategy, Planning, & Design, see: https://mosaicprojects.com.au/PMKI-SCH-011.php  

Are organization charts still useful?

Has ‘agile’ killed the organization chart?

Despite being a part of management for over 100 years, this article suggests the traditional organization chart (OBS) is of very limited value in a modern organization, and of less value in a project or program. There are less restrictive ways to document seniority, responsibility, pay-grade, etc.  
Download Are organization charts still useful?

Or click through to see more on the origins of this type of management chart: https://mosaicprojects.com.au/PMKI-ZSY-020.php#WBS

Do project plans predict or create the future?

Our latest article, Is Planning Predictive or Persuasive suggests that project controls staff and management place too much emphasis on attempting to develop the ‘perfect plans’ that accurately predicts future outcomes (a passive process that is doomed to failure), and not enough on using the planning and scheduling processes to proactively influence the direction of the project’s future work.

Download Is Planning Predictive or Persuasive from: https://mosaicprojects.com.au/Mag_Articles/AA019_Is_Planning_Predictive_or_Persuasive.pdf

CPI Stability Myth

As part of an on-going project to publish a history of EVM (target August 2022) I’m reviewing a lot of resources accumulated over a number of years. One of the first outputs is an update to our paper The CPI Stability Myth – this review and update draws on a number of new resources to show where the research is applicable, where the 20% stability myth does not apply.

Download from: https://mosaicprojects.com.au/Mag_Articles/N002_CPI_Stability_Myth.pdf

The First Dry Docks

The First Dry Docks is the final paper in a short series looking at the civil engineering aspects of transport projects prior to the industrial revolution: https://mosaicprojects.com.au/Mag_Articles/AA018_The_first_Dry-Docks.pdf  

Basin 6 after excavation. (Courtesy of Nanjing Municipal Museum)

Other papers in the series include:

The need to clean, repair and maintain ships has been a challenge from the time merchant and military vessels became too heavy to simply drag up a beach, to a position above the water. One of the early solutions to this challenge involved using the change in water level caused by the tide to assist the maintenance process, another was to increase the pulling power by using animals and simple machines. Other solutions involved creating basins that could be closed to the sea and drained; initially these were temporary structures intended for one-off use, then in 1495 the first reusable dry dock was constructed at Portsmouth Dockyard in the UK.

These and other linked papers can be downloaded from The evolution of construction management: https://mosaicprojects.com.au/PMKI-ZSY-005.php#Process2

The evolution of South Melbourne

As many people know I have an interest in the history and development of project, and construction, management: https://mosaicprojects.com.au/PMKI-ZSY.php  This includes an interest in the way the built environment is created, adapted, and evolves.

We have lived and worked in modern-day South Melbourne for the last 20+ years, so I thought it was time to focus on history closer to home…… using images of maps I’ve found over the years that show the development of our suburb during its relatively short existence.

The city of Melbourne was founded on the North bank of the Yarra River in 1835. Within 20 years, the road pattern for Emerald Hill had been established (now South Melbourne) and the rail lines to Port Melbourne and St. Kilda built.  This map shows the area in 1855:

By 1880 tram lines were under construction connecting through to the city:

The shops in the background are different but the buildings remain unchanged.

By 1890 most of the features recognizable today were in place (Albert Park is the location of the Melbourne F1 race each year):

Thirty years later in 1921 the tram network was established. Most of the tram lines are still operational and the railways have been converted to light rail and join the tram network in the city:

Fast forward to 2022 and apart from changes in the municipal boundaries, not much has changed:

And South Melbourne is still a great place to live and work.