How High-Performing Projects Balance Performance and Earned Value Management System Compliance
When you look off into the distance—toward the mountain-top goal of having a top-notch Earned Value Management System (EVMS)—what is the most important element of the equation: compliance, performance–or a mix of both?
In case you’re wondering, “compliance” relates to whether the project is adhering to EVM guidelines, and performance relates to whether it is delivering on scope, schedule, and cost objectives.
Some experts say, “Compliance always comes first!” At AzTech, we agree that compliance is key, but we also add a twist with an approach we call “Performance-Driven Compliance.” This strategy recognizes that both compliance and performance are equally essential for successful project management.
In this brief article, we’d like to make the case for Performance-Driven Compliance, while opening the door for further discussion, conversation, and debate.
The Challenge of Focusing Solely on Compliance
When EVMS surveillance focuses solely on compliance, there’s a risk of using compliance simply for compliance’s sake. This can negatively impact EVM’s ability to ensure projects are performing well—in other words, that they are hitting their technical, schedule, and cost targets.
The challenge for both government and contractor stakeholders (who take their cues from government agencies) lies in deciding which projects need focus from external and internal EVMS surveillance teams. Without understanding which compliance problems produce the biggest performance setbacks, it is difficult to know which compliance issues are the most important.
The Value of a Performance-Driven Earned Value Management System?
Experience tells us that Performance-Driven Compliance is a proven way to follow the project’s story and focus our attention on the most important issues first. Our vision of Performance-Driven EVM does not ignore the importance of compliance. We just keep our eyes on performance metrics at the same time. Performance metrics help us use the rules, structures, and magnifying glass of compliance more effectively.
For example, consider a portfolio of 10 projects or a project with 10 control accounts. Why audit the project that is underrun and ahead of schedule–or at all? It makes more sense to prioritize compliance concerns in poorly performing projects. In many cases, resolving these issues first will have the greatest positive impact.
In contrast, giving every project or control account equal time and energy—to investigate data and interview Control Account Managers—results in a scattershot approach. This approach relies too heavily on luck and laborious investigative work to identify the true problem areas. It leaves surveillance teams tired, burned out, and worried that they may have missed the most important issues, concerns, and risks.
How to Achieve Performance-Driven EVM
By keeping your fingers on the pulse of performance, you can immediately identify the poorly performing projects within a given portfolio of projects or the control accounts within a project. Then, you can look for compliance issues in those poorly performing areas before looking at other areas. If a project is overrun and has a compliance problem—this project should take precedence over others that only have compliance issues.
Ultimately, the simplest way to achieve a Performance-Driven Earned Value Management system is to rank projects based on their performance risks. At AzTech, we do this by grouping projects into these four tried and true quadrants:
- Ahead of schedule and underrun
- Ahead of schedule and overrun
- Behind schedule and underrun
- Behind schedule and overrun
The twist is that we then look at performance metrics that help spot the most interesting story behind the data. Grouping projects into these performance risk quadrants and using targeted metrics within each helps you recognize which core compliance issues to focus on while boosting the overall efficiency and success of the EVM process.
A Performance-Driven Pitfall to Avoid
“Poor performance” doesn’t always mean that a project is doing badly. For instance, if you are implementing new technology or designing something that has never been built before, delays and overruns are more likely–even expected. In these cases, being late and overrun shouldn’t automatically trigger prioritization.
In short, don’t rely on a one-size-fits-all approach to performance metrics. Instead, use performance metrics as a guiding light to complement your long-standing EVM experience, sensitivity, and common sense.
Used wisely, Performance-Driven Compliance is a powerful tool for delivering what stakeholders want most from an effective EVMS: avoiding unpleasant surprises and having enough time to react when something goes wrong. While keeping track of essential compliance concerns, it leverages performance metrics, performance-based prioritization, and more focused action to help stakeholders and managers (1) get better data, (2) make better and earlier decisions, (3) understand and explain variances, and (4) avoid those ugly surprises that nobody wants. So, do performance metrics play a role in your EVM strategy? Does your EVM strategy do better when you keep a finger on the pulse of performance? What does a Performance-Driven Earned Value Management system look like for you? We would love to hear your thoughts.