APPENDIX B
EVOLUTION OF PMI'S PRACTICE STANDARD FOR EARNED VALUE MANAGEMENT
B.1 Initial Development: 2001–2005
Recognizing the need for global guidance on earned value management (EVM) beyond that included in A Guide to the Project Management Body of Knowledge (PMBOK® Guide), the Project Management Institute (PMI) initiated its second practice standard project in 2001 and invited the PMI College of Performance Management (PMI-CPM) to assume a leadership role. PMI-CPM accepted the invitation and agreed to contribute both knowledge and financial resources to help make the project a success. It was agreed that the PMI-CPM Vice President of Professional Development, Dr. John Singley, PMP, would serve as Project Manager of PMI's Practice Standard for Earned Value Management.
During the first year of the project, a project charter was developed, team members were recruited, and a preliminary draft of the Practice Standard for Earned Value Management was prepared. The project team was comprised of about 30 PMI members, most of whom were PMI-CPM members. During that year, the team held several meetings and working sessions, and by the end of the first 6 months, the team had developed an outline of the practice standard. Small writing teams were formed and given the charge of preparing the first draft. By the end of the year, a preliminary draft of the practice standard was distributed to the entire team for review. A team meeting was held to gather and discuss recommendations.
Although the outline for the practice standard aligned it with the PMBOK ® Guide and focused its content on those essentials of earned value that contribute to good project management, it was the opinion of most team members reviewing the preliminary draft that it went beyond the guidance provided by the outline and lacked the desired focus on essentials. The President of PMI-CPM, Wayne Abba, who agreed with the team's assessment of the preliminary draft, presented a compelling recommendation to return to the intent of the outline and align the practice standard with the PMBOK ® Guide. The assembled team members agreed with this objective, but expressed varying opinions about the manner in which to achieve Mr. Abba's recommendation.
The project manager decided on a course of action: The two writing teams were asked to finish any remaining work on their drafts (without making any major revisions) and submit them to the project manager for editing. During the summer and fall of 2002, with the help of an independent, professional editor, the project team attempted to reshape and revise the preliminary draft of the practice standard. The results of this effort were not satisfactory; the edited practice standard appeared to mimic the structure and content of the PMBOK ® Guide. It became apparent that a different approach was required.
At about this same time, the practice standard project team began to grow significantly, adding many new members who wanted to contribute to the development of the practice standard. (By February 2003, the end of the second year of the project, the team had grown to about 80 members; during the course of the project's third year, team membership peaked to about 145 individuals.) On the recommendation of the PMI Standards Manager, Mr. Steve Fahrenkrog, the project manager of the practice standard prepared an article for the March 2003 issue of PMI Today. This article reaffirmed PMI's vision for the practice standard and renewed the project team's commitment to realizing this vision.
To meet the challenge of writing a standard containing universal guidance for a global community of project management practitioners, a new and different approach was adopted: the project manager hired a ghost writer to prepare a series of drafts, which the members on the project team would each review. Capitalizing on the expert knowledge captured in the earlier drafts of the practice standard, in June of 2003, the writer composed a rough draft and distributed it to the project team for review. Comments and recommendations were collected from the project team's members. The writer revised the draft practice standard to reflect the accepted recommendations and, in August 2003, the project manager distributed this revised draft to the project team for review. This process was repeated four times. The third draft, completed in October 2003, was submitted to the PMI standards program team.
The third draft of the practice standard was revised by the writer to incorporate recommendations of the PMI standards program team, as well as recommendations from project team (which had expanded to include about 145 members). Throughout the entire review/revise process, a concerted effort was made to align with the vision for the practice standard and to focus on providing universal guidance for a global audience. In early January 2004, the project manager submitted the exposure draft to PMI, In February 2004, PMI posted the exposure draft of the practice standard on its website for a 60-day period of review by the project management community. PMI invited reviewers to submit their recommendations.
The exposure process, which included special invitations to independent EVM experts (who had not participated in the standard development process), yielded 280 recommendations. Four small project teams were formed to help with the process of adjudicating the recommendations. During the summer and fall of 2004, the standard's project manager and writer used the accepted recommendations to revise the exposure draft into the final draft of the practice standard. In October 2004, the project manager submitted the final draft to PMI for publication.
From the beginning of the project to its end, PMI recognized the challenge of developing the Practice Standard for Earned Value Management to provide project management practitioners with a better focus on the essentials of earned value management that apply to most projects most of the time. The best-known practice of earned value management matured over a period of 30 years in the United States and allied countries through its application on large defense systems contracts. Most of the literature on earned value management and most of its professionally active community is grounded in that experience. Guidance for the practice of earned value management, written and followed by that community, is comprehensive project management guidance with earned value seamlessly incorporated. PMI's challenge in writing this practice standard has been to transcend that experience, extract the essence of earned value, and align it with the PMBOK ® Guide, so that it applies to most projects most of the time.
B.2 Second Edition: 2009–2011
In January of 2010, the Practice Standard for Earned Value Management (PS-EVM) update project committee received its charter from the PMI Standards Membership Advisory Group (MAG) and began to update the first edition of the PS-EVM published by PMI. The committee assembled for the second edition is comprised of individuals from five different countries and an even broader variety of backgrounds. The initial meeting was in March of 2010 where the committee examined the existing practice standard as well as comments and recommendations received during the previous review and publication cycles. During this meeting, the committee decided to take a different approach to the structure of the practice standard.
The first edition of the PS-EVM focused on providing a succinct overview. It accomplished that goal in four chapters: (1) An Introduction, (2) Basic Elements, (3) Performance Analysis and Forecasting, and (4) Guidance for the Use of Key Practices. For the Second Edition, the committee decided to move to a “process” approach to EVM. Rather than provide an overview of the subject, it was decided to address the developmental flow of EVM on a project. Much like the structure of the PMBOK ® Guide itself, the role of EVM dramatically changes during the project life cycle. It was felt that the reader should understand that project data (EVM data) is the result of careful planning, organization, scheduling, management, and even compromise. Thus, in the current structure, the analysis of project data is not introduced until Chapter 9 (the second to the last chapter).
The committee had some overarching goals when developing the material of this standard. First, it was imperative that we did not create another standard similar to that used on U.S. Government contracts. Our intent was to create a standard for use by a much broader audience, both within and outside of the United States.
One topic that received a great amount of discussion during the second edition standard development was “reserves.” Reserves were not addressed in the previous edition of the standard and we felt it was important to address the subject. There was a great deal of discussion and debate among the committee members on how to define reserves. The committee finally decided to recognize two distinct types of reserves: management reserve and contingency reserve. This distinction represents a foreign concept to many in the U.S., but is aligned with the PMBOK ® Guide and the global audience is very comfortable with how the ideas are presented.
Another topic that required discussion was the treatment of scheduling and, specifically, earned schedule. Chapter 5 on Schedule Work is a relatively light treatment of the incredibly complex and important topic of scheduling. This is by design, as PMI's Practice Standard for Scheduling is a well written document which was in the process of being updated at the same time as the Practice Standard for Earned Value Management. The EVM committee worked closely with the project scheduling committee to ensure consistency in both practice standards.
In the previous edition, the concept of earned schedule was treated as “an emerging EVM practice,” and an example was developed in Chapter 3 to explain the basic metrics and concepts. In the past five years this “emerging practice” has had an interesting path of emergence. With some exceptions, the concept was not adapted on U.S. Government contracts. However, when the content and structure of the second edition of this practice standard was presented at PMI's Global Congress in Ireland in 2011, and at the European EVA Conference in Ghent Belgium, it was evident that earned schedule has gained strong support outside of the United States. Subject matter expert reviewers of the PS-EVM Second Edition from the U.S. insisted on exclusion of the topic with the same intensity that non-U.S. reviewers insisted on inclusion. A compromise was reached by giving a more complete coverage of earned schedule, but placing that coverage into an appendix where topics that are not necessarily core to the subject matter of practice standards are presented.
The topics for inclusion in the appendices of the Practice Standard for Earned Value Management—Second Edition were carefully chosen and reviewed by the core committee members. Appendices are treated differently by the PMI review process in that they are not released for consensus body review like the chapters, thus, the committee acted as the primary reviewers of this material. These appendices add valuable understanding to the practice of EVM. As stated previously, the practice standard was written to explain how EVM is used as a best practice on most projects most of the time. This goal is covered well in the ten chapters. In addition to Appendix D on Schedule Analysis Using EVM Data the core committee decided that the subject areas of integrating Earned Value with risk management (Appendix E), Deployment of EVM Systems (Appendix F), and EVM Pitfalls and Recommendations (Appendix G) would provide useful material for EVM practitioners around the world.
The goal was to provide the global community with a readable document that (1) explains the basics of EVM clearly and concisely for new practitioners and (2) provides a reliable extension for those who practice project management and those who want a more complete coverage of EVM than given in the PMBOK ® Guide. The Practice Standard for Earned Value Management—Second Edition is intended to represent the basis for enhancing the practice of EVM by the global earned value management community as well as encouraging its increased adoption by project management practitioners and organizations globally.