This series of papers has been developed from our work in upgrading TenStep's PortfolioStep™. For more information on TenStep's internal consulting methodology, please visit http://

Published here February, 2008.

PART 5 | Tips on Step 8 - Plan and Execute the Work (Activation)
Managing the Portfolio | Tips on Step 9 - Report on Portfolio Status (Reporting & Review) 
Measuring the Success of Projects, Within Tolerances
Portfolio Variances | The Earned Value Technique | PART 7

The Earned Value Technique

From a project portfolio perspective, "value" is derived from the product of the project, something that can only be realized once the project is complete and the product delivered. Hence, if a project gets canceled 90% through to completion, the business value might well be zero. The Basic Concepts of Earned Value are quite different.

Earned Value is a technique for measuring project progress, not product value. It looks at "value earned" relative to what was expected according to the project's budget and schedule. So, you are earning the value of the project on an incremental scale as the project is being executed. When 50% of the work is completed, you can say that 50% of the value of the project has been realized as well. If, at this point, you have only spent 50% of your budget, then you are right on target.

Earned Value metrics were established to remove the guesswork from where you are in relation to a baseline. In theory, this concept is very elegant and interesting. Using it allows a project manager to know precisely how far along they are, how much work is remaining, what the expected cost and end date will be, and all sorts of other interesting information.

Unfortunately, the necessary measurements of project status in terms of cost and schedule for a project in "mid flight" are not easily obtained without meticulous care - and perhaps even then only by making estimates of work in progress. Further, remaining work still has to be estimated, even though better productivity factors may have been determined from recent work. Still, there is a lot of time-consuming estimating involved. Moreover, this is particularly difficult in IT work where intellectual work is involved that is difficult to quantify.

Consequently, all of this estimating tends to undermine the claim of removing the "guesswork" out of status reporting. This is probably why the technique is not used on projects generally, unless it is mandated by contract or government fiat.

Coming Next

In PART 7 we will provide tips on Step 10.

Portfolio Variances  Portfolio Variances

Home | Issacons | PM Glossary | Papers & Books | Max's Musings
Guest Articles | Contact Info | Search My Site | Site Map | Top of Page