The Earned Value Mistake

In project management, an earned value calculation focuses on the expected cost of a task to calculate how valuable the task is. If a task will take three people two days and each person-day is worth $500, then the value of the task is set as $3000. (3 people x 2 days x $500 = $3000) As the task is completed, progress is tracked by assigning an ‘earned value’ to the completed work. If the work is exactly half-way completed, the earned value is $1500. 

There are two mistakes in calculating the earned-value based on the cost of what the project will cost to complete: 

  1. This earned value reflects the value to the people completing the project, not the stakeholders. The stakeholders may not find the results valuable at all, yet they have been assigned a value in the project plan. 
  2. The earned-value calculation gives the unintended impression that doing more work increases the value. Even though exceeding the estimated value for a task negatively impacts a project, the people completing the work feel that if two days of work is valuable, then three days of action must be even more valuable. 

The Better (and maybe only) Way to Calculate Earned Value

Value can only be calculated after the project is complete. This is why quickly putting a working solution into the hands of the end-users is so essential. The earlier that the users benefit from the project solution, the quicker the solution proves to ‘earn’ it’s value. 

In projects, a solution is only valuable if it is proving useful to the end-users.