Earned Value Management (EVM) is a project management technique that integrates scope, schedule, and cost to assess project performance and progress. It consists of three key metrics:

Planned Value (PV): The estimated value of the work planned to be done by a certain date. It is based on the project's cost and schedule baseline.

Actual Cost (AC): The total cost incurred for the actual work completed by a specific date.

Earned Value (EV): The value of the work performed up to a certain date. It represents what has been achieved in physical terms.

While these metrics provide a comprehensive view of project performance, there is a critical aspect often overlooked: the value delivered to the customer.

Earned Value to the Customer (EVc) is a project management metric that measures the value of the work delivered to the customer at any given point in time. Unlike traditional Earned Value (EV), which focuses on the internal progress of a project, EVc emphasizes the tangible and usable outputs that the customer receives.

Key Points of (EVc):

Customer-Centric Focus: EVc shifts the focus from internal project metrics to the actual value delivered to the customer, ensuring that the project outcomes align with the customer’s expectations and requirements.

Milestone-Based Measurement: EVc is typically assessed based on specific project milestones agreed upon by both the vendor and the customer. These milestones represent key deliverables or phases of the project that provide real value to the customer.

Tangible Deliverables: EVc considers only those aspects of the project that are complete and ready for the customer to use. This means partial completions or in-progress work are not counted unless they provide usable value to the customer.

Alignment with Customer Requirements: By tracking EVc, project managers can ensure that the project is not only progressing according to schedule and budget but is also meeting the customer’s needs and delivering the intended benefits.

Example Scenario

Imagine you are hired to write 10 test scripts for testing equipment purchased by a customer. Each script is priced at $10, and you are given a timeline of 20 hours (2 hours per script).

Project Details:

Each script is valued at $10.

The total project value is $100 (10 scripts x $10 each).

The timeline for completion is 20 hours (2 hours per script).

After 10 Hours of Work:

You have completed 50% of each script.

Traditional Metrics:

Planned Value (PV): $50 (based on the scheduled progress).

Actual Cost (AC): $50 (cost incurred).

Earned Value (EV): $50 (work completed).

However, Earned Value to the Customer (EVc) would be $0 at this point because none of the scripts are fully complete and ready for the customer to use. The customer derives value only when the scripts are fully functional and can be used to test their equipment.

Importance of EVc:

Enhanced Customer Satisfaction: By focusing on the value delivered to the customer, project managers can ensure that the project outcomes meet or exceed customer expectations.

Better Project Alignment: EVc helps in aligning project activities with customer priorities, ensuring that the work being done is directly contributing to customer value.

Improved Decision Making: Tracking EVc provides a clearer picture of project success from the customer's perspective, aiding in more informed decision-making and adjustments.

Summary:

Earned Value Management (EVM) integrates scope, schedule, and cost to assess project performance through three key metrics: Planned Value (PV), Actual Cost (AC), and Earned Value (EV). However, these traditional metrics often overlook the actual value delivered to the customer.

Earned Value to the Customer (EVc) is a project management metric focusing on the value delivered to the customer at any given time. Unlike EV, which measures internal project progress, EVc emphasizes tangible and usable outputs for the customer.

By Charles S. Logan, MBA, CxA, PMP, PMI-RMP, PMI-SCP, DCCA

Keywords: Data Center, Leadership, Project Management

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