Abstract
A PM must report on the project’s performance to the upper management of the performing organization and perhaps also to the benefiting organization. Upper management usually realizes the complexity and rapid dynamics of IT projects, however, it still needs accurate projections of project completion time and cost so that interdependent business activities, including product release/migration can be planned. Traditional methods of progress-performance reporting are often inaccurate and misleading. Earned value analysis (EVA) has proven to be an extremely effective tool for project time and cost management providing good estimates of actual project completion cost and date. EVA is also is a good early indicator of project problem areas, so that appropriate corrective action can be initiated. The effective use of earned value in IT projects, however, is still low, particularly outside of the U.S. government and its contractors. The application of EVA in IT projects is neither trivial nor straightforward because earned value requires careful planning and reporting in regard to work-packet specification, progress measurements, and actual cost determination. In addition, mechanisms to obtain all this information must be integrated into the organization’s project management, software engineering methodology, and financial reporting systems. This chapter discusses and illustrates effective ways to integrate EVA into an organization’s methodology and financial systems, and also presents specific techniques to deal with associated EVA complexities.