EVM is a powerful program management tool and, when used correctly, provides tremendous insight into program status and alerts managers of potential risks. However, there are some common EVM pitfalls that all PMs should avoid:

EVM doesn't work well on level-of-effort contracts. If the work is merely measured by the number of FTEs over a given period of time, there is no control over the progress. Whatever work doesn't get accomplished in a given period is carried over to the next. In order for EVM to work, the effort has to be planned in discrete work packages. Progress is then measured against these work packages.

Many EV methods can obscure the true program status, particularly in large enterprise efforts reported at WBS (work breakdown structure) Level 3. An in-depth knowledge of the underlying tasks that compose the critical path is needed to assess the true cost schedule risk. Programs can show favorable Schedule Performance Index (SPI) and Cost Performance Index (CPI) due to many level-of-effort tasks that operate at 100-percent efficiency, poorly defined or subjective criteria for taking credit, or overestimating early tasks. Meanwhile, tasks on the critical path can be experiencing overruns and problematic technical issues that may eventually reflect in EVM, but too late to mitigate the risk.

EVM can have problems with timely accounting of actual costs. In order for EVM to be meaningful, the Actual Cost of Work Performed (ACWP) must correspond to the Budgeted Cost of Work Performed (BCWP) reported for the most recent period. For each work package for which progress is reported against, there must also be a corresponding actual cost. The contractor must report the cost for that amount of work accomplished. Monthly invoices tend to be 30-60 days late and are often rolled up without regard to the work packages. It becomes a challenge for the prime contractor to allocate the amounts to the different work packages during the period in question. Since contractors may not report on time, there can be a 60 to 90 day lag. This means you can be managing the project using data that is 90 days old!

EVM is a great tool, but make sure you consider these pitfalls when you use it.