What are some common causes and effects of cost and schedule variances in EVM?

1 Cause 1: Poor Planning

One of the most common causes of cost and schedule variances in EVM is poor planning. If you don't have a clear scope, realistic estimates, accurate assumptions, and well-defined deliverables, you are likely to face issues such as scope creep, rework, delays, and budget overruns. Poor planning can also affect your baseline plan, which is the reference point for EVM calculations. If your baseline plan is not aligned with the project objectives, stakeholders' expectations, and available resources, you will have inaccurate or misleading EVM metrics.

2 Effect 1: Low Performance

The effect of poor planning on EVM metrics is low performance. If your EV is lower than your PV, it means that you are behind schedule and not delivering the expected value. If your AC is higher than your EV, it means that you are over budget and not using your resources efficiently. Both scenarios result in negative CV and SV, and lower than one CPI and SPI. These indicators show that your project is underperforming and at risk of not meeting the success criteria.

3 Cause 2: External Factors

Another common cause of cost and schedule variances in EVM is external factors. These are factors that are beyond your control and influence, such as market changes, regulatory requirements, customer feedback, supplier issues, weather conditions, and unforeseen events. External factors can affect your project scope, schedule, cost, quality, and risk, and require you to adjust your plan accordingly. However, if you don't update your baseline plan to reflect these changes, your EVM metrics will not reflect the current reality of your project.

4 Effect 2: Inaccurate Reporting

The effect of external factors on EVM metrics is inaccurate reporting. If your baseline plan is outdated or irrelevant, your EVM metrics will not provide a reliable picture of your project status and progress. For example, if your PV is based on a scope that has changed significantly due to external factors, your SV will not tell you how much work you have completed or how much work remains. Similarly, if your AC is based on a budget that has increased or decreased due to external factors, your CV will not tell you how much money you have spent or how much money you have left. Inaccurate reporting can lead to poor decision making, stakeholder dissatisfaction, and loss of trust and credibility.

5 Cause 3: Human Factors

A third common cause of cost and schedule variances in EVM is human factors. These are factors that relate to the people involved in the project, such as team members, managers, sponsors, customers, and vendors. Human factors can affect your project performance in various ways, such as communication, collaboration, motivation, skills, experience, availability, and productivity. Human factors can also introduce errors, biases, and inconsistencies in your EVM data collection, analysis, and reporting.

6 Effect 3: Miscommunication

The effect of human factors on EVM metrics is miscommunication. If your EVM data is not accurate, consistent, or timely, you will not be able to communicate your project status and progress effectively to your stakeholders. For example, if your EV is based on subjective or incomplete measurements of work done, your SV will not reflect the true value of your project deliverables. Likewise, if your AC is based on inaccurate or delayed invoices or receipts, your CV will not reflect the true cost of your project resources. Miscommunication can result in confusion, conflict, and missed opportunities.

7 How to Use EVM Formulas and Examples

To avoid or minimize the causes and effects of cost and schedule variances in EVM, you need to use EVM formulas and examples correctly and consistently. EVM formulas help you calculate the key metrics that indicate your project performance, such as CV = EV - AC, SV = EV - PV, CPI = EV / AC, and SPI = EV / PV. EVM examples help you interpret and apply these metrics to your specific project context, such as CV > 0 means under budget, SV < 0 means behind schedule, CPI < 1 means low efficiency, and SPI > 1 means high productivity. By using EVM formulas and examples, you can identify and analyze the root causes of variances, evaluate the impact of variances on your project objectives, and implement corrective actions to improve your cost control skills.