Earned Value - MISUNDERSTOOD

ARRRGHHHH

Yet again this week I've heard the "Earned value isn't" exclamation that should be heard as "I'll criticise it because its name is clearly wrong (but if I thought about it a bit maybe I'd realise the name was picked by smart people so maybe they did know what they were talking about and its me that needs to appreciate a little more context".

SO

*IF* you buy warships and jet fighters n stuff under contract you have a challenge. When your contractor pitches up on the doorstep and says "Chuck us a billion" you really have to ask "Have you earned it in the context of the result I will, at some point receive? What is, as a result of you executing a fixed_price_for_a_fixed_result contract the portion that is legitimately payable?"

Therein is the 'Earned' bit.

If the contract is for $1,234,567.89c and Ms. contractor has *completed* 10% of the *work required* - as provable by quality control (independent of how many labour hours and materials are consumed) - then the portion of the contract value earned and so legitimately payable is 12,345.67. When I get my shiny new warship it has 'value ' for national pride, influence on the world-stage, fun for the Adrmirals etc but their isn't a monthly $ 'value' like there is if you have a McDonald's franchise and every burger sold after operating costs is a 5c margin.

Its NOT called earned margin.

There is no confusion nor overlap between in-project expenditure and post project ROI - it is JUST % of the result completed prorated at the rate agreed for the final delivery.

EV IS NOT ABOUT ROI!

So the folk who named EV EV did so because for them the name is EXACTLY descriptive of what the contractor has earned as a portion of the 'value (cost)' of the contract. Earned cost might be a more intuitive name but its not more or less accurate.

Now if some third party comes along and recognises a really first class solution to the really vexing question of "How do we *show* *project* *status* versus contractual commitments in a meaningful way?" and so adopts it as a solution then they perhaps(?) should rename it. But if you keep the old name don't then criticise it for not fitting alternate uses of the same word with which you've confused its application.

To think its wrongly named shows you've not understood it and to say so out loud is to show others you don't understand what it means (even if you can recite the formulas).

[[ Oh and there's quiet a bit of complexity in fixed-price contracts for long-duration, evolving high-tech solutions so you need the whole of the rest of DOD-5000 - which has (imperfect but useful) solutions for a great many of the same issues as 'agile' but a long time earlier and without crippling size of team issues nor limitation to a single discipline (but with new, different challenges). But IPT, trade-space, CAIV, TCO/ TLC etc is too much for one article. ]]