Earned Value Management (EVM) and its associated methods for estimating at completion (EAC) are powerful tools in a project manager’s arsenal. However, like all tools, they come with their strengths and weaknesses. Let’s delve deeper into the critique of the three EAC methods:

  1. EAC with Assumption of Ideal Conditions (EAC = AC + BAC – EV):
    • Pros: It’s a straightforward method and easy to compute.
    • Cons:
      • Overly optimistic: Assumes that whatever issues caused the variances have been resolved and will not recur.
      • Not adaptive: Doesn’t account for systemic issues or changes in the project environment.
      • It might give stakeholders a false sense of security.
  2. EAC with Current CPI (EAC = BAC / Cumulative CPI):
    • Pros:
      • Reflects current project performance.
      • More realistic than the first method, especially if the project has a consistent performance trend.
    • Cons:
      • Assumes that the current rate of cost performance will continue, which might not be the case if corrective actions are taken.
      • Doesn’t factor in potential changes in the project environment.
      • It might not be suitable for projects with fluctuating performance or where significant changes are anticipated.
  3. EAC considering both CPI and SPI (EAC = AC + (BAC – EV) / (CPI * SPI):
    • Pros:
      • Provides a more comprehensive view by considering both cost and schedule performance.
      • It can be more accurate when cost and schedule variances are significant.
    • Cons:
      • More complex to compute.
      • Assumes that additional resources can rectify schedule slips, which isn’t always the case. The “mythical man-month” concept suggests that adding manpower to a late software project only makes it later.
      • Might overestimate costs if corrective actions significantly improve performance.

General Criticisms of EAC Methods:

  1. Static Nature: EAC methods are based on data up to the current point in time. They don’t inherently account for future risks or changes unless those are manually incorporated.
  2. Over-reliance on Past Performance: While past performance is a good indicator, it’s not always a predictor of future performance, especially in dynamic or rapidly changing environments.
  3. Doesn’t Account for Non-Quantifiable Factors: Factors like team morale, stakeholder engagement, and market dynamics can significantly impact project performance but might not be captured in EAC calculations.
  4. Potential for Misinterpretation: Stakeholders might misinterpret EAC figures if they’re not provided context or if the assumptions behind the calculations aren’t communicated.

In conclusion, while EAC methods provide valuable insights into project performance and potential outcomes, they should be used judiciously. Project managers need to understand the assumptions and limitations of each technique, regularly update their forecasts, and communicate the context behind the numbers to stakeholders.