The 50/50 Earned Value Technique: Is This EVT Right for Your Type of Work?

Some practitioners in the Earned Value Management (EVM) industry are critical of the 50/50 Earned Value Technique (EVT) as an objective measurement of work performance. What is the 50/50 EVT? It allows you to claim credit (earned value) worth 50% of the work just for starting the work. The remaining 50% is claimed when all tasks associated with that work are complete. The 50/50 rule is effective if you have work that is short in duration—not longer than two reporting periods or months.

For example, you plan to design and develop a widget and estimate the work will cost $1,000. Work is to start during Month 1 and finish during Month 2. You hold a design meeting to kick off the effort during Month 1, thereby allowing you to take credit for $500 of the $1,000 value of the work. Your Earned Value reports after Month 1 show that you're in good shape—you're on schedule. This is all good news, as long as you can stay on plan and complete the remaining work during Month 2. The problem is, it may not show a complete picture.

Some Concerns with the 50/50 EVT

The project management team uses performance measurement data analysis to make decisions. So it is important that the work is planned in accordance with the way it will be performed. There is no "one size fits all" earned value technique. Some practitioners believe there are better ways to assess progress than using the 50/50 EVT. Some of the pitfalls of using the 50/50 EVT include:

  • Giving Yourself Too Much Credit. If you consider 50% of the work to be complete the day you initiate the work package, you're probably taking more credit than you deserve. Does it make sense that 50% of the value is credited just because you "started" the effort? There certainly may be cases where this works but most work doesn't really fit this model.
  • All or Nothing. Under the 50/50 EVT, you don't receive credit when the work is almost completed. The 50/50 EVT rules are clear: You can take credit for the remaining 50% of the work ONLY when you complete ALL of the work—there is no partial credit within the remaining 50% value.
  • Misleading Results. Depending on the type of work or when you start that work, the actual effort may not be truly split into equal halves. For example, if you perform most of the work in the Month 1 and complete the remainder of the work in the first week of Month 2, you could understate work accomplishment for Month 1 if you only took 50% credit.

One Alternative to the 50/50 Earned Value Technique

To address these issues, the industry is leaning in the direction of a user-defined ratio for the EVT, also known as the X/Y or X%/Y% technique. The X/Y method allows the planner to define the percent earned when the work is started and the remaining percent earned when the work is completed, as long as the total equals 100%. Returning to our example scenario above, it may have made more sense to plan to take only 10% ($100) of the credit for the design meeting and leave the remaining 90% ($900) of the credit for the bulk of the work associated with developing and delivering the widget to the customer (10/90).

The X/Y technique also addresses issues related to faulty distribution of start and finish percentages. This technique still assumes that all work will be completed in two reporting periods. If work extends beyond two reporting periods once it is performed, then neither the 50/50 nor the X/Y EVTs were correctly applied.

TriVariant's consultants have worked with companies across many industries and various project types to help select the appropriate earned value technique to measure work performance for Earned Value Management. We can help you, too. Contact us at info@trivariant.com or complete our Request for Information form, and we will be glad to assist.