Applying EVM

I am writing in response to the article in the Jan. 27 edition of The Jakarta Post titled Donors must share blame for graft and the related editorial, Embezzling foreign loans.

For many years those of us trying to introduce modern project management to Indonesia have been advocating for the adoption of Earned Value Management (EVM) (aka Cost/Schedule Control Systems Criteria or C/SCSC). This is a proven methodology developed almost 40 years ago by the U.S. Department of Defense (www.acq.osd.mil/pm) to prevent contractors from overcharging the U.S. government for goods and services (i.e. US$300 toilet seats, $200 screwdrivers).

To explain EVM simply, it is based on the principle of "Quantum Merit", or paying the fair market value for goods and services as they are delivered and accepted. Stated another way, using Earned Value Management enables the funding and/or sponsoring agency to pay only for what they received and was proven to meet the specifications and contractual terms and conditions -- no more, no less. And to be able to make the determination before the funds are released, not after. While this methodology will not end corruption, implementing EVM at all funding steps along the way and at all levels will go a long way toward making it less easy to hide or disguise corruption embedded in project billings.

Implementing EVM also works hand in glove with the post- project audits by providing a documented history by independent evaluators at each major milestone (payment tranche) of the project.

What the U.S. Department of Defense learned long ago is that controlling project costs through audits alone is an exercise in futility. Audits alone are akin to locking the barn door after the horse has escaped. The money is long gone and the cost to recover it and prosecute the thieves in many cases would exceed the value of the project. (And that assumes a court system that would in fact prosecute and punish the perpetrators, assuming they were proven guilty.)

Indonesia has a significant number of internationally certified Project Management Professionals (PMP), either through the U.S.-based Project Management Institute or the Australian Institute of Project Managers (Reg PM).

Both these organizations recognize Earned Value Management and have both Indonesian and expatriates in place to professionally evaluate whether the work performed does or does not meet the criteria specified in the contract documents. These professionals can serve as independent auditors to sign off on each release of funds. By evaluating the work before and not after the payment has been made is the key to controlling, if not eliminating, corruption and embezzlement of project funds.

PAUL D. GIAMMALVO, Jakarta