Lesson 2.7: Earned Value Management
The Challenge of Program Management
The most difficult part of program management is determining:
If the program is on schedule,
If the technical objectives are being achieved,
If the program is costing more than planned, and
What can be done if the program deviates from the plan.
Earned Value Management (EVM) provides the processes and information necessary to manage a program effectively. Without EVM, there is little more than guesswork.
What Is EVM?
EVM is an integrated management tool that:
Ensures the cost, schedule, and technical aspects of a contract are truly integrated. Measures work progress in objective terms.
States the value of work completed in dollars, or other measurable units. When the plan integrates work scope, schedule, and budget, and project status is determined using objective measures, both the Government and industry Program Managers (PM) have visibility into the technical, cost, and schedule planning, performance, and progress on the contract.
Recognize basic EVM guidelines
The following Laws and Regulations are instrumental in shaping current DOD policy with respect to EVM:
Government Performance and Results Act of 1993 (GPRA) - Established performance Standards for Federal budget.
Federal Acquisition Streamlining Act of 1994 - Title V (FASA V) –
Requires agencies to Report cost, schedule and performance goals and evaluate progress.
Information Technology Management Reform Act of 1996
(ITMRA/Clinger-Cohen) - Requires agencies to Report performance on information systems acquisition.
Department of Defense Instruction (DoDI) 5000.02 - establishes the
American National Standards Institute/Electronic Industries Alliance
(ANSI/EIA) Standard 748-1998 as the DoD standard for EVM systems.
EVM is a valuable management tool to support timely management decisions. When successfully implemented, EVM ensures:
• A disciplined planning process
• Baseline work plans that integrate work scope, schedule, and budgets, and • Objective measures of the work completed
Management systems which use EVM principles provide:
• Integrated management processes.
• Objective measures of work performed.
• Valid, accurate, timely information to support management decisions.
Integration Is the Key
An EVM System must have the ability to integrate the work with the associated budgets and schedule. When an integrated plan is developed, program managers are able to:
Compare the value of the work performed to the actual costs incurred and to the value of the work planned.
Use this information to identify and take appropriate actions in a timely manner to mitigate costs and schedule impacts.
Earned Value Management Systems (EVMS)
An EVMS is a series of processes that relate scope of the work with schedules and budgets. An EVMS will:
Establish a comprehensive work plan known as the Performance
Measurement Baseline (PMB).
Measure performance against this baseline using objective measures.
An EVMS provides three data elements to manage the day-to-day program operation: Value of Work Planned, Value of Work Completed, and Cost of
Work Completed. The contractor's Management System must use processes to:
Develop an integrated plan, and
Measure performance using objective metrics or measures.
Scope, Schedule, and Budget
An effective EVMS must develop a plan that integrates the work scope with the schedule and budget. The system must use objective measures to determine the value of the work completed compared to the plan.
Recognize how EVM fits into the defense acquisition process
EVM in Defense Acquisition
EVM techniques apply throughout the acquisition life cycle when the
Government shares the risk with the contractor. The visibility and management control required by EVM principles can help manage project risks. Earned Value Management
Applicability of EVM