Earned Value Management

 

The basic concept of EVM is more than a unique project management process or technique.  It is an umbrella term for 32 guidelines that define a set of requirements that a contractor’s management system must meet.

 EVM Foundational Concepts:

As introduced above, Earned Value Management Systems allow the project manager to answer the following three questions, as they relate to the project:

Where have we been?

Where are we now?

Where are we going?

In Earned Value Management, unlike in traditional management, there are three data sources:

-- the budget (or planned) value of work scheduled

-- the actual value of work completed

-- the “earned value” of the physical work completed

Earned Value takes these three data sources and is able to compare the budgeted value of work scheduled with the “earned value of physical work completed” and the actual value of work completed.

 

Objectives of EVM:

1. Relate time phased budgets to specific contract tasks and/or statements of work.

2. Provide the basis to capture work progress assessments against the baseline plan.

3. Relate technical, schedule, and cost performance.

4. Provide valid, timely, and auditable data/information for proactive project management analysis and action.

5. Supply managers with a practical level of summarization for effective decision making.

Once the contractor’s EVM System is designed and implemented on a project, there are significant benefits to the contractor and to the customer. Contractor benefits include increased visibility and control to quickly and proactively respond to issues which makes it easier to meet project schedule, cost, analysis, and technical objectives. Customer benefits include confidence in the contractor’s ability to manage the project, identify problems early, and provide objective, rather than subjective, contract cost analysis and schedule status. Earned value management does introduce a few new terms.