EVMpedia® - Earned Value Management (EVM)

  • WHAT IS EARNED VALUE MANAGEMENT (EVM) - EVMpedia®.com
  • HISTORY OF EVM
  • ANSI EIA 748-B INDUSTRY STANDARDS
  • EVMi® EVM GLOBAL SOLUTIONS

WHAT IS EARNED VALUE MANAGEMENT (EVM)?

“Earned Value Management (EVM) is a project management technique that proactively integrates a project's cost, technical scope and schedule to allow for the objective measurement of the project's performance. EVM allows visibility into the final costs of completion of a project or a program using simple mathematical forecasting techniques. Lastly, EVM used as an early warning system, identifies problems that show up as significant variances (schedule, cost, technical or quality) which pose a threat to timely project/program completion. As a result of this early warning system, solutions are made and decisive actions taken to fix these problems and place the project back on track. A team of EVMi® certified Earned Value Management Professional®s (EVMP®s) facilitate the resolution of problems, issues and risks on any project” - Adapted from ‘The Kwaku Akyeampong Approach to Earned Value Management Excellence®’

WHAT IS EARNED VALUE MANAGEMENT (EVM)?

“Earned Value Management in its various forms is a commonly used method of performance measurement. It integrates project scope, cost and schedule measures to help the project management team assess and measure project performance and progress. It is a project management technique that requires the formation of an integrated baseline against which performance can be measured for the duration of the project. The principles of EVM can be applied to all projects, in any industry. EVM develops and monitors three key dimensions for each work package and control account: Planned Value, Earned Value and Actual Cost”
Adapted from Project Management Body of Knowledge® PMBOK®, 4th Edition, Page 181, 182

WHAT IS EARNED VALUE MANAGEMENT (EVM)?

“Earned Value Management is a project control process based on a structured approach to planning, cost collection and performance measurement. It facilitates the integration of project scope, time and cost objectives and the establishment of a baseline plan for performance measurement” - Adapted from Association for Project Management (2006) APM Body of Knowledge, 5th Edition

Earned Value Management (EVM) - Wikipedia

http://en.wikipedia.org/wiki/Earned_value_management

HISTORY OF EVM

Year/Event

1967 - The U.S. Department of Defense (DoD) starts the Cost/Schedule Control System Criteria (C/SCSC)

1972 - The C/SCSC Joint Implementation guide is launched for use at all US Military branches

1991 - US Department of Defense (DoD) issues DoD Instruction 5000.2—Defense Acquisition Management Policies and Procedures. This document re-affirms Department of Defense's application and use of EVM on DoD-wide programs

1998 - American National Standards Institute/Electronic Industries Alliance publishes industry wide guidelines for Earned Value Management Systems (EVMS) called the ANSI/EIA-748-A (version A, 1998)

1999 - The Under Secretary of Defense adopts the ANSI/EIA-748, version A, 1998 at an agency-wide level on all US Department of Defense-wide acquisition contracts.

2007 - American National Standards Institute/Electronic Industries Alliance publishes industry wide guidelines for Earned Value Management Systems (EVMS) called the ANSI/EIA-748-B (version A, 2007)

2007 - EVMi® Earned Value Management Institute® (www.evmi.com) is founded in USA

2009 - The Weapon Systems Acquisition Reform Act of 2009 becomes law of the land in the USA (the Weapon Systems Acquisition Reform Act (formally Weapons Acquisition System Reform Through Enhancing Technical Knowledge and Oversight Act of 2009) was an Act of Congress passed in 2009 that was created to reform the way the Pentagon contracts and purchases major weapons systems. The bill was signed into law on May 22, 2009 by US President Barack Obama.) This Act require all US Department of Defense (DoD) contractors to have in place fully compliant ANSI EIA 748-B Earned Value Management Systems (EVMS) for the life-cycle management of Weapons Systems Development programs

2010 - Four EVMi® Earned Value Management Institute® EVM credential certification programs: CAEVM® Certified Associate in Earned Value Management®; EVMP® Earned Value Management Professional®; RQMP® Risk and Quality Management Professional®; and CEVO® Chief Earned Value Officer® are approved for the United States Federal Government's Federal Acquisition Certification for Program and Project Managers (FAC-P/PM) for US Federal Government Program and Project Managers (www.fai.gov)

2010 - The State of Virginia approves the EVMi® Earned Value Management Institute® for Workforce Investment Act (WIA) trainining

2011 - The State of Colorado approves EVMi® Earned Value Management Institute® for Workforce Investment Act (WIA) training

2012 - EVMi® Earned Value Management Institute® launches the CCAM® Certified Control Account Manager® credential certification for Control Account Managers (CAMs) and EVMA™ Earned Value Management Architect™ credential certification

ANSI EIA 748-B INDUSTRY STANDARDS

ANSI-EIA-748-B EARNED VALUE MANAGEMENT SYSTEMS (EVMS INDUSTRY STANDARDS AND GUIDELINES):

NOTE: ALL EVMI® EARNED VALUE MANAGEMENT INSTITUTE® (WWW.EVMI.COM) GLOBAL CREDENTIALS ARE FULLY ALIGNED WITH THE 32 GUIDELINES OF THE ANSI-EIA-748-B EVM
Industry Standards (SEE LIST OF 32 CRITERIA BELOW)

The ANSI/EIA Standard 748-B-2007 Edition for Earned Value Management Systems (EVMS) is copyrighted and available for purchase at: http://webstore.ansi.org/

ANSI/EIA-748-B Standard for Earned Value Management Systems (ADAPTED FROM THE ANSI EIA 748-B INDUSTRY STANDARDS)

Organization

1. Define the authorized work elements for the program. A work breakdown structure (WBS), tailored for effective internal management control, is commonly used in this process.
2. Identify the program organizational structure including the major subcontractors responsible for accomplishing the authorized work, and define the organizational elements in which work will be planned and controlled
3. Provide for the integration of the company's planning, scheduling, budgeting, work authorization and cost accumulation processes with each other, and as appropriate, the program work breakdown structure and the program organizational structure.
4. Identify the company organization or function responsible for controlling overhead (indirect costs).
5. Provide for integration of the program work breakdown structure and the program organizational structure in a manner that permits cost and schedule performance measurement by elements of either or both structures as needed.

Planning and Budgeting

6. Schedule the authorized work in a manner which describes the sequence of work and identifies significant task interdependencies required to meet the requirements of the program.
7. Identify physical products, milestones, technical performance goals, or other indicators that will be used to measure progress
8. Establish and maintain a time-phased budget baseline, at the control account level, against which program performance can be measured. Budget for far-term efforts may be held in higher-level accounts until an appropriate time for allocation at the control account level. Initial budgets established for performance measurement will be based on either internal management goals or the external customer negotiated target cost including estimates for authorized but undefinitized work. On government contracts, if an over target baseline is used for performance measurement reporting purposes, prior notification must be provided to the customer.
9. Establish budgets for authorized work with identification of significant cost elements (labor, material, etc.) as needed for internal management and for control of subcontractors.
10. To the extent it is practical to identify the authorized work in discrete work packages, establish budgets for this work in terms of dollars, hours, or other measurable units. Where the entire control account is not subdivided into work packages, identify the far term effort in larger planning packages for budget and scheduling purposes.
11. Provide that the sum of all work package budgets plus planning package budgets within a control account equals the control account budget.
12. Identify and control level of effort activity by time-phased budgets established for this purpose. Only that effort which is unmeasurable or which measurement is impractical may be classified as level of effort
13. Establish overhead budgets for each significant organizational component of the company for expenses which will become indirect costs. Reflect in the program budgets, at the appropriate level, the amounts in overhead pools that are planned to be allocated to the program as indirect costs.
14. Identify management reserves and undistributed budget.
15. Provide that the program target cost goal is reconciled with the sum of all internal program budgets and management reserves.

Accounting Considerations

16. Record direct costs in a manner consistent with the budgets in a formal system controlled by the general books of account.
17. When a work breakdown structure is used, summarize direct costs from control accounts into the work breakdown structure without allocation of a single control account to two or more work breakdown structure elements.
18. Summarize direct costs from the control accounts into the contractor's organizational elements without allocation of a single control account to two or more organizational elements.
19. Record all indirect costs which will be allocated to the contract.
20. Identify unit costs, equivalent units costs, or lot costs when needed.
21. For EVMS, the material accounting system will provide for:
(1) Accurate cost accumulation and assignment of costs to control accounts in a manner consistent with the budgets using recognized, acceptable, costing techniques.
(2) Cost performance measurement at the point in time most suitable for the category of material involved, but no earlier than the time of progress payments or actual receipt of material.
(3) Full accountability of all material purchased for the program including the residual inventory

Analysis and Management Reports

22. At least on a monthly basis, generate the following information at the control account and other levels as necessary for management control using actual cost data from, or reconcilable with, the accounting system:
(1) Comparison of the amount of planned budget and the amount of budget earned for work accomplished. This comparison provides the schedule variance.
(2) Comparison of the amount of the budget earned the actual (applied where appropriate) direct costs for the same work. This comparison provides the cost variance.
23. Identify, at least monthly, the significant differences between both planned and actual schedule performance and planned and actual cost performance, and provide the reasons for the variances in the detail needed by program management.
24. Identify budgeted and applied (or actual) indirect costs at the level and frequency needed by management for effective control, along with the reasons for any significant variances.
25. Summarize the data elements and associated variances through the program organization and/or work breakdown structure to support management needs and any customer reporting specified in the contract.
26. Implement managerial actions taken as the result of earned value information.
27. Develop revised estimates of cost at completion based on performance to date, commitment values for material, and estimates of future conditions. Compare this information with the performance measurement baseline to identify variances at completion important to company management and any applicable customer reporting requirements including statements of funding requirements.

Revisions and Data Maintenance

28. Incorporate authorized changes in a timely manner, recording the effects of such changes in budgets and schedules. In the directed effort prior to negotiation of a change, base such revisions on the amount estimated and budgeted to the program organizations.
29. Reconcile current budgets to prior budgets in terms of changes to the authorized work and internal re-planning in the detail needed by management for effective control.
30. Control retroactive changes to records pertaining to work performed that would change previously reported amounts for actual costs, earned value, or budgets. Adjustments should be made only for correction of errors, routine accounting adjustments, effects of customer or management directed changes, or to improve the baseline integrity and accuracy of performance measurement data.
31. Prevent revisions to the program budget except for authorized changes.
32. Document changes to the performance measurement baseline.

EVMpedia® Earned Value Management pedia® is a registered trademark of EVMI® Earned Value Management Institute® in the USA and globally

Earned Value Management (EVM) Global Systems Delivery - EVMI® Total EVM™ Programs

EVMi®'s Total Earned Value Management (EVM) programs include EVMI® Total EVM™ Certification Program - Level 1: (Project Team Members Level); EVMI® Total EVM™ Certification Program - Level 2: (Project /Program Level); and EVMI® Total EVM™ Certification Program - Level 3: (Organization-wide Level). For more info, visit: http://www.evmi.com

According to DoD, "Earned Value Management (EVM) is an essential Program Manager and Technical Lead tool for supporting proactive decision making".

"Earned Value Management (EVM) is a project management technique that proactively integrates a project's cost, technical scope and schedule to allow for the objective measurement of the project's performance. EVM allows visibility into the final costs of completion of a project or a program using mathematical forecasting techniques. Lastly, EVM used as an early warning system, identifies problems that show up as significant variances (schedule, cost or technical) which pose a threat to timely project/program completion. As a result of this early warning system, EVM solutions are made and decisive actions taken to fix these problems and place the project back on track. A team of Earned Value Management Professionals (EVMPs) facilitate the resolution of these project related problems and issues” - Adapted from ‘The Kwaku Akyeampong Approach to Earned Value Management Excellence®.

For more info, visit: http://www.evmi.com

Globally, EVMi®'s EVM Division is responsible for assisting our global clients in implementing and maintaining EVM compliance; enforcing EVM surveillance; ensuring EVM compliance with EVM Industry standards (ANSI EIA 748-B); maintaining EVM maturity at the organizational and project level; providing reliable and timely EVM communications; and disseminating accurate EVM data across projects and programs.

EVMi® EVM Vision: Global EVM Outreach

Earned value management is fully leveraged by the US Federal Government and US Federal Government contractors. EVM is a vital part of the Federal Government's acquisition strategy and program/project management execution and delivery. EVM provides Federal Government Program Managers with early warning systems and insights into cost, schedule and technical performance of their acquisitions.

EVMi® EVM's goal is to increase and enhance the benefits of the use of earned value management across the US Federal government's projects and programs as a powerful tool that provides true status into the cost, schedule and technical scope areas of their programs. EVMi® is totally committed and dedicated to assisting organizations to leverage, implement and apply EVM effectively and efficiently on their projects and programs.

EVMi® EVM Global Implementation Initiatives & EVM Approach include among others:

  • EVM Policy Implementation
  • EVM Surveillance
  • EVM Compliance
  • EVM Maturity Assessment
  • EVM Risk & Quality Management Integration
  • EVM Variance Analysis
  • EVM Corrective Actions

For more info, visit: http://www.evmi.com