Earned Value Management Practice

Earned Value Management (EVM) is a program management technique that integrates technical performance requirements, resource planning, with schedules, while taking risk into consideration. The major objectives of applying earned value to a contract are to encourage contractors to use effective internal technical, cost and schedule management control systems, and to permit the customer to rely on timely data produced by those systems for better management insight. This data is in turn used for determining product-oriented contract status, and projecting future performance based on trends to date. In addition, EVM allows better and more effective management decision making to minimize adverse impacts to the project.

Project management component circle

Earned value provides an objective measurement of how much work has been accomplished on a project. Using the earned value process, the management team can readily compare how much work has actually been completed against the amount of work planned to be accomplished. All work is planned, budgeted, and scheduled in time-phased "planned value" increments constituting a Performance Measurement Baseline (PMB).

Analysis of these variances should reveal the factors causing the deviation from plan.

The Task Manager uses this information in conjunction with his knowledge of the task, to project an estimate to complete for this task. The Task Managers analyzes variances resulting from comparisons of these five basic data elements; planned work, work accomplished, actual costs, total budget at completion and the estimate at completion. The work breakdown structure provides a useful framework for summarizing this performance information for all levels of management.

Earned value improves on the "normally used" spend plan concept (budget versus actual incurred cost) by requiring the work in process to be quantified. The planned value, earned value, and actual cost data provides an objective, quantifiable measurement of performance, enabling trend analysis and evaluation of any cost estimate at completion within multiple levels of the project.

EVM is a valuable tool in the Project Manager's "toolbox" for gaining valuable insight into project performance and is the tool that integrates technical, cost, schedule and risk management. In addition, EVM provides valuable quantifiable performance metrics for forecasting at-completion cost and schedule for their project. The central concepts of Earned Value Management are relatively simple. However, when an organization chooses to adopt EVM, the initiative often identifies issues or gaps in the project planning and management process.

Earned Value Management (EVM) Process

Our consultants will work with you to define and establish an EVM process for your project / business. This will address:

Policy for performance management
Principles of EVM
Work and Cost Breakdowns Structures
Performance Measurement Techniques
Cost Collection and Allocation
Performance Analysis Techniques
EVM and forecasting
Review and Assessment

Earned Value Management System

Our consultants will work with you to implement an Earned Value Management System (EVMS). For example, we can support the development of:

System requirements
System processes
Users processes and instructions
Support the establishment of the Earned Value management system
Data analysis

Support for Customer Integrated Baseline Review

An Integrated baseline Review (IBR) is a formal review of the baseline plan, upon which EVM is going to be based, often conducted with the Customer. Our consultants will work with you to prepare for a formal Integrated Baseline review. This will address:

  System readiness
  System integrity
  Integrity of plans, budgets, organization & structures
  People readiness – coaching & training
  Data integrity

SQC specializes in helping organizations identify how they can improve their control and management of projects using earned value.

In addition to end-to-end consultation and assessments, we also conduct EVM Workshops which will highlight areas that are fundamentally important to making EVM work well.