Earned Value Management

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Measuring the effectiveness of Program Management. Explanation of Earned Value Management. EVM.



What is Earned Value Management? Definition

Earned Value Management is an integrated program measurement and management technique that integrates

  • technical performance requirements,
  • resource planning with schedules,
  • while taking risk into consideration.

In other words, EVM is a management technique that relates resource planning to schedules and to technical cost and schedule requirements. All work is planned, budgeted, and scheduled in time-phased ''planned value'' increments, constituting a cost and schedule measurement baseline.

Objectives of EVM

There are two major objectives of an Earned Value Management system:

  1. to encourage contractors to use effective internal cost and schedule management control systems; and
  2. to permit the customer to be able to rely on timely data produced by those systems for determining product-oriented contract status.

The major objectives of applying EVM 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, Earned Value Management allows better and more effective management decision making to minimize adverse impacts to the project.

Benefits of Earned Value Management

Earned Value Management provides an objective measurement of how much work has been accomplished on a project. Using the EVM 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.

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Generic Steps in Earned Value Management

1. Identify and organize all project steps: Identi...
Usage (application): Project Management, EVM Implementation

Limitations of Earned Value Management

Following limitations of EVM can be distinguished:...
Usage (application): Project Management, EVM Implementation

Earned Value Management and Prompt Payment Clauses

IF Earned Value Management is combined with "Promp...
Usage (application): EVM Contracting

Recommendations for EVM Implementation

Based on a study, Kim, Wells and Duffey developed ...
Usage (application): Critical Factors for EVM, EVM Best Practices

Earned Value Management System

Private companies use some form of business planni...
Usage (application): Standardization

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Calculating the Basic Elements in EVM

Presentation that gives a short introduction into ...
Usage (application): Earned Value Management

DAU Gold Card

This is a one page summary produced by the Defense...
Usage (application): EVM Formulae

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Compare EVM with: Cost-benefit Analysis  |  DCF  |  Net Present Value  |  Value Engineering  |  Gantt Chart

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