Earned Value Management

Earned Value Management Definitions

There are three definitional aspects of Earned Value.  Each definition logically follows from and is dependent on the other.

Earned Value Management.  Earned Value Management is a methodology that allows both Government and Contractor Program Managers to have visibility into cost, schedule, and technical progress on their contracts to measure and manage performance.  ANSI/EIA 748, Earned Value Management System contains the industry guidelines, which establish the framework within which an adequate integrated cost, schedule, and technical performance management system will be effective.

Earned Value Management System is the integrated set of processes, which implements ANSI/EIA 748.  In its simplest form, EVMS can be implemented without any software.  Software simply enhances productivity, allows the implementation of EVM more economically and facilitates managing complex projects.  EVMS is not software.

Earned Value is the budgeted value of the work actually accomplished.  When compared to the planned (scheduled) work and to the actual cost of that work, performance and progress can be determined.

The three terms cannot be used interchangeably.  Each has a different meaning, however, slight.  When discussing Earned Value Management, the guide makes deliberate distinctions and the terms are consistently employed.

Fundamental Principles of Earned Value Management

Earned Value Management originated in industry, was adopted and further developed by the Department of Defense and spread throughout the U.S. Government, industry and other countries because the management concept embodied fundamentally sound principles for managing performance of projects and programs.  These principles are:

• All work is planned to completion
• The work is broken down into finite product-oriented components that can be assigned to a responsible organization
• The scope, schedule and cost objectives are integrated into a plan by which progress can be measured.
• Actual costs are recorded.
• Performance is objectively measured
• Variances and deviations are analyzed, impacts are forecasted and estimates at completion are based on the actual performance to date.
• Changes to the performance measurement baseline are controlled.
• Earned Value information is employed in the organization’s management processes.