Earned Value Management-What is EVM

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What is EVM and the ANSI/EIA 748 Guideline

What is Earned Value Management?
Earned Value Management (EVM) is both an established best practice and the mandated federal government contractor requirement for project-based businesses. When properly applied, EVM provides an early warning of contractor performance problems.

To integrate the project management disciplines of task definition and planning, resource application and scheduling, cost budgeting and accounting and the control of schedule and cost performance;

To require detailed, quantified and auditable documentation to support management activities to measure project performance over a projects entire life from start to finish;

To provide project management with the ability to assess technical progress both in terms of its schedule and costs of execution (i.e., what should have been accomplished and spent at any point in the life of a project).

In its Earned Value Management Implementation Guide (Oct. 2006), the Department of Defense formally adopted the ANSI/EIA-748 EVM Standards. Each agency has since established its own contract dollar and type thresholds where EVM must be imposed. Contract dollar thresholds currently range from $1M to $20M, depending upon the agency. You can determine if you have an EVM requirement by looking for clause 52.34.1 in your contract or proposal documents.

A fundamental component in fulfilling the ANSI/EIA-748 EVM Standards is the business intelligence system that reflects the objectives and underlying processes of EVM. eProMT’s best practices incorporated with its comprehensive EVM capabilities provide the means to properly equip every manager participating in the EVM processes.

The following table illustrates how the four required support components are interrelated to provide EVM compliance with the 32 Guidelines established by ANSI/EIA-748. It is important to note the eProMT fully satisfies the Business Intelligence Solution component requirement and contributes to satisfying 26 of the 32 guidelines.

ANSI/EIA 748 Guidelines for Earned Value Management
			Contractor's EVM Support Components
Item #		ANSI/EIA-748 Guidelines	Accounting (ERP) System	Program Scheduling Solution	Business Intelligence Solution	Company Procedures & Practices

	ORGANIZATION
1		Define Authorized Work - Work/Resources by Work Breakdown Structure (WBS)				●
2		ID Program WBS/Organization Structure	●			●
3		Integrate Company EVMS Subsystems with WBS/OBS (Organizational Breakdown Structure)	●	●	●	●
4		ID Org. Overhead Functions/Responsible Mgrs. & Recovery Process	●			●
5		Establish WBS/OBS Integration Matrix/Control Accounts	●	●	●	●

	PLANNING, SCHEDULING & BUDGETING
6		Schedule Work & Establish Interdependencies/Critical Path		●
7		ID Deliverables & Establish Success Criterion		●	●	●
8		Establish/Maintain Time-Phased Budget Baseline at Control Acct. Level			●	●
9		ID Authorized Work by Cost Element at Control Acct. Level	●		●
10		ID Authorized Work by Work Packages at Control Acct. Level	●	●	●
11		Control Account Budget Must Equal its Component Work/Planning Pkg. Budgets		●	●	●
12		ID, Budget & Control All Level of Effort Activities	●		●	●
13		Establish Indirect Exps. Recovery Rates/Apply to Program Budget	●		●	●
14		ID Management Reserves & Undistributed Budget			●	●
15		Establish Program Target Cost as Sum of Established Budgets & Management Reserve			●	●

	ACCOUNTING CONSIDERATIONS
16		Record Direct Costs Against Budgeted Control Accounts	●		●	●
17		Each Control Account Must Sum Into a Unique WBS Element	●		●	●
18		Each Control Account Must Sum Into a Unique OBS Element	●		●	●
19		Record All Indirect Exps. That Will Be Allocated to Program	●		●	●
20		ID All Unit, Equivalent Unit or Lot Costs to be Applied to Program	●		●	●
21		Accurate Materials Cost Accumulation by Control Account	●		●	●

	ANALYSIS & MANAGEMENT REPORTS
22		Monthly Reporting of BCWS (Budgeted Cost of Work Scheduled), BCWP (Budgeted Cost of Work Performed), ACWP (Actual Cost of Work Performed) at Control Account Level			●	●
23		Monthly Reporting/Explanation of Schedule/Cost Variances at Control Account Level			●	●
24		ID/Explain Any Significant Variances in Budgeted vs. Applied Indirect Exps.			●	●
25		Summarize Performance Variances at Control Acct. Level Up the WBS/ORG Structure			●	●
26		Document/Implement Management Actions as a Result of EVM Analysis			●	●
27		Develop Revised Cost Estimates & Compare to Performance Measurement Baseline		●	●	●

	REVISIONS & DATA MAINTENANCE
28		Incorporate Authorized Program Changes in a Timely Manner	●	●	●	●
29		Record & Reconcile All Budget Changes to Original Budget			●	●
30		Limit Retroactive Budget Changes to Error Corrections Only			●	●
31		Prevent all Program Budget Revisions Except for Authorized Changes			●	●
32		Provide Periodic Reports of Any Changes to Performance Measurement Baseline			●	●

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