EARNED VALUE DEFINED

An earned value management system (EVMS) is universally defined as a project management system that, at a minimum, complies with the 32 criteria set forth in ANSI/EIA-748. “Earned value” is the primary metric for reporting progress on a project or program. Work “earned” is the amount of budgeted work scheduled that has been completed.

EVMS is an integrated project management system that includes the planning and execution of a project or program. From a high-level view, as shown in Table 1-1, it seems quite simple.

* Integrated Management Report Program

The Department of Defense (DoD) presents a complete description of EVMS in Part 1, Section 1, of its 2006 Earned Value Management Implementation Guide:

Earned Value Management (EVM) is a program management tool that integrates the technical, cost, and schedule parameters of a contract. During the planning phase, an integrated baseline is developed by time phasing budget resources for defined work. As work is performed and measured against the baseline, the corresponding budget value is “earned.” From this earned value metric, cost and schedule variances can be determined and analyzed. From these basic variance measurements, the program manager (PM) can identify significant drivers, forecast future cost and schedule performance, and construct corrective action plans to get the program back on track. EVM therefore encompasses both performance measurement (i.e., what is the program status) and performance management (i.e., what we can do about it). EVM is program management that provides significant benefits to both the Government and the contractor.