Why Earned Value Management is Important

In recent years the practice of Earned Value Management (EVM) has seen a significant resurgence. 

This is being driven by several factors..

First, Earned Value Management has been mandated by the US Federal government's Office of Management and Budget (OMB) as a critical element of Capital Planning and Investment Control.  Section 300 of OMB Circular A-11 provides as part of the scoring criteria that "Agency will use, or uses an Earned Value Management System (EVMS) that meets EIA Standard 748 and project is earning the value as planned for costs, schedule, and performance goals."  

As a result, many Federal agencies are working hard to implement effective EVM processes and tools as part of their standard project management practice.

Second, the Federal Acquisition Regulation (FAR) has been revised to expand the number and types of programs that will require EVM.  A whole new generation of federal agencies and their contractors are adopting EVM in record numbers.

Finally, Earned Value Management is increasingly being regarded as a project management "best practice" and is being adopted by many commercial companies and government agencies that just want to improve project planning, visibility and control.

Why Do You Need EVM?

Broader EVMS Requirements

Compliance with EVMS requirements is no longer limited to the Department of Defense (DoD). EVM compliance is now important for all government agencies and their contractors that do business in the federal market. The Office of Management and Budget (OMB) requires an agency to comply with EIA-748-C EVMS guidelines in order to achieve and maintain a "green" level of performance on the President's Management Agenda (PMA) Scorecard. 

Lower DoD Application Thresholds

Even in the DoD arena, EVMS requirements are expanding. On March 7, 2005, the Acting Under Secretary of Defense for Acquisition, Technology and Logistics (USD (AT&L)) signed a memorandum approving revisions to the Department's EVM policy.

EVM compliance is required on cost or incentive contracts, subcontracts, intra-government work agreements, and other agreements valued at or greater than $20 million in then-year dollars. An EVMS that has been formally validated and accepted by the cognizant contracting officer is required on cost or incentive contracts, subcontracts, intra-work agreements, and other agreements valued at or greater than $50 million in then-year dollars. Although validation is not required below $50 million, the contractor must still comply with the industry standard.

Improve Return on Investment (ROI)

Even without a government requirement, many commercial companies are applying EVMS principles across the organization in order to:

• Improve cost/schedule control
• Better predict the cost at completion of projects
• Provide an “early warning system”
• Identify risks & impacts
• Manage scope creep
• Analyze performance trends and improve efficiencies
• Better manpower planning
• Forecast financial results
• Improve existing Project Portfolio Management (PPM) and Enterprise Resource Management (ERM) capabilities

The bottom line is better cost/schedule control on projects leads to improved ROI.

Learn more about our EVM Services.

Talk to a Pinnacle professional regarding an EVM solution - Give Us a Call or