An Earned Value Management System (EVMS) is a program management tool for measuring project performance and progress as it relates to cost, schedule, and technical performance. It is an integrated business management system consisting of the following five areas:
- Planning, Scheduling and Budgeting
- Analysis and Management Reports
- Revisions and Data Maintenance
The organization criteria address whether a project has a sound organization process. This is evidenced by documents that define and assign the project work scope and properly organize the project for EVMS reporting and management control. The primary documents that are created to support this are the Work Breakdown Structure (WBS), the Organizational Breakdown Structure (OBS), and the Responsibility Assignment Matrix (RAM).
Planning, Scheduling, and Budgeting
The planning, scheduling, and budgeting criteria verify whether a project has sound planning and controls in place. This phase is repeated throughout the life of the project when changes are required. Evidence to support compliance with the criteria again includes the WBS, OBS, and RAM, as well as a good plan, schedule, and Control Account Managers (CAMs). A project plan provides the structure for critical milestone decision points, establishes the framework for accountability of time-phased resources and budgets, and provides the basis for assessing cost, schedule, and business and technical risk. Project schedule development estimates the effort across the planned project duration by allocating specific activities to specific work packages. A project budget must also be in place to formally allocate resources to cost accounts, authorize the expenditure of resources to accomplish the work, and track against the plan.
The accounting criteria determine whether cost data is derived from the contractor’s financial management system to ensure accurate project cost information. A liaison should be established between the CAMs, the Project Managers, and the Accounting Department to assist in the effort of reconciling project direct and indirect costs (labor, material, and other direct costs) with the general books of account.
Analysis and Management Reports
The analysis and management reporting criteria verify whether project managers are accurately reporting earned value data for their projects. This includes earned value data from contractor-outsourced work. The Project Manager must monitor and track the defined EV data to assure that planning, controlling, and accurate reporting of project cost and performance information is occurring on at least a monthly basis.
Revisions and Data Management
The revisions and data management criteria seek to assess the change control processes of major projects. Baseline changes can arise due to project scope changes, milestone and quality reviews, and issue resolution as well as at the request of project stakeholders or regulatory authorities. Change is inevitable in projects, therefore a process to control change to the project baseline is necessary to retain control of the project.
The American National Standards Institute (ANSI) standard criteria and associated reporting requirements ensure that projects use adequate management processes to integrate cost, schedule, and technical performance. A compliant process, when used properly, will ensure that valid cost, schedule, and technical progress information provide project managers with an effective tool for decision making.
In accordance with the ANSI/Electronic Industries Alliance (EIA) Standard 748, EVMS measures five key areas:
- Budgeted Cost of Work Scheduled
- Budgeted Cost of Work Performed
- Actual Cost of Work Performed
- Budget at Completion
- Estimate at Completion
The equations for measurement are directed and precise. A system must have the proper controls for data design, input, and reporting such that data is assured to be accurate throughout the system so that it may be assessed as compliant.
The Code of Federal Regulations (CFR) Title 48 Chapter 2 Subchapter G Part 242 Subpart 242.70 – Contractor Business Systems states that Government-acceptable contractor business systems are defined in the Defense Federal Acquisition Regulation Supplement (DFARS) clause 252.242-7005 – Contractor Business Systems and describes an adequate EVMS as follows:
- An Earned Value Management System (EVMS) that complies with the EVMS guidelines in the American National Standards Institute/Electronic Industries Alliance Standard 748, Earned Value Management Systems (ANSI/EIA-748).
- Management procedures that provide for generation of timely, reliable, and verifiable information for the Contract Performance Report (CPR) and the Integrated Master Schedule (IMS) required by the CPR and IMS data items of this contract.
CFR Title 48 Chapter 2 Subchapter G Part 242 Subpart 242.70 further requires the EVMS design phase to ensure that the system structure addresses the nine EVMS process areas:
- Work Organization
- Planning and Scheduling
- Work/Budget Authorization
- Indirect Management
- Management Reporting and Analysis
- Revisions and Data Maintenance
- Material Management
- Subcontract Management
The integrity of the EVMS must be validated with documented policies and procedures that include sufficient detail describing the system itself, data input, reporting, and accountability. Policies and procedures that are clearly and concisely documented will meet the compliance requirements contained in the FAR.
The integration of all the process areas and ancillary systems must clearly define:
- Who is responsible for what.
- The flow of functions, inputs, and outputs or products.
- The various interactions between the different subsystems, functional organizations, and projects.
- Flow-down to functional organizations and subcontractors.