The fundamentals of Earned Value Management (EVM) for projects originated with the United States Air Force in 1966. Air Force programs required EVM as a planning methodology along with other controllers.
EVM approaches proved to be an excellent value management tool across industries, whether incorporated into construction, research and development, manufacturing, or production. Its use delivers an early warning system to costs and scheduling challenges at all management levels. Numerous worldwide government agencies, companies and institutions use EVM within functional and management levels, including the Department of Health Services and National Aeronautics and Space Administration.
EVM is an all-encompassing phrase that defines 32-guidelines for a contractor’s management system. The principles place the value of an element of work that is equal to the amount of budgeted expenditures for completion. Using EVM, you can assess schedules and cost performance throughout the life cycle of the project. The goals are to
- Generate continual in progress evaluations
- Allocate resources for particular assignments/jobs or work
- Provide management tools for operational decision-making
- Interconnect costs, scheduling, and performance
- Proactive support for real time analysis and action or corrections with informed data
The advantages are substantial for clients and contractors, such as immediate transparency, rapid corrections and response are possible. This, in turn, results in better outcomes for clients with enhanced confidence, up-to-date scheduling, and proactively hitting technical goals. Additional returns are
- Clear-cut and distinct terms involved in the scope of work
- Proactive alerts for possible Earned Value issues and problems
- Recognizes complications for quick management resolution
- Enhanced planning development with frequent, collaborative communication at all phases and milestones
- Inclusive of management levels, transparency and responsibility
- Cost, performance, scheduling and technical elements are combined into one methodology
- Accountability for tasks and assignments and capacity to continually evaluate systems, costs, technical, schedules, and risk versus benefit factors
- The enhanced precision of reporting and analysis of problems influencing cost and schedules
Implementing an EVM system leads to better communication and expenditure reduction for both client and contractor.
Five sections comprise the 32- guideline points that train individuals from early project planning to implementation and execution. The comprehensive guide includes baseline revision processes and data analysis techniques. The tenets and formulas are designed to inspire performance and value the visual beauty of this management tool. The five sections are:
- Organization – includes a work breakdown structure (WBS) that defines the tasks, deliverables, and who is accountable
- Planning, Scheduling and Budgeting – creates the framework for the master schedule roadmap with concurrent milestones and budget resources
- Accounting Considerations – are capturing of actual costs (ACWP) of the work project
- EVMS Analysis and EVMS Management Reports – draws attention to changes and discrepancies in costs and scheduling
- Revisions and Data Maintenance – covers client related modifications, project analysis, and replanning
Earned value management is the current best practice standard in an ever-evolving industry. These sectors mandate an accurate indicator of actual costs to budget and offer a proactive corrective mechanism. This approach supplies applicable, measurable units and insight into any project’s component.