The Contract Coach

Expert Advice - Quality Training

Earned Value Management

Need help in implementing an Earned Value system? The Contract Coach can assist your business with selecting the correct implementation and the tools needed to perform EVM. We also can perform an audit of your system to ensure compliance and identify potential weak links.

Why EVMS


Every business owner knows that their success or failure depends on how well they manage their costs in relation to their expenses. It’s common sense. As is the notion that delivering products (goods or services) to the customer in a timely manner is essential if they wish to remain in business and establish a reputation for dependability. So it is no wonder that the idea of measuring actual progress in terms of what was done, when it was completed and how much it cost versus the owner’s expectations (or better yet their plan) is fundamental to managing a business. Based on that premise a number of business systems such as EVMS have evolved to aid businesses that have grown beyond the one owner and a checkbook level of sophistication.

When is EVM a Requirement?


From a contracting perspective, there are certain thresholds at which the Federal Acquisition Regulation (FAR) and/or the Defense Federal Acquisition Regulation (DFAR) establish as being mandatory for a full or partial EVMS implementation. These thresholds are generally in the 20 Million-dollar range and address only certain types of contracts (usually Cost Reimbursement or “Incentivized” contracts) that have a period of performance in excess of one year.
Anything less than these threshold values is a judgment case depending on the degree of risk and other factors. However, this does not mean EVMS techniques are inapplicable to lesser contracts, shorter periods of performance, or fixed price efforts.
Having the correct tools and understanding the EVM principles are essential if one wants to employ an EVMS.
There is a difference between earned value and EVMS criteria. Earned value is a special metric that can be used to manage any project. The criteria are standards for management control systems that use earned value.
David S. Christensen

Which Criteria Should I Use?


The two major sources of guidance for the Earned Value system. Those are the ANSI/EIA Standard 748 and the Program Management Institute’s Program Management Book of Knowledge (and the PMI Practice Standard). The Australian Standard AS4817-2006 simplifies the ANSI/EIA and PMBOK requirements and only uses 11 of the full 32 points. Similarly, the National Aeronautics and Space Administration (NASA) and the U.S. Department of Health and Human Services (HHS) have a tiered approach whereby some programs only must comply with the 7 critical points in the ANSI/EIA specification. Which approach should you use?

Tools


The most popular scheduling tool in use today is Microsoft Project. The Contract Coach can provide training and assistance with setting up MS Project and installing various tools and plug-ins to expand its functionality. Perhaps the best of these tools for EVM is WizSchedule.
WizSchedule is one of those programs that if you do Earned Value you can't afford to be without. It does so many things easily and gracefully that once you try it you realize just how much work it will save you over the life of your project. (Full disclosure – The author of this paper is an authorized reseller of WizSchedule and has participated in development testing)
The product actually encompasses two applications: WizPlan and WizEVM. Together they do a complete schedule logic analysis, the 14 point DCMA schedule analysis, provides an Earned Value dashboard, and produces the DD2734 series (Formats 1-5) reports from your MS Project file. (Full disclosure - I am presently working with the developer to optimize the WizSchedule product) WizSchedule also provides workflows for novice Project users to guide them through a number of tasks including updating the schedule to track progress.

Here is a look at the WizSchedule tool:
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