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.