"Earned Value Management: Monitoring Capital Investment Performance"
Introduction
Federal agencies are under increased pressure to use Earned Value Management (EVM) when planning and controlling capital investments and purchasing related products and services. The pressure – or incentives, as the case may be – comes primarily from two sources.
First, the Office of Management and Budget’s (OMB’s) stated intention to more rigorously enforce EVM stipulations issued over the past decade. This underscores the OMB’s effort to encourage federal agencies to enhance their Capital Planning and Investment Control practices by deploying a trusted management technique that will provide an objective measurement of program performance – and improve control over the cost and schedules of federal funds. Specifically, section 300 of the OMB Circular A-11 states, “Agency will use, or uses an Earned Value Management System (EVMS) that meets ANSI/EIA Standard 748 and investment is earning the value as planned for costs, schedule, and performance goals.” This statement, which refers to the EVM standard that defense agencies have been using for some time, raises the bar for civilian agencies.
Second, the Federal Acquisition Regulation (FAR) has been revised to include standard EVM provisions for project management and a set of guidelines for EVM use in all federal agencies. In effect, the new regulation expands the number and types of programs that will require the use of EVM.
These pressures and incentives have enormous implications for all federal agencies – as well as for any contractor hoping to do business with the federal government. Personnel from project managers in both the public and private sectors through agency directors and C-level executives will need to understand how to respond and what the implications are for their business processes and IT systems.
At first glance, this insistence on EVM may seem a difficult burden. Yet it also presents an enormous opportunity, because EVM is a proven methodology for successfully managing projects and generating an appropriate return-on-investment. By integrating costs, schedules, and technical performance EVM provides early, detailed, and ongoing understanding of project progress. This whitepaper outlines the many benefits of EVM, as well as the key requirements for implementing it.
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