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EVMpedia®
Earned Value Management pedia®
WHAT IS EARNED VALUE MANAGEMENT
(EVM)?
“Earned Value Management (EVM) is a project management
technique that proactively integrates a project's cost, technical
scope and schedule to allow for the objective measurement of the project's performance.
EVM allows visibility into the final costs of completion of a project or a
program using mathematical forecasting techniques. Lastly EVM as an early warning system, identifies problems that show up as significant variances (schedule, cost or
technical) which pose a threat to timely project/program completion. As a result of this early warning system, solutions are made and decisive
actions taken to fix these problems and place the project back on track”
Adapted from ‘The Kwaku Akyeampong Approach to Earned Value Management
Excellence®’
“Earned Value Management in its various forms is a commonly used method of
performance measurement. It integrates project scope, cost and schedule measures
to help the project management team assess and measure project performance and
progress. It is a project management technique that requires the formation of an
integrated baseline against which performance can be measured for the duration
of the project. The principles of EVM can be applied to all projects, in any
industry. EVM develops and monitors three key dimensions for each work package
and control account: Planned Value, Earned Value and Actual Cost”
Adapted from Project Management Body Of Knowledge® PMBOK®, 4th Edition, Page
181, 182
“Earned Value Management is a project control process based
on a structured approach to planning, cost collection and performance
measurement. It facilitates the integration of project scope, time and cost
objectives and the establishment of a baseline plan for performance measurement”
Adapted from Association for Project Management (2006) APM Body of Knowledge,
5th Edition
CLICK ON EVM LINKS: EVM LEGISLATION, DOCUMENTS & ORGANIZATIONS
EVMI®
ANNOUNCEMENTS:
EVM LEGISLATION & POLICY (SINCE JANUARY 2009):
USEFUL EVM
REFERENCE GUIDES & WEBLINKS:
1)
IT DASHBOARD (US FEDERAL
GOVERNMENT IT SPENDING TRACKING)
2)
FRAMEWORK FOR DEVELOPING
EVMS POLICY
3)
OMB Circular A-11 PART 7
4)
EVM CONTRACT REQUIREMENTS
CHECKLIST
5)
COST PERFORMANCE REPORTS
FORMATS 1 - 5
6)
DOD RISK MANAGEMENT GUIDE
2006
7)
GAO COST ESTIMATING &
ASSESSMENT GUIDE
MARCH 2009
8)
NDIA EVMS Intent Guide
JUNE 2009
9)
NDIA EVMS Intent Guide
JUNE 2009
WITH FINAL CHANGES HIGHLIGHTED
10)
NDIA
EVMS Application Guide
NOVEMBER
2006
11)
NDIA EVMS Systems
Acceptance Guide
MARCH 2007
12)
NDIA EVMS Surveillance Guide
OCTOBER
2004
13)
DoD
Integrated Baseline Review (IBR) Guide
APRIL 2003
14)
NDIA
Integrating Risk Management with Earned Value Management
15)
NDIA FEDERAL AGENCIES EVM
THRESHOLDS
16)
DoD IMS & IMP
PREPARATION/USE GUIDE
OCTOBER 2005
17)
MIL-HDBK-881A 30 JULY
2005 (WORK
BREAKDOWN STRUCTURES)
18)
NDIA SERVICES CONTRACTS
19)
DoD EARNED VALUE
MANAGEMENT IMPLEMENTATION GUIDE 2006
20)
FEDERAL ACQUISITION
REGULATION (FAR)
21)
DoD 5000.2 R
22)
DEFENSE ACQUISITION
GUIDEBOOK
23)
DFARS 252.234-7001 Notice
of Earned Value Management System.
24)
DFARS 252.234-7002 Earned
Value Management System
25)
DCMA EVMS SYSTEM
SURVEILLANCE
EVM RELATED
ORGANIZATIONS & INSTITUTIONS:
DEFENSE CONTRACT MANAGEMENT AGENCY
DEFENSE CONTRACT AUDIT AGENCY
OFFICE OF MANAGEMENT & BUDGET
(WHITE HOUSE)
UNITED STATES GOVERNMENT ACCOUNTABILITY
OFFICE (GAO)
NDIA PMSC
RECOVERY.GOV
GOVERNMENTAL
ACCOUNTING STANDARDS BOARD
ANSI-EIA-748-B EVMS GUIDELINES:
NOTE: ALL EVMI®
GLOBAL CREDENTIALS
ARE FULLY ALIGNED WITH THE 32
GUIDELINES OF THE
ANSI-EIA-748-B EVM
Industry Standards (SEE
LIST OF 32 CRITERIA BELOW)
The ANSI/EIA Standard 748-B-2007 Edition for Earned
Value Management Systems (EVMS) is copyrighted and available for
purchase at:
http://webstore.ansi.org/
ANSI/EIA-748-B Standard for Earned Value Management Systems
(ABRIDGED VERSION)
is extracted
from Section 2 of the NDIA INTENT
GUIDE, June 2009 Edition):
Organization
1. Define the
authorized work elements for the program. A work breakdown structure (WBS),
tailored for effective internal management control, is commonly used in
this process.
2. Identify the
program organizational structure including the major subcontractors
responsible for accomplishing the authorized work, and define the
organizational elements in which work will be planned and controlled
3. Provide for
the integration of the company's planning, scheduling, budgeting, work
authorization and cost accumulation processes with each other, and as
appropriate, the program work breakdown structure and the program
organizational structure.
4. Identify the
company organization or function responsible for controlling overhead
(indirect costs).
5. Provide for
integration of the program work breakdown structure and the program
organizational structure in a manner that permits cost and schedule
performance measurement by elements of either or both structures as
needed.
Planning and Budgeting
6. Schedule the
authorized work in a manner which describes the sequence of work and
identifies significant task interdependencies required to meet the
requirements of the program.
7. Identify
physical products, milestones, technical performance goals, or other
indicators that will be used to measure progress
8. Establish and
maintain a time-phased budget baseline, at the control account level,
against which program performance can be measured. Budget for far-term
efforts may be held in higher-level accounts until an appropriate time
for allocation at the control account level. Initial budgets established
for performance measurement will be based on either internal management
goals or the external customer negotiated target cost including
estimates for authorized but undefinitized work. On government
contracts, if an over target baseline is used for performance
measurement reporting purposes, prior notification must be provided to
the customer.
9. Establish
budgets for authorized work with identification of significant cost
elements (labor, material, etc.) as needed for internal management and
for control of subcontractors.
10. To the extent
it is practical to identify the authorized work in discrete work
packages, establish budgets for this work in terms of dollars, hours, or
other measurable units. Where the entire control account is not
subdivided into work packages, identify the far term effort in larger
planning packages for budget and scheduling purposes.
11. Provide that
the sum of all work package budgets plus planning package budgets within
a control account equals the control account budget.
12. Identify and
control level of effort activity by time-phased budgets established for
this purpose. Only that effort which is unmeasurable or which
measurement is impractical may be classified as level of effort
13. Establish
overhead budgets for each significant organizational component of the
company for expenses which will become indirect costs. Reflect in the
program budgets, at the appropriate level, the amounts in overhead pools
that are planned to be allocated to the program as indirect costs.
14. Identify
management reserves and undistributed budget.
15. Provide that
the program target cost goal is reconciled with the sum of all internal
program budgets and management reserves.
Accounting Considerations
16. Record direct
costs in a manner consistent with the budgets in a formal system
controlled by the general books of account.
17. When a work
breakdown structure is used, summarize direct costs from control
accounts into the work breakdown structure without allocation of a
single control account to two or more work breakdown structure elements.
18. Summarize
direct costs from the control accounts into the contractor's
organizational elements without allocation of a single control account
to two or more organizational elements.
19. Record all
indirect costs which will be allocated to the contract.
20. Identify unit
costs, equivalent units costs, or lot costs when needed.
21. For EVMS, the
material accounting system will provide for:
(1) Accurate cost
accumulation and assignment of costs to control accounts in a manner
consistent with the budgets using recognized, acceptable, costing
techniques.
(2) Cost
performance measurement at the point in time most suitable for the
category of material involved, but no earlier than the time of progress
payments or actual receipt of material.
(3) Full
accountability of all material purchased for the program including the
residual inventory
Analysis and Management Reports
22. At least on a
monthly basis, generate the following information at the control account
and other levels as necessary for management control using actual cost
data from, or reconcilable with, the accounting system:
(1) Comparison of
the amount of planned budget and the amount of budget earned for work
accomplished. This comparison provides the schedule variance.
(2) Comparison of
the amount of the budget earned the actual (applied where appropriate)
direct costs for the same work. This comparison provides the cost
variance.
23. Identify, at
least monthly, the significant differences between both planned and
actual schedule performance and planned and actual cost performance, and
provide the reasons for the variances in the detail needed by program
management.
24. Identify
budgeted and applied (or actual) indirect costs at the level and
frequency needed by management for effective control, along with the
reasons for any significant variances.
25. Summarize the
data elements and associated variances through the program organization
and/or work breakdown structure to support management needs and any
customer reporting specified in the contract.
26. Implement
managerial actions taken as the result of earned value information.
27. Develop revised
estimates of cost at completion based on performance to date, commitment
values for material, and estimates of future conditions. Compare this
information with the performance measurement baseline to identify
variances at completion important to company management and any
applicable customer reporting requirements including statements of
funding requirements.
Revisions and Data Maintenance
28. Incorporate
authorized changes in a timely manner, recording the effects of such
changes in budgets and schedules. In the directed effort prior to
negotiation of a change, base such revisions on the amount estimated and
budgeted to the program organizations.
29. Reconcile
current budgets to prior budgets in terms of changes to the authorized
work and internal re-planning in the detail needed by management for
effective control.
30. Control
retroactive changes to records pertaining to work performed that would
change previously reported amounts for actual costs, earned value, or
budgets. Adjustments should be made only for correction of errors,
routine accounting adjustments, effects of customer or management
directed changes, or to improve the baseline integrity and accuracy of
performance measurement data.
31. Prevent
revisions to the program budget except for authorized changes.
32. Document changes
to the performance measurement baseline.
EVMpedia® Earned Value Management pedia®
is a registered trademark of EVMI®
Earned Value Management Institute® in the USA and globally
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