EVM as a Best Practice

Earned value management (EVM) can be a critical element of successful project management. It ensures that projects stay within budget and meet schedule requirements as well as technical performance standards. By establishing a baseline plan, measuring performance and tracking actual costs, project teams can effectively monitor progress and make necessary adjustments to ensure the successful completion of the project.

What is EVM as a Best Practice?

EVM is a system of project management that is used to provide early warning indicators when projects are not performing as planned. These early warning indicators allow project managers to apply effective corrective action to help ensure projects are completed on time and within budget. The EVM framework allows project managers to track progress, measure performance, and analyze the project's cost. It also helps identify potential areas of risk and corrective action measures that can be taken to ensure the successful completion of the project.

How Does EVM as a Best Practice Work?

EVM works by tracking the estimated costs of a project against the progress that has occurred, along with the actual costs that are incurred. This process involves using tools to analyze the progress of the project and determine whether it is on track to meet its goals and tracking and reporting on variances. EVM also allows managers to identify areas where adjustments may be needed or where certain activities are taking longer than expected. The system enables managers to quickly recognize and respond to changes in the project's timeline or budget.

The EVM framework is based on the following principles:

• The project must be broken down into measurable components.
• Progress should be measured using a consistent set of metrics.
• Performance should be measured against defined objectives.
• Cost and schedule baselines should be established at the start of the project.
• Forecasting should be used to anticipate future performance.
• Changes in scope and resources must be monitored and controlled.

Benefits of EVM as a Best Practice

The benefits of EVM are numerous and often outweigh the costs associated with its implementation. It allows project managers to accurately track progress and ensure that resources are being used efficiently. This helps teams avoid over-allocating resources or missing deadlines, which can result in costly delays and cost overruns. Furthermore, by using earned value management techniques, project managers can more easily identify potential risks and develop mitigation plans.

• It aids in practical project planning by outlining the scope, work breakdown, and baseline plan.
• It offers real-time visibility of centralized information and objective data on project performance.
• Use tools to measure schedule and cost data, allowing for accurate forecasting of project outcomes.
• It identifies potential risks and takes early action to reduce them.
• It promotes accountability and motivation among project team members and stakeholders.
• The implementation of EVMS can comply with government or customer mandates.

EVM Components

EVM components are the key elements that make up a successful earned value management system, they include:

• The project baseline is the original plan for the project that includes scope, budget, schedule, and resources.
• Measure performance by regularly tracking progress against the baseline.
• Performance measurement systems analyze cost and schedule variances.
• Data collection and analysis tools help project managers capture real-time data from various sources.
• Reporting tools create project reports that provide insight into how well the project is progressing.

EVM introduces some new terms into project management, they are useful to understanding the basics, so here is a primer:

• Planned value is the planned budget,
• Budget at completion is the total planned cost,
• Estimate at completion is the cost forecast to complete the project, and
• Cost variance is the difference between budgeted and actual cost.

Learn about these terms in detail in Deltek’s latest EVM Whitepaper, Earned Value Management: A Tool for Project Management Success, to help with your next EVM implementation.

Project Management Framework

Project management framework is a structured approach or process to managing projects that includes planning, organizing, directing, and controlling activities necessary to achieve project objectives. The framework provides a structure for the team to manage the project’s resources, timeline, and budget in order to ensure successful completion. By using project management principles and practices such as risk assessment, resource allocation, variance analysis, communication, and quality management, project managers can ensure that the project is completed on time and within budget.

Project Managers and Control Account Managers

Project managers (and Program Managers) and Control Account Managers are key personnel in an EVM compliance system. Project Managers are responsible for the overall direction of a project/program and for creating and maintaining the project baseline. Control Account Managers (CAMs) are responsible for managing the cost and schedule performance of specific activities within the project. They are tasked with monitoring progress, analyzing actual results against baseline values, explaining variances to the Project Managers, and taking action when necessary to ensure successful completion of the project.

Government Agency Requirements

For government agencies, EVM compliance can be an important element of their project management processes. Government agencies are required to adhere to regulations and guidelines when contracting for certain types of projects over specified values. If the type and size of the project require the use of EVM, then government agencies and government contractors must use EVM techniques to measure and manage the cost, schedule, and technical performance of their projects. These types of contracts can be common for the Department of Defense, Department of Energy, and NASA.

Project Teams and Project Timelines

Project teams and project timelines are essential components of EVM compliance. Project teams are responsible for executing the tasks outlined in the project baseline and meeting the goals set forth by the project manager. This includes assigning specific tasks to members of the team, monitoring progress, managing resources, and ensuring that all activities are completed within a specified timeline. Project timelines provide an overview of the entire project from start to finish, including milestones and critical dates. They help project teams stay organized and on track in order to meet the goals set forth by the project manager.

Measuring Performance with EVM

EVM is an effective way to measure performance on projects. It allows project teams to monitor the progress of a project and compare it to the original baseline plan. This enables them to identify areas where adjustments are needed in order to get back on track or make improvements. The earned value management system also provides useful metrics that can be used for evaluating overall project performance. This includes measuring cost performance, schedule performance, and technical performance.

Project Budget and Actual Costs

In an EVM compliance system, project budgets are established at the beginning of a project and used to track progress. The project budget lays out the anticipated costs for each activity and milestone in the project. During execution, progress and actual costs are tracked and compared to the baseline budget to measure performance. This allows teams to identify areas where spending is over or under budget and make necessary adjustments.

How Deltek Can Help

In the dynamic landscape of government contracting project management, managing EVM can be important in meeting customer needs. Earned value management is a powerful technique for harmonizing project scope, schedule, and budget, empowering project managers with a robust predictive toolset.

Deltek Cobra is the trusted industry leader in cost and earned value management. By analyzing metrics like planned value, earned value, and actual cost, Deltek Cobra enables project managers to forecast cost variations and take timely corrective actions, guiding projects toward efficient cost management and enhancing the likelihood of success within budgetary constraints.