Lesson II

Introduction to Earned Value

EVM

©2007 Strategy Bridge International Inc.

Lesson Objectives
□ At the completion of this lesson a student will be able to:
■ Explain the concept of earned value and why it is unique
□ Describe how earned value is calculated
□ When earned value correctly applies
□ What earned value provides
□ How earned value fits the management process
■ Describe the impact and benefit of earned value to:
□ A customer
□ A company
□ A project
□ A CAM
■ Summarize the Program Management Team (PMT)
relationships, roles, and responsibilities
□ Relationship with Peer CAMs
□ Responsibility and authority for EVMS implementation

©2007 Strategy Bridge International Inc.

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Types of Work
□ Level of Effort
■ “Availability” rather than results oriented
■ Cannot measure results, only responsiveness
□ Services
■ “Steady State” oriented
■ Measure status rather than results
■ If plan in enough detail could become product
oriented
□ Products
■ “Output” oriented
■ Measure progress toward the results
■ Need to detail the process to complete the work

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How is it going?

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 The Foundation

Combines Scope
Schedule & Resources

15 25

15 10

5 5
Plan -
Earned Value - 8 12
Actual -

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Status?

Schedule
Variance

Cost Variance

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Why Is EVM Used?
□ Improve performance
■ Useful and accurate planning
■ Objective status evaluation
■ Cost performance management
■ Integrated information
■ Ability to forecast performance
□ Prevent future problems
□ Basis for DECISIONS
□ Oversight/Insight

©2007 Strategy Bridge International Inc.

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What does EVM provide
□ Captures what is expected to happen
□ Predicts future performance
□ Performance evaluation
□ Change control
□ Communication
□ Summarization of data
□ Ties cost to schedule and technical
objectives

©2007 Strategy Bridge International Inc.

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When use EVM?
□ Any project that expects results
■ Hardware
■ Software
■ Design
■ Research
■ Support
□ When need to achieve results
■ Cost matters
■ Schedule matters
■ Sooner is better

©2007 Strategy Bridge International Inc.

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Who uses EVM?
□ Government contractors
■ DoD 5000
■ NRO 82.3
■ NASA NPD 9501.3
□ Government organizations
■ OMB A11
□ Commercial contractors
□ Customers
□ Management
□ You?

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Fits into Familiar Processes
□ “Labor Standards” or work measurement
techniques
■ Automobile dealer
■ Construction
■ Manufacturing
□ Objective metrics for “soft” labor
■ Software engineering
■ Research
■ Studies

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As a Management Tool
□ Prevents problems through planning
□ Objective visibility to status
□ Increases in value as move further from the
action
□ Predicts future performance based on
performance to date

©2007 Strategy Bridge International Inc.

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 Program Management Process
Planning Element

Schedule
planning
RFP /
RFQ Work Program
financial Work
or organization
planning authorization
contract and planning
or project Technical
performance
Contract Internal measurement Work
changes changes planning performance Output
Detailed planning
M S
Performance
Problem
identification
Performance
measurement,
management
EV
change control
and corrective
action
Execution element
analysis and
reporting

Planning and execution linked through EVMS

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Benefit to and Impact on:
□ Customer
□ Company
□ Project
□ PM
□ IPTL/IPTM
□ CAM

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Roles, Responsibility, and Relationships

□ Program Manager (PM)

□ Program Engineering Manager (PEM)
□ Integrated Product Team Lead /Manager
(IPTL/IPTM)
□ Control Account Manager (CAM)
□ Finance / Program Control
□ Master Planning
Where does authority for EVMS originate?
Who is responsible for implementation?

©2007 Strategy Bridge International Inc.

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Summary

■ Earned value
management comes as
a natural extension of
the project
management and
systems engineering
processes
■ A project defines any
effort with a definable
start, end, and purpose
(result)
■ Judge the quality of
earned value by its
usefulness

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