Unlocking EVM's Potential for Program Performance Management

By Jessica Rivard 

The Role of Earned Value Management 

For nearly 60 years, Earned Value Management (EVM) has been a cornerstone of project management, particularly within aerospace and defense, as well as construction and engineering. Its detailed principles offer a structured approach to understanding project performance, providing an objective alternative to subjective assessments. 

While often mistakenly seen as merely a cost reporting tool, Earned Value Management (EVM) is fundamentally a comprehensive system for program and project performance management. EVM's strength lies in its ability to replace subjective assessments with objective data, offering clear insights into resource allocation, cost attribution, schedule management, risk assessment, quality analysis, and reporting. 

Intuition vs. Structure 

The limitations of relying on intuition in project management become evident. Without a structured methodology for measuring progress against a defined baseline, projects succumb to optimistic biases and delayed recognition of potential issues. The U.S. government, having experienced the financial consequences of such deficiencies, mandated the utilization of EVM for Department of Defense and Department of Energy contracts.  

This mandate directly responded to the necessity of ensuring contractor accountability and the efficient use of public funds. Project schedules lacked a clear connection to tangible deliverable completion, which was a fundamental challenge. Tracking labor hours or relying on subjective progress assessments proved insufficient.  

Consequently, governmental agencies now require the use of quantifiable backup data on complex, multi-period (more than 44 days) discrete tasks to link the completion of defined work scope to observable and verifiable evidence of progress. 

The ramifications of insufficient project performance management are escalating markedly. Schedule delays commonly precede budgetary excesses. The inability to identify schedule slippage in a timely manner curtails the potential for effective remedial measures. Upon schedule reserves' exhaustion, the capacity to implement modifications and mitigate subsequent cost augmentations often decreases greatly. 

The First 20% is Key to Success 

The initial 20% of a project's duration represents a crucial window within an EVM framework to effectively shape its trajectory and enact significant positive changes in the Cost Performance Index (CPI) and Schedule Performance Index (SPI).  

Once a project progresses beyond this threshold, its momentum increases, severely limiting the efficacy of major corrective actions and making recovery from substantial cost or schedule deviations improbable, a trend supported by analyses of completed projects by organizations like the Department of Energy and the Project Management Institute.  

Furthermore, project success extends beyond internal timelines to encompass external commitments, such as governmental expectations for deliverable milestones essential for testing, deployment, and strategic objectives.  

Contractor schedule delays can cascade across broader governmental operational plans. External factors, such as adverse environmental conditions impacting deployment, can further compound the consequences of initial schedule slippage. 

The Evolving Role of EVM 

The introduction of EVM software significantly transformed how organizations apply this methodology. The value of these systems resides in their enhanced transparency, providing an integrated and traceable view of project schedules, financial data, and relevant project artifacts.  

For schedule management, this includes not only the schedule itself but also the Integrated Master Plan (IMP), the customer's Work Breakdown Structure (WBS), and the Organizational Breakdown Structure (OBS), alongside robust baseline change control and the capability to decompose budgets to control accounts and work packages. 

Modern EVM software facilitates the incorporation of risk management and estimated actual costs directly into the integrated schedule, enabling advanced forecasting capabilities. This holistic perspective, a unified source for project schedule, financial, and artifact data (spanning registers for tracking and managing risk, contract lines, baseline change, WBS, OBS, corrective actions, requirements, estimated actuals, current period corrections, and lessons learned), significantly improves project transparency and control. 

To ensure comprehensive accounting of all project-related costs, the EVM solution platform employs a rate matrix for accurate rating and burdening during budgeting and forecasting. 

Furthermore, contemporary EVM solutions often provide centralized or cloud-based access tailored to various roles within the project team, including contract managers, program managers, control account managers, and business development personnel. This role-based access ensures that each stakeholder can view performance data relevant to their responsibilities, promoting improved understanding and more informed decision-making. 

EVM in Action 

Consider the experience of a large organization collaborating with Cora, managing a substantial portfolio of projects. By analyzing benchmark metrics across project and portfolio management (PPM) best practices, including resource management, scenario comparisons, risk assessment, training, and project delivery, they were able to quantify the value of each metric.  

This enabled them to identify specific areas requiring focused improvement. The analysis revealed distinct performance profiles across different operational areas, allowing for targeted strategies to enhance overall outcomes. 

Despite its established benefits, organizations sometimes perceive EVM negatively, viewing it as an administrative burden primarily for reporting and payment purposes. However, this perspective undervalues its potential to enhance organizational performance. Moreover, it misses the government’s intent for organizations to internalize EVM into their management principles and methodology. 

Transforming the perception of EVM from a reporting burden to an actionable management philosophy and platform unlocks significant advantages. Integrating EVM within a comprehensive PPM solution for Government Contracting streamlines processes by consolidating cost, schedule, risk, and reporting functionalities. 

This integration can substantially reduce the overhead associated with reconciliation, reporting, and system maintenance. By establishing an EVM solution that integrates cost, schedule, risk, quality, and reporting, project teams can focus on optimizing outcomes rather than expending resources on reconciliation tasks, thereby realizing the true value of EVM. 

Jessica Rivard is a Product Manager at Cora Systems. She has spent over 15 years working in the defense sector in a range of roles, including senior corporate applications manager and as both a business and systems analyst. For more information on how the Cora platform addresses EVM, click here